- How much house can I afford?
The amount of a loan for which you qualify is based on
two different calculations.Using what are known as qualification ratios, lenders evaluate your income and long-term
debts to determine a "safe" amount for your mortgage payments. A fairly standard ratio is 33/38.
Certain mortgage plans sometimes use more
liberal ratios-for example, the Federal Housing Authority(FHA)currently uses
Here's how it works: With a 33/38 ratio, you are allowed to spend up to 33% of your gross monthly income
for mortgage payments.
The lender will then run a different calculation. This one is your loan payment and debt payments combined, which may
not exceed 38% of your gross monthly income.
Lenders use your gross monthly income
(Before taxes)to calculate exactly how much you may borrow. As part of this
calculation, they include the property taxes, homeowner's insurance, and if
applicable, homeowner association fees, as part of your monthly expense.
If your gross monthly income is $3000 per month and your credit cards, auto
loan and personal loan debts are $500 per month, the calculations would break
down as follows:
$3000 x 33% = $990
$3000 x 38% = $1140 less your monthly debts of $500 = $640
Because we take the lessor of the two calculations, you would have $640
available for your new mortgage.
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- Why do I need to check my credit prior to purchasing a house?
Even if you're sure you have excellent credit, it's wise
to double-check at the outset. Straightening out any errors or disputed items
now will avoid troublesome holdups down the road when you're waiting for
You may see disputed items, in addition to errors caused
by a faulty social security number, a name similar to yours, or a court ordered
judgment you paid off that hasn't been cleared from the public records. If such
items appear, write a letter to the appropriate credit bureau. Credit bureaus
are required to help you straighten things out in a reasonable time (usually 30
- 60 days). But it could take longer or you may not have 30-60 days for your
settlement. It is important to find out these things and take care of them in
- How much do I need for a down payment?
The normal down payment for conventional loans is 5% and
for FHA it is 3.5%. But there are 3% down payment options available for Conventional loans
with higher monthly PMI. Usually, the interest rate on the 3% down loans are also a little
higher. We can tailor a down payment plan to suit your
particular needs. VA loans generally require no down payment.
The lender will want to know how much money you plan to
put down and the source of those funds. Sources you may draw upon include
savings, stocks and bonds, pension funds, real estate holdings, life insurance
policies, mutual funds, and employee savings plans.
You may also use a gift of money from a family member
that need not be repaid. If you do this, you will need to present a letter to
your lender that states the amount of the gift and is signed by the gift donor
and yourself. We have a standard form which we will provide to you. You will
also need to show that the gift left the donor's account and was deposited into
your account or given directly to the real estate office handling the sale.
>You are also now allowed to withdraw up to $10,000 from
both traditional and Roth Individual Retirement Accounts (IRAs) with no early
withdrawal penalty, if used towards buying your first home. Check with your
benefits administrator for specific details & rules.
We at Boulevard Mortgage also have some down payment asssistance programs
that can provide some or all of the money you need to purchase a home.
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- How is Pre-Qualification different from Pre-Approval?
A Pre-Qualification consists of a credit check and
an estimation of what you can afford based on the information you tell
them. The underwriter (The person who has the authority to approve your loan)
usually has not seen your application at this point. This is not a commitment to
lend to you, but you have passed the first test. This we do for free!
A Pre-Approval is a committment to
lend to you. This is based not on what your tell them, but on a review of your
W2's, paystubs, tax returns , bank statements etc. An underwriter has seen your
loan application and has given the O.K. to lend you the money. Having this
committment in today's market is important. This tells the seller that he
dosen't have to worry about if you will get the loan. This could give you the
edge over someone else who bids on the house you want and is not already
Pre-approval makes you a strong buyer, welcomed by sellers.
With most other purchases, sellers must tie the house up on a contract while
waiting to see if the would-be buyer can really obtain financing.
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- What is the difference between conforming and nonconforming loans?
The term "conforming," as opposed to "nonconforming," is used to classify
loans that fall within the guidelines as set forth by Fannie Mae and Freddie Mac.
These are the two private, congressionally chartered companies that buy mortgage
loans from lenders, thereby ensuring that mortgage funds are available at all
times in all locations around the country. These loans generally offer the most
Non-Conforming loans exceed the maximum loan size set by Fannie Mae and Freddie Mac
(Currently $379,000.00). These loans are usually called a "JUMBO" loan.
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- Should I choose fixed or adjustable interest rate mortgage?
You can choose a mortgage with an interest rate that is fixed for the entire term of the loan
or one that changes throughout. A fixed-rate loan gives you the security
of knowing that your interest rate will never change during the term of the
loan. An adjustable-rate mortgage called an ARM) has an interest rate that will vary during the life of the loan,
with the possibility of both increases and decreases to the interest rate and
consequently to your mortgage payments.
Adjustable rates start lower than fixed rates but depending on the market at the time of
"Adjustment" could wind up higher than a fixed rate. But sometimes, and the past 10 years have been
reflective of this, the ARMs stay below the fixed rates consistently. However,
there are no guarantees. So the question of whether to go with a fixed or an
adjustable is a personal decision that you have to make based on your tolerance
- What are points?
In the special vocabulary of mortgage lending, "points" are a type of fee that
lenders charge (the full term to describe this fee is "discount points").
Simply put, a point is a unit of measure that means 1% of the loan amount.
So, if you take out a $100,000 loan, one point equals $1,000.
Discount points represent additional money you can pay at closing to the lender
to get a lower interest rate on your loan. Usually, for each point on a
30-year loan, your interest rate is reduced by about 1/8th - 1/4th (or .125 &
.250 respectively) of a percentage point.
TIP: Usually, the longer you plan to stay in your home, the more sense it makes
to pay discount points. We will be happy to discuss the pros & cons with you to
help you make your decision.
- What is APR (Annual Percentage Rate)?
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An interest rate index reflecting the cost of a mortgage as a yearly rate. It
is not the rate your payments are based on but a combination of the
interest rate, points and other lender fees. Because of this,
the APR is almost always higher than your interest rate.
The APR is supposed to allow home buyers to compare different types of
mortgages based on the annual cost for each loan. However, because not all
lenders include all their fees in the APR calculation like they are supposed to,
the comparison of APR's is almost useless. It is far easier and more accurate to
request a "Good Faith Estimate" from all lenders when you are shopping for a
loan. A Good Faith Estimate will show all points, lender fees and the interest
rate. Simply add up all the lender fees and count the total cost in dollars, not
Boulevard Mortgage Company will cheerfully email a Loan Estimate
for free at your request.
- What are closing costs?
On the day you actually buy your new home, in addition to
your down payment, the prepaid property tax and homeowners insurance premiums,
you'll need cash for various fees associated with the purchase. These
expenses are known as closing costs and are paid by both buyers and sellers.
Some closing costs you pay up-front when you apply for a
mortgage loan. Those include money for a credit check on all applicants
and an appraisal on the property. Keep in mind that even if you don't
eventually receive the loan, that money is not refundable. This is because the
lender has to pay third parties for those services when the services are
provided. Boulevard Mortgage offers a free "Pre-Qualification" before we accept
any money so that you can be reasonably certain your loan will be approved.
Beacuse of the way we do business, it is rare that a loan is denied once we
accept your application fee.
Other closing costs are possible and should be considered when evaluating your
financial situation. These may include, but are not limited to:
Title insurance fee
Attorney fees or escrow fees
Document preparation fee
Points; up-front interest paid in return for a lower interest rate.
Each point is one percent of the loan amount. Sometimes you can contract for the seller to
pay your points.
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- What is PMI (Private Mortgage Insurance)?
If you put less than 20% down on most loans, you'll be
asked to protect the lender by carrying private mortgage insurance (PMI).
Carrying PMI ensures that the debt is repaid if you default on the loan.
This charge adds approximately an extra half a percent onto
FHA mortgages, in return for their low-down-payment
requirements, also charge for mortgage insurance premiums (MIP).
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- I am a first time buyer, what is the best way to get started looking for a home?
The first step a potential buyer should take is to get pre-approved by a
lender so that you know how much you can afford to purchase before starting to
actually look at properties. After pre-approval, the next step would be to locate
a real estate agent that can help you determine where and what you would like to buy.
Please refer to How is pre-qualification different from pre-approval?
- I already own a home and I am looking to move up, do I need to sell or list my current home
prior to making an offer on a new property?
It depends on your qualifications and if you need money from the sale of your present home
in order to close on the new one. It also depends on your income / debt ratio (see question#1 above)
If you are qualified carrying both your old housing payment , your new housing payment and the rest of your debts, than you
may no need to sell your home to buy the new one.
It is absolutely best to know this upfront so you should consult with out team
- Do I need a real estate agent and how do I go about finding one?
With advances in on-line resources available today, many buyers question whether they
should work with an agent. But an experienced agent earns his or her commission. In a fast
moving real estate market, a good agent may learn of real estate listings before they hit the
general market and can always ease the way in working with a seller and his listing agent (both
at the time an offer to purchase is made as well as throughout the buying process). In addition,
most areas require a licensed realtor to show you the inside of the house listed for sale. Exceptions
are made when the home is a "For Sale By Owner" also known as a "FSBO", pronounced as "Fisbo".
Boulevard Mortgage works with many agents and would be happy to recommend some to you if you are not
working wih an agent now or are not satisfied with their service.
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- How do I obtain information on the local schools in the neighborhood?
If you are working with a real estate agent, your agent should have information on the
school test scores in your selected area. You may also contact the neighborhood schools
directly for information. Comprehensive on-line resources for school information are at
- How do I find information about specific neighborhood statistics (i.e. population, crime, local services, etc.)?
Free information is available at www.bestplaces.net
- How will my real estate agent (or builder) and my lender work together to coordinate the closing?
Good real estate agents and builders keep in close contact with all parties
involved in a transaction. In a typical sale, purchase contract contingencies
(i.e. financing, inspections) require that an agent or builder's rep communicate
well with all parties to ensure that the contingency deadlines are met.
The real estate agents, builder, loan agent and escrow officer are dependent upon
one another to close a transaction (no one gets paid until closing occurs) as well
as for the referral of future business, so it is in their best professional interest,
as well as their clients, to communicate with one another. Of course it is always a good
idea for a buyer/borrower to keep in close contact with each of these service providers
for a status and progress report. We here at Boulevard Mortgage Company work very closely
with all parties involved to ensure as smooth transaction. It does not matter whether it is
your agent or one of ours, we believe communication is the key.
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- Must I obtain financing from the lender my real estate agent (or the builder)recommends?
You are never required to use the referred (or preferred)lender of a real estate agent or
builder. Many Agents refer clients to Boulevard Mortgage Company because of our reputation for
being a good, honest lender with competitive rates. There are many lenders out there who talk a
good game but fall short of their promises. Some because they are inept and some because they are
just plain dishonest. Agents who have worked with Boulevard Mortgage Company in the past know their
clients will be pleased with the service provided. Since the agents commission is on the line and they
want you to refer your friends and family, they want to be sure your transaction is as "stress-free" as
possible. And since a good portion of our customers are referred by agents, Boulevard Mortgage Company
is committed to providing exceptional service & value.
- What documentation will the lender typically require from me to process my loan?
The answer depends upon the quality of your credit and the size of the down payment you
will be making. On a typical fully documented loan application (where an applicant is seeking
to qualify based on an employee's salary), the lender will require: one or two current paystub's,
W-2's for the prior two years and bank and investment account statements for the prior 2 months.
If an applicant is self employed (has a 25% or greater ownership in a business) then additional
documentation could be required (i.e. 1040's, 1165's & 1120's,).
If you have excellent credit or are putting down a large down payment, this documentation can be
reduced to 1 paystub, last year's w2 and 1 month statement from your funds for closing.
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- Are there limited documentation (aka EZ doc, no income qualifier) loans available?
We know of no one accepting No Doc or Stated Income loans anymore.
- Should I lock my interest rate at loan application or float the rate until closing?
The answer depends on one's outlook for interest rates, whether you are satisfied with the
current rate being offered (and would not be deterred from proceeding if rates declined),
how far out the closing date is and whether or not a rate increase could effect your ability
to qualify for the loan. With a purchase, there is a contractual obligation to close on a
specified date. Some lenders try to take the guess work out of the process by allowing
borrowers to lock and then float the rate down one time during the loan process,
typically a borrower is required to bring in a fee of ?-1% of the loan amount
which is then credited (or refunded) to them at closing. It is a lock fee the
lender requires to insure the transaction will in fact close.
- Will the lender require a fee to lock in my interest rate?
For a traditional 30-60 day rate lock, the lender will not require the borrower to pay a
lock fee, but for the privilege of locking for a period beyond 60 days they may. Some lenders allow
borrowers to lock and then float the rate down one time during the loan process, typically a borrower
is required to bring in a fee of ?-1% of the loan amount which is then credited (or refunded) to them
at closing. It is a lock fee the lender requires to insure the transaction will in fact close.
- What is a Super-Jumbo Loan?
A super jumbo loan is a loan request exceeding $650,000. A super jumbo loan
typically has a rate 1/4% higher than your average jumbo loan.
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- When purchasing investment or rental property, what is the difference in rate for non-owner occupied vs. owner occupied financing?
Conforming non-owner occupied rates are typically 3.875% to .750% higher than owner occupied interest rates depending upon the down payment, the number of units (i.e 1 family,
2 family or 3-4 family) and credit score of the borrower. The down payment or equity requirement is usually higher for non-owner
occupied loans as well, typically 20 -30% depending on your credit & rental management experience.
- What is the minimum down payment typically required to purchase an investment or rental property?
The down payment requirement can vary depending upon several factors. Usually for a true investment
property (Where you will not occupy the home at all) you will need 20-25% down. Other factors to be considered are the number of units in the property, your credit history and your rental management experience.
- Is it best to put down as much money as possible (or as little) towards the down payment?
This is a question that has been debated amongst tax specialists because of the IRS rules
regarding the mortgage interest tax deduction. Please consult with your tax advisor if you
have sufficient funds to make a sizeable down payment but are analyzing whether or not it is advisable to
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- Is it possible to borrow 100% of the purchase price?
Not at this time unless you are 1) a Veteran or 2) A First-Time Buyer or 3) buying in an approved area for USDA Rural housing loans. The recent credit crisis has eliminated most of the programs available. There is still 3.5% down with an FHA loan and you can get up to 6% of the sales price in seller's assist to help pay for closing costs.
- Is it possible to get a gift from a relative for 100% of the down payment?
Yes. Certain loans allow a relative or close friend to provide 100% of the down payment as a
gift, but the lender will ask that a "Gift" letter be signed by the donor stating that the gift
funds are not expected to be repaid. The donor will also have to show a bank statement or other
paperwork proving the gift came from their account. Some loan products require a 20% down payment
if the source of the down payment is exclusively from gift funds. It is best to discuss your
particular situation with our PreApproval department at 1-888-929-9445
- Can I borrow the funds for the down payment?
Yes. It is possible to borrow against an asset that you currently own for the down payment.
For example you can borrow against your 401(K), assuming that your company plan permits it,
and you could also borrow against your current residence to purchase a new one (i.e. a bridge loan or an
equity line). You may also borrow against your fully invested stock portfolio, avoiding the tax consequences
of selling prematurely. Some loan programs allow you to borrower unsecured personal loans to help
with the costs. Please consult your benefits plan administrator for your 401k or stocks.
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- Is it possible to borrow against (or liquidate) my 401(K) or IRA for a down payment and if so is this a good idea?
Yes. You may borrow against your 401(K) to purchase a home as
long as your company plan permits it. You may also cash out of your retirement
account and pay penalties and withholding taxes if you prefer. Whether or not it
is advisable to do so depends on how long it will take to either repay the debt
(if you plan to borrow against it) or whether you look at a home purchase as an
investment or a place to live (if you plan to liquidate). If a home is an
investment, do you believe that you can achieve greater appreciation of these
funds in real estate or in some other investment vehicle. If you plan on
purchasing property as a place to live, then perhaps borrowing funds for the
down payment would be preferable to liquidating and paying taxes and penalties
on your retirement accounts.
- What is mortgage insurance and am I required to have it?
Mortgage insurance also know as Private Mortgage Insurance(MI) or (PMI) is paid by the
borrower to protect the lender against payment default on the mortgage and is required when only one
lender is financing in excess of 80% of the value or purchase price of a property. It can also be required at other times if the lender perceives a
higher risk associated with a particular loan program.
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- Is mortgage insurance something that I should avoid if possible?
Only if you have enough funds to make a 20% down payment. The IRS has made
the Mortgage Insurance Premiums tax deductible and most loan programs or second
mortgages avoiding paying PMI are presently more costly than the PMI itself. The
best way is to just compare the costs both ways and pick the cheaper.
- How can I avoid having to get mortgage insurance on my loan?
Many borrowers who have less than a 20% down payment, used to choose
a combination first and second mortgage (referred to as a piggyback loan) to
avoid mortgage insurance (MI). The most common method of financing without MI is
an 80-10-10 (an 80% 1st mortgage, 10% 2nd mortgage & a 10% borrower down
payment). Also available is an 80-15-5 (requiring an 80% 1st mortgage, 15% 2nd
mortgage; and 5% borrower down payment). Like most lenders today, Boulevard Mortgage
no longer offers both these loans.
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- If I do get mortgage insurance, how can I eliminate it?
In July of 1999, legislation became effective which requires
mortgage insurance (MI) companies to terminate their borrower paid insurance
policies once a borrower's loan balance reaches 78% of the original property
value (there are exceptions to this law, i.e. lender paid (MI), so read your
mortgage insurance disclosures carefully). Borrowers are entitled to receive a
refund of the unearned portion of the premium they paid once the mortgage
insurance policy is canceled.
Additionally, if 2 years have passed since you took out the mortgage and you have not been
30 days late with any payment, and you now have 20% equity by either appreciation of the home or
making extra principal payments, you can "Challenge" the MI. This would require you to pay for
a new appraisal (Currently $350). If the appraisal shows that you have 20% equity based on the current
market value and you meet all the above criteria, the lender may remove the mortgage insurance.
PLEASE NOTE: There is no legal requirement for the lender to do so at this early point in the loan.
However, some lenders will.
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- What is Homeowner's (aka Hazard) insurance?
Homeowner's insurance protects both the owner as well as the lender against the occurrence of physical damage to the property (i.e. fire or
burglary). Some perils are not generally covered by the standard homeowner's polices, for example floods and earthquakes. Also, properties located in areas
prone to fires and windstorms may have difficulty obtaining standard insurance policies.
- How much Homeowner's insurance coverage will I need?
The minimum most lenders look for is an amount at least equal the the mortgage amount you are borrowing. A safe bet is to buy a guaranteed-replacement-cost policy which will generally pay out 20-50% more than the face value of the policy to rebuild your home (this is also the preferred policy of lenders). A replacement-cost policy typically adjusts the amount of insurance each year to keep pace with rising construction costs in your area. It is important to note that local building codes require structures to be built to specific standards which could vary over time, if your home is severely damaged, you may be
required to rebuild it to current codes. Even guaranteed-replacement-cost
polices do not always cover this expense. However, many insurers offer an
endorsement that will pay for the upgrading cost, it is a good idea to consider
adding such an endorsement to your replacement-cost policy.
- Must I have flood insurance coverage?
The lender should not ask you to obtain a flood policy unless
your property is located in a flood hazard zone. By law mortgage companies are required to check
to see if the property your are buying is located in a flood zone. If it is, you will be required to
obtain flooed insurance before your loan closes.
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- What is title insurance and why do I need it?
Before you purchase a property or close on a new loan, it's
essential to know that the title to the property will be free and clear, free of
prior defects and indebtedness. A homeowner and prospective lender need to be
certain that what is available on the property is what is referred to as a
"marketable title". A title company researches the legal history of the property
which entails searching public records in the offices of the county recorder.
Problems with the title could threaten the mortgage, limit ones use and
enjoyment of the property and could result in financial loss. A policy of title
insurance protects a homeowner's title and the insurer covers the cost of any
legal challenges. All lenders require a title insurance policy before they will fund your loan.
- What is the best way to shop for insurance?
A reliable method of shopping for homeowner's insurance is to get estimates from at least
three high-rated companies. Be prepared to discuss the type of policy you want as well as the
coverage limits you require We suggest getting at least 3 quotes from reputable companies.
- I am purchasing a condo (or townhouse or PUD) and I have been told that I need project approval, what is it and who handles it?
Project approval is performed by the lender who will be funding your loan. The approval
process usually involves a questionnaire (aka certification or warranty letter) being
completed by either the development's Homeowner's Association (HOA) or the property management
company. Often, the HOA or management company will require a nominal fee from a borrower or buyer to
perform this service and will submit a bill to escrow. The questionnaire, once
completed, is then returned to the lender for a compliance review. The lender
will then ascertain whether the development's legal and financial position meet
their guidelines. In many cases, if the development is a sizeable one, the
lender may have already lent within it and could have all necessary
documentation for approval on site. The title company may also provide needed
documentation for the lenders review, for example, the project's budget,
by-law's and covenants, conditions and restrictions (CC & R's). Some projects are on an approved
list where no further investigation is needed.
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- What is the function of the HOA (Homeowner's Association)?
In some states, Homeowner's Association's are legally required for developments where
residents share an interest in common property,
such as condominiums or townhomes. The association is headed by a board of
directors which generally follows a set of by-laws regarding maintenance, upkeep
and other issues pertinent to the development. The development's unit owners
must become members of the association and comply with its by-laws and pay dues
or fees to finance maintenance and other development expenses (i.e. the master
- What expenses are typically covered in the HOA dues?
HOA dues cover the general maintenance and upkeep of all
common areas within the development. These dues also contribute to the premium
payments for the master policy of insurance, which protects all unit owners.
Also included in HOA dues are major repairs not covered by insurance, the HOA
could handle these unexpected expenses by a special assessment of all unit
owners or by raising the association dues. Sometimes water or trash collection are also
covered by these dues.
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- If my development (or project) has an HOA, what type of insurance am I expected to obtain independently?
The master insurance policy, which is purchased on behalf of
all unit owners by the HOA, covers all units or structures located within the
development but does not typically cover an individual unit owner's personal
belongings located within their dwelling. Therefore, it is advisable to purchase
a separate contents coverage policy for the protection of personal possessions.
Check with your HOA or property management company for the coverage details of
the master insurance policy. Usually this type of policy is called an "H06". Your insurance
agent will be familiar with these policies.
- I am purchasing a condo (or townhouse or PUD) and I am aware that the HOA is currently in litigation with the developer, will I be
able to obtain financing in the development?
A Homeowner's Association could leave itself open for legal
action if it doesn't act on legitimate building defects or disclose these
defects to prospective buyers. However the fact that an association is suing a
developer can impact a potential buyer's ability to obtain financing. It is
vital to let your lender know up front if the development or project you are
making an offer on is in litigation. It may be possible to obtain financing
in such situations, but it will limit the number of lenders who might be able to
finance your purchase. In some cases the lender may require a larger down
payment and the interest rate could exceed that of standard financing programs.
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- Is it necessary to get pre-qualified before making an offer on a property?
Yes. It is always a good idea to have a lending professional or
service evaluate your finances and render a determination of your loan
qualifications prior to actually looking for property. To avoid frustration,
before setting out to make an offer, you know what loan amount you could likely
qualify for. In most markets, a seller willnot even accept your offer without a letter
of pre-qualification from a lender.
In some markets, an agent or seller will not even show you the house unless they know
you have at least been pre-qualified by a mortgage professional. Boulevard Mortgage Company will
pre-qualify you for free.
Get Pre-Qualified now
- Is it necessary to get pre-approved before making an offer on a property?
On a nice property, where multiple offers commonly occur, (happens even in buyers' markets)
it is a good idea to go through the loan pre-approval process prior to
submitting an offer to a potential seller. Prospective buyers who do not take
the time to become pre-approved are severely handicapping themselves when competing for the nicer properties.
- How long does it take to get pre-qualified or pre-approved for a loan?
Loan pre-qualification can occur in a matter of minutes, in
the time required to communicate your financial circumstances to a lending
professional so they can crunch the numbers. Loan pre-approval could involve
more time up to 1-3 days to gather the applicant's income, asset and credit
documentation and to have an underwriter review it. Whether you are requesting a
pre-qualification or pre-approval, ask for it in writing. Both your real estate
agent and a potential seller will want a letter from your lender. Boulevard Mortgage
does this for free.
Get Pre-Qualified now
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- Once the offer is accepted, how long will it typically take to close the transaction?
This can vary from one transaction to another, depending upon
seller and buyer contingencies. But in a tight seller's market, the typical
closing will occur within 30-45 days. In a buyer's market, where there are many
properties available for sale, closing could usually occurs within 30-90 days./p>
- What types of problems typically cause closing delays?
This varies from one transaction to another, but the typical
closing delays relate to a failure to satisfy loan conditions quickly or a
buyer's delay in setting up their homeowner's insurance. The loan condition that
most frequently causes problems in the end is a borrowers lack of documentation
regarding the source of funds for the down payment and closing costs. Lenders
want to see a paper trail of all funds transferred into escrow, and unless a
borrower takes the time to document the liquidation, withdrawal and transfer of
funds along the way, they must scramble at the end of the transaction to
re-create their trail.
If the property in question is new construction, building and completion delays frequently occur
depending upon weather delays, contractor and sub-contractor problems and the builder/developer involved.
The bottom line is get whatever the lender asks from you to them as soon as possible.
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- Which mortgage related closing fees will the lender typically collect from me up front?
The appraisal and credit report fees are the third party fees
that your lender or broker will typically ask that you pay for up front. The
appraisal fee on an owner-occupied standard tract home will range between
$300-$400. A tri-merged credit report reflecting three credit bureaus ranges
- Which closing costs associated with my purchase are tax-deductible?
Usually points (whether you pay them or the seller pays them
for you),the interim interest and real estate taxes paid by you at closing.
There may be other tax deductible items. Please check out the
for homebuyers or your tax advisor. Most people simply give a copy of their
HUD-1 Settlement statement to their tax advisor at tax time.
- Should I pay points on my loan?
When points are paid on a loan, the result is to buy down the
interest rate, typically 1 point (or 1% of the loan amount) will buy the rate down .25%. The key to
analyzing whether paying points makes financial sense is to determine: 1) How
long do you anticipate remaining in the property? 2) When would the breakeven
point occur? For example if you pay two points to buy your rate down from 8.00%
to 7.50% on a $300,000 loan, the payment at 8.00% would be $2,201 and at 7.50%,
the payment would be $2,098, with the difference in payment amounting to
$103/month. With two points costing $6000, divided by the savings of $103/month
equaling 58.25 months or 4.85 years to break even. You would want to hold the
loan and remain in the property approximately 5 years for this to make sense.
Other factors to consider are the tax implications of paying points (see our
link to the IRS website as well as the time value of money (could you put these funds to
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- What is the difference between a zero point and a no cost loan?
With a zero point loan, a borrower has opted not to pay
points to buy their interest rate down but will still be paying for their base
closing costs (i.e. appraisal, credit report, lender doc fees, title and escrow,
etc.). With a no cost loan, a borrower has accepted a higher interest rate,
(typically .375-.500% higher than on a zero point loan) with the trade off that
the lender or broker will pay for all their non-recurring closing costs (all
base closing fees except for interest, taxes and insurance due).
- How can I find a qualified, reputable CPA to advise me?
There are always the "big five" accounting firms to rely on
and referrals from family and friends are also advisable. Another helpful
on-line resource for finding qualified professional service providers in your
area is www.cpafinder.com.
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- Will the lender require an appraisal of the property? If so, will I receive a copy of it?
Yes. The property is the collateral for the loan, therefore
an appraisal is almost always required and if a borrower pays for the appraisal
he or she is definitely entitled to receive a copy of it.
- What is a loan prepayment penalty and is it generally advisable to get a loan that has one?
A prepayment penalty on a loan allows the lender to charge a
borrower additional interest, typically six months worth, when a loan is repaid
during the penalty period, which is usually somewhere in the first three to five
years of the loan. If a loan does have a prepayment penalty, this is clearly
stated within the mortgage disclosures, mortgage note or prepayment penalty
rider to the note. The advantage of taking a loan with a prepayment penalty is
that it could carry a lower rate of interest or you may be permitted to take a
loan without paying for non-recurring closing costs. Boulevard Mortgage Company has no
prepayment penalties on any of our Conventional, FHA or VA loans.
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As always, please feel free to call us at 1-888-929-9445.