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Frequently Asked Questions
What documentation do I need to provide to get pre-approved?
In addition to an online application, our secure site allows for clients to upload the documentation we will need so that we can finalize a loan decision for you. Please note that we never charge for this pre-approval service. The normal list of documentation needed is below, however certain situations or loan types may require more or less. We like to have a 10-minute discovery call up front to help refine the list to just your needs:
- Clear copy of your driver’s license
- Current months’ worth of paystubs
- 2 years’ most recent W2s and 1099s
- 2 years’ most recent personal federal tax returns
- 2 years’ most recent corporate tax returns for any corporations in which you have 25% or greater ownership
- Most recent 2 months’ bank statements
- Most recent quarterly (or last 2 months’) retirement/investment statements
- Mortgage statements for all properties that you own
- Homeowners insurance declaration page for all properties that you own
- Current HOA statement for all properties that you own (if located in a condo or PUD development)
- Lease agreements for any properties which you own and rent out to tenants
Once we receive your documentation we typically turn around a decision within 24 hours.
My loan is pre-approved, now what?
Now the fun begins! You and your Realtor can begin your home search with the confidence of knowing that you are fully qualified for the price range in which you are looking. During the home search, your Realtor may come to us for updated pre-approval letters which are specific to the property and price you wish to write an offer on. Your agent will already have been furnished a credit score disclosure and redacted proof of funds to forward along with your offer. Additionally, we go above and beyond the competition by having a Hillhurst Mortgage team member contact the seller’s agent on your behalf to rest assure them of your creditworthiness and our ability to meet the contract deadlines. This helps make your offer stand out over other competing offers to help win the escrow. In the competitive real estate market, these details can make all the difference.
Do you have to pull my credit during the pre-approval stage?
Your credit history and qualifying credit scores are as crucial to your pre-approval as your income and your assets. Having a formal pre-approval in hand when making purchase offers gives you an edge over other competing buyers because it assures the seller that you are ready and able to purchase their home. To ensure that we have done our due diligence, we can’t use a credit report from another lender.
One of the main fears that our clients share with us is that too many credit inquiries may lower their score. We understand this and want to provide you with some helpful information to alleviate this concern.
The excerpt below is directly CFPB (Consumer Finance Protection Bureau) website and pertinent article: Click Here
What are impounds?
Setting up an impound account (also known as “escrow account”) with your loan payment servicer is a way to include property taxes and homeowner’s insurance in your monthly mortgage payment. With impounds, your mortgage payment will include a monthly amount for taxes and insurance. Then, your mortgage loan payment servicer will make the lump sum payouts to the tax assessor and insurance company when the premiums come due every year. When setting up your impound reserve account, the lender has to forecast the due dates and collect enough reserves from you up front so that they have sufficient funds to pay out the taxes when they come due. This will add more in funds up front at the closing of your loan, however the benefit is that it avoids your having to personally pay large tax and insurance bills during the year when it may be inconvenient to do so. You won’t need to pay your insurance or property taxes out of pocket ever again since they will be rolled into your mortgage payment each month.
If you are putting less than 10% down on your home, in most cases the lender will require you to set up an impound account for your taxes and insurance. If you have a down payment of more than 10% on your home, impounds are optional for you. Deciding on whether to have impounds is a question of your comfort level in coming up with large sums throughout the year to cover your taxes and insurance versus paying a larger monthly mortgage payment. There is no additional cost nor benefit to having impounds versus not having them. If you would like more guidance on whether an impound account is right for you, please give us a call.
How long is my pre-approval valid?
Pre-approvals are valid for 90 days. Updating your pre-approval is quick and easy. Since we already have most of your documentation we will simply need to obtain updated paystubs and bank statements from you and we may also refresh your credit report.
Why is my credit score online so higher than the one on your credit report?
Online credit reporting companies are meant to provide an ‘all purpose’ credit report. Credit scoring models vary depending upon the reason for your inquiry. For example, if you are shopping for a car, the auto dealership will run a credit report with scoring criteria that places more emphasis on your credit history as it relates to auto loans. A mortgage credit report is specific to home financing and has its own specific criteria.
Does my spouse’s credit score matter?
It depends. FHA loans require that we factor in your spouse’s debts when qualifying you for a home loan. Most Conventional and Jumbo loans, including VA loans, do not have that same requirement. Our knowledgeable team members are well versed in program guidelines and will prepare you up front if your spouse’s credit is a factor in your specific loan scenario.
Should I be prepared to pay anything other than the down payment?
The simple answer is YES.
Closing costs (which are all fees and costs above and beyond your down payment) are a part of any purchase or refinance. The amount will vary depending on the loan amount that you are applying for, the sales price (for a purchase), and the loan program/interest rate that you select. Most closing costs are not loan related costs, but rather they are 3rd party fees such as: Independent Escrow and Title fees, Homeowner’s Insurance Policy, prorated Property Taxes, County Recording fees, etc. Loan costs are generally limited to your credit report, appraisal, underwriting fee, and occasional costs for property specific searches like a verification that your home is not in a flood zone. Beyond that, if you are paying ‘loan fees’ it is likely because you have selected a rate that comes at a ‘cost’ (also known as ‘points’ or a ‘discount fee’).
At Hillhurst Mortgage, it is our policy is to present clients with 3 rate options: 1 that comes at a cost, 1 that comes at no cost, and 1 that offers a credit from the lender to help offset those other charges that we just described above (sometimes offering a No Cost loan option). Whether you decide to buy down your rate by paying points or choose a rate that offers a lender credit, one thing you can always count on from us is that we will be honest and transparent with you about the amount of funds you should be prepared to bring in at closing. We work diligently to ensure that you not only understand the decisions you make, but that you are selecting the best loan program and interest rate for your specific circumstances, as everyone is different. What was best for your co-worker, may not be best for you.