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Rich Toepper

Broker Associate

 

Frequently Asked Questions About Financing


 

Which type of loan is right for me?

There are a considerable amount of loan options in the marketplace and finding and speaking to a reputable lender is the first place to find out which loan programs best fits your financial situation.

These are the four most common factors which a lender will look at to determine your financing options:

  1. Credit:  Do you have a good credit history?
  2. Income:  Is your income appropriate for the property you want to purchase?
  3. Monthly Debt:  With your currently monthly debt and payments, can you afford the mortgage too?
  4. Type of Income:  Are you self-employed?  Do you work on commission only?  How much do you rely upon bonuses for your income?  How much of your income right now is due to overtime?

 

How much of a down payment do I need?

Your down payment requirement could be affected by your income and credit situation.  The old rule about necessarily having 20% down on a home no longer applies.  There are loan programs which allow you to have as little as 3% down and other loan assistance programs which will help you with a down payment.  There are also special loan programs for veterans.  All the available loan programs have different requirements.  Again, by speaking with a reputable lender you will find out which loan programs best fit your financial situation.

 

I just changed jobs.  How will that affect me?

As long as you are in a similar industry and making similar money, the job change should not affect you.  However, if you were salaried and now you are commission-based in your pay or if you are now self-employed or went to an entirely different industry making less money, this could affect the type of loan and down payment that is required.

 

I am self-employed.  

The loan process for self-employed people varies on a number of factors.  How much money do you have available?  What type of business are you in?  How do you pay yourself? All of these questions may affect your loan status.  More documentation is required for the self-employed and the loan process may be more complex.

 

How does bankruptcy affect my ability to get a loan?

In many cases you will need two years of spotless credit after the discharge of debtors in the bankruptcy process.  No late payments, no judgments, and no collections can exist within a five year period after bankruptcy is declared.

 

What is the waiting period after a short sale or foreclosure?

Typically the waiting period can be anywhere from 2 to 7 years.  The waiting period varies depending on if you had a short sale or a foreclosure and if you had any extenuating circumstances such as a death, illness, or job transfer.  You also may be required to have a larger down payment and the home must be your principal residence.

 

Will I pay an application fee for my loan?

There are fees involved in processing a loan and they will vary by lender.  Typical costs can include the property appraisal, credit report, and administrative costs.

 

Will I need mortgage insurance?

As long as you can make a 20% down payment or have at last 20% equity in the home you are purchasing, you will not pay for mortgage insurance.  Mortgage insurance compensates lenders should you default on your loan.

 

What documentation do I need to start the loan process?

 

Do I really need an attorney for the closing process?

We always recommend that you hire an attorney for the closing process.  Why?  They are the legal experts in protecting you while you are under contract.  They are the experts with title transfers, liens, encroachments on surveys, etc.  Also, Realtors and lenders are prohibited from acting in any capacity as an attorney.  Typically the fee for an attorney is a flat fee of under $500.  Your attorney could save you many dollars and lots of headaches.

 

Can you refer me to a reputable lender?

Of course!  We have worked with many lenders through the years and we can help direct you to somebody who can help you.  Please give me a call at 815-338-9900 or email me at rich@richsoldit.com for futher information.

 

 

 

 

This information was provided with the assistance of Chicago Funding, Inc.