Learn More About Our FHA Loan Offerings
Learn More About Our VA Loan Offerings
Learn More About Our USDA Loan Offerings
Loan Application Checklist
|In general, the documentation you will need includes:|
|Check for application fee|
|Property Information (if you already have a contract on a house)|
|Copy of legal description and MLS sheet.|
|If you are selling your current home, copy of listing contract.|
|If you have sold your current home, copy of settlement statement (HUD-1).|
Income & Assets
|Pay stubs for the last 30 days.|
|For the past two years:|
|Statements for each bank, mutual fund, and/or investment account for the last three months.|
|Estimated value of personal property and furniture.|
|If you have made any large deposits to your accounts:|
|If you own more than 25% of a business:|
|If you own rental property:|
|If you are retired:|
|If you receive Social Security:|
|If you are counting child support as income:|
|Names, addresses, account numbers, balances and monthly payments on all current loans.|
|Explanation of credit report anomalies, including:|
|Copy of DD Form 214, Report of Separation.|
|Photo ID and proof of Social Security number.|
|Residence addresses for the past two years.|
|If applicable, a copy of your divorce decree.|
|If you are not a citizen, a copy of the front and back of your green card.|
About the Mortgage Loan Process
Getting a mortgage loan involves four major steps.
Step one: determine how much you can borrow
This is a function of a couple things. How much of a monthly payment can you afford? And given your unique credit and employment history, income and debt, and goals, how much will a lender loan you? You can get a good idea of your preferred payment abount using the calculators on our website. We'll also help you through different scenarios by asking a few simple questions. Because lender guidelines are fairly standard, we can give you a good idea of how much you can borrow after a short conversation.
Step two: pre-qualify for your loan
This step is where Queen City Mortgage Company, LLC will start saving you money. You will give us information on your current job, assets, and residence history. You'll supply your employment, asset, and residence history information. We will pull get your credit report and score (only after you give your permission, of course). We'll review this information and give you a letter of pre-qualification. With this letter, your real estate agent will negotiate the best deal for your new home. The pre-qual letter gives you buying clout! While you're shopping for the home that's right for you, we're busy researching the loan that's just right for your situation.
Step three: apply for your loan
Once you have made an offer and the sellers have accepted, you should complete the loan application. Applying for your loan couldn't get much easier; you can apply right here on our site. After the seller has accepted your offer and you have applied for your loan, we'll order the professional appraisal on the home.
Step four: your loan is funded
The agents will find a title company to handle the "funding" of the loan and closing. We'll coordinate with this company to ensure the papers your lender will require are avaiailable, and you will probably}likely sign everything at their officeWe work with with this company on your date to close. Since you won't need to coordinate this process, you can concentrate on moving logistics, painting, new carpet, and the fun parts of moving into a new house.
You've answered some few questions, given us detailed information, applied , and Before you know it, you'll be moving! We do the legwork so you can focus on finding the new home that's right for you.
Lowering Your Payments
Is your refinance primarily to lower your rate and monthly payments? In that case, getting a low, fixed-rate loan could be a good choice for you. An ARM (Adjustable Rate Mortgage) or a fixed mortgage with a high rate are loans that you may want to refinance. Even as interest rates rise, a fixed rate mortgage must stay at the same, low interest rate, unlike an ARM. If you are expecting to stay in your home for about five more years, a loan with a fixed rate may be an especially good fit for you. However, an ARM with a low intitial payment could be a wiser way to lower your mortgage payments if you see yourself moving in the next few years.
Getting Out some Cash
Is "cashing out" your primary purpose for refinancing? Maybe you need to pay for home improvements, pay your child's college tuition bill, or take your family on a dream vacation. With this in mind, you want to apply for a loan above the balance remaining on your present mortgage.Then you'll want to find a loan for a higher amount than the remaining balance on your existing mortgage loan. If you've had your existing mortgage for a long time and/or have a high interest mortgage, you may be able to do this without making your mortgage payment bigger.
Do you have other debt, perhaps with a higher interest rate, that you need to consolidate? If you have built up some equity, taking care of other debt with rates higher than your mortgage (credit cards or home equity loans, for example) might be able to save you a lot of cash each month.
Switching to a Shorter Term Loan
Do you want to build up home equity more quickly, and have your mortgage paid off more quickly? If this is your goal, the refinance loan can move you to a loan program with a shorter term, such as a 15 year loan. You will be paying less interest and growing your equity faster, although your monthly payments will usually be more than they were. But, you might be able to switch without a bigger monthly payment if your longer term mortgage was closed a while back, and the remaining balance is small. You may even make it lower! To help you understand your options and the many benefits of refinancing.
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A home equity line of credit (HELOC) can be helpful when you are looking a lump sum to remodel your home, make a major purchase, or consolidate debt. A kind of revolving credit, a HELOC is secured by the equity in your home. This open-ended loan may be be charged up or paid down during the set term of the loan. The loan interest typically fluctuates every month
With a HELOC, the lender approves you for a particular amount of credit - the largest sum you can borrow at any one time with the agreement. Your credit history, rate of pay, debt and various other financial circumstances will affect your credit limit. In order to ascertain your home' present market value, you'll need an appraisal on your home. Your credit limit will be based on all of your financial information, in addition to a percentage of your home's appraised value, which is subtracted from the balance owed on your current mortgage.
When we pre-qualify you, we help you determine the amount in mortgage payments you can afford, and the loan amount you can qualify for. We can achieve this by considering your income and debts, your employment and residence situations, the available funds for a down payment, required reserves, and some other things. It's a quick, thorough process with minimal risks for papercuts.
We award you a Pre-Qualification Letter when you qualify, that states that we're confident you can qualify for up to a certain amount of mortgage dollars.
Several advantages open to you after you've found your new house, and have pre-qualification. The first is that you will know the amount you'll be able to afford when determining the offer. Even more important to the seller, your pre-qualification gives them confidence - as if you'd arrived at their house with a bag of cash to make the offer! They need not wonder if they have been wasting their time if you don't be able to qualify for a big enough mortgage. The seller of the home won't worry if he can count on you to qualify for your mortgage in the amount you'll need.Your qualifying for your needed loan amount will not cause them concern. You have the capability to back your offer up.
We can help you pre-qualify
When we pre-qualify you, we help you determine how much of a monthly mortgage payment you can fit in your budget, and how much we of a loan you will qualify for. We will do this by analyzing your debts and income, your employment and housing circumstances, the funds available for down payment, required reserves, and some other things. We will require a minimum amount of paperwork, and avoid a lengthy process.
Slash the budget and build up savings. Look for ways you can trim your monthly expenses to put away money for a down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a set amount from your take-home pay transferred into savings. Some effective methods to build up funds include moving into less expensive housing, and skipping your vacation for a year or two.
Work more and sell things you do not need. Perhaps you can find an additional job to get your down payment money. You can also get serious about the possessions you actually need and the things you could be able to put up for sale. A closetful of small things may add up to a fair amount at a garage or tag sale. Also, you can look into selling any investments you own.
Borrow from your retirement funds. Check the provisions of your retirement program. Many people get down payment money from withdrawing from Individual Retirement Accounts or borrowing from their 401(k) plans. Make sure you are clear about any penalties, the way this could affect on your income taxes, and repayment terms.
Ask for assistance from generous family members. First-time buyers are often fortunate enough to receive help with their down payment help from thoughtful parents and other family members who may be anxious to help them get into their own home. Your family members may be eager to help you reach the milestone of owning your first home.
Learn about housing finance agencies. These agencies offer special mortgage programs to moderate and low income homebuyers, buyers with an interest in remodeling a house within a targeted area, and other certain kinds of buyers as specified by each finance agency. With the help of this kind of agency, you can receive a below market interest rate, down payment help and other incentives. Housing finance agencies may help you with a lower rate of interest, help with your down payment, and provide other benefits. These non-profit agencies exist to build up community in specific neighborhoods.
Learn about low-down and no-down mortgage loan programs.
- Federal Housing Administration (FHA) loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low to moderate-income Americans qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who need to qualify for home financing. FHA offers mortgage insurance to private lenders, ensuring the buyers are eligible for a loan. Interest rates for an FHA loan generally feature the going interest rate, but the down payment amounts for an FHA loan will be less than those of conventional loans. Closing costs might be included in the mortgage, while your down payment can be as low as 3 percent of the total.
- VA mortgages
Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan requires no down payment, has limited closing costs, and provides the benefit of a competitive rate of interest. Although the VA doesn't issue the mortgage loans, it does issue a certificate of eligibility to qualify for a VA loan.
- Piggy-back loans
You may fund your down payment through a second mortgage that closes with the first. Usually the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. Rather than the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
In the option of a seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. You would borrow the majority of the purchase price from a traditional mortgage lending institution and borrow the remaining amount from the seller. Typically, this kind of second mortgage will have higher interest.
Lenders use a ratio called "debt to income" to determine the most you can pay monthly after you've paid your other monthly debts.
How to figure the qualifying ratio
In general, underwriting for conventional mortgage loans requires a qualifying ratio of 28/36. FHA loans are less restrictive, requiring a 29/41 ratio.
The first number is how much (by percent) of your gross monthly income that can be spent on housing costs. This ratio is figured on your total payment, including hazard insurance, HOA dues, PMI - everything that constitutes the payment.
The second number is what percent of your gross income every month that should be spent on housing costs and recurring debt. Recurring debt includes credit card payments, car loans, child support, and the like.
Some example data:
A 28/36 qualifying ratio
- Gross monthly income of $4,500 x .28 = $1,260 can be applied to housing
- Gross monthly income of $4,500 x .36 = $1,620 can be applied to recurring debt plus housing expenses
With a 29/41 (FHA) qualifying ratio
- Gross monthly income of $4,500 x .29 = $1,305 can be applied to housing
- Gross monthly income of $4,500 x .41 = $1,845 can be applied to recurring debt plus housing expenses
The credit score is built by credit reporting agencies. These agencies use the payment history of all of your loans: mortgages, car/motorcycle/boat loans, credit cards, and the like.
The three main credit agencies use slightly different formulas to build a credit score. The original FICO score was developed by Fair Isaac and Company. While Experian still calls its score "FICO", TransUnion calls its score "Beacon" and Equifax uses "Empirica." While these methods vary from one agency to another, the differences aren't huge; they all use the following to build a credit score:
- Credit History - How long have you had credit?
- Payment History - Have you paid more than 30 days late?
- Credit Card Balances - How many accounts do you have, and how much do you owe?
- Inquiries on Your Credit - How many times have lenders pulled your credit for the purpose of giving you a loan?
These factors are weighted slightly differently depending on the formula being used. The result is one number. FICO scores can be as low as 300 and as high as 800. Higher scores are better. Most people who want to get a mortgage loan in the current environment score 620 or above.
Not just for qualifying
Did you know? FICO scores affect more than your ability to get a loan. They also affect your interest rate. Higher scores indicate you are a better credit risk, and thus may qualify for a better mortgage rate.
Improving your score
Is there any way to raise your credit score? Despite what you hear from "credit repair" companies, the FICO score is calculated from your lifelong credit history, so you can't turn it around right away. You must, of course, appeal for the credit agency to remove any incorrect data on your credit report; this is really the only way to quickly improve your credit score.
Know your FICO score
Before you can improve your FICO score, you must get your score and make sure that the reports from each agency are correct. Fair Isaac, the company that offered the original FICO score, offers scores on its website: myFICO.com. It's inexpensive, fast, and easy to get your credit score along with reports from all three credit reporting agencies. Also available are information and tools that can help you analyze what actions might have the greatest impact on your FICO score.
You can get a federally-mandated free credit report once per year from all three credit reporting agencies at AnnualCreditReport.com. While this report does not include a free credit score, the cost to "upgrade" your report to include a credit score is very reasonable.
Now that you have all the facts, you'll be a more informed consumer and you'll be better positioned to obtain the right mortgage for you.
A common misperception is that your Annual Percentage Rate (APR) and interest rate are the same thing. They aren’t.
Your interest rate is what you’ll pay above the actual loan amount to the lender expressed as a percentage of the amount you’re borrowing. The APR includes your interest rate along with some of the other costs associated with the loan.
The APR is a way for you to be able to compare “apples to apples” when considering which loan offer to choose. It represents the true cost of the loan shown as a yearly rate and includes some, but not all of the fees and insurance premiums that are part of your mortgage payment.
So why include it in your Loan Estimate if it’s so confusing?
The easy answer is that it’s required by federal law to disclose both the interest rate and the APR to you as the borrower. The primary reason is so that lenders can’t “hide” their fees and upfront costs behind low advertised rates. However, the law doesn’t specify what goes into the calculation, so APR’s can vary from lender to lender and from loan to loan.
With a fixed-rate loan, your monthly payment never changes for the life of the loan. The amount allocated to your principal (the amount you borrowed) will go up, but your interest payment will go down in the same amount. Your property taxes may go up (or rarely, down), and so might the homeowner's insurance in your monthly payment. But generally payment amounts on your fixed-rate mortgage will increase very little.
During the early amortization period of a fixed-rate loan, most of your payment pays interest, and a much smaller part toward principal. As you pay on the loan, more of your payment is applied to principal.
Borrowers might choose a fixed-rate loan to lock in a low rate. People select fixed-rate loans because interest rates are low and they want to lock in this low rate. For homeowners who have an ARM now, refinancing into a fixed-rate loan can provide greater monthly payment stability. If you currently have an Adjustable Rate Mortgage (ARM), we'd love to assist you in locking a fixed-rate at a good rate.
There are many different types of Adjustable Rate Mortgages. Generally, interest rates for ARMs are determined by an outside index. A few of these are: the 6-month Certificate of Deposit (CD) rate, the 1 year Treasury Security rate, the Federal Home Loan Bank's 11th District Cost of Funds Index (COFI), or others.
Most ARMs feature this cap, so they won't increase above a specific amount in a given period of time. Your ARM may feature a cap on how much your interest rate can increase in one period. For example: no more than a couple percent a year, even though the underlying index goes up by more than two percent. Your loan may feature a "payment cap" that instead of capping the interest directly, caps the amount that the payment can go up in one period. In addition, almost all ARM programs feature a "lifetime cap" — your rate can never exceed the capped percentage.
ARMs most often have the lowest rates at the start of the loan. They guarantee the lower interest rate for an initial period that varies greatly. You may hear people talking about "3/1 ARMs" or "5/1 ARMs". In these loans, the introductory rate is set for three or five years. It then adjusts every year. These loans are fixed for a number of years (3 or 5), then adjust after the initial period. These loans are usually best for people who anticipate moving in three or five years. These types of ARMs are best for people who plan to move before the loan adjusts.
You might choose an Adjustable Rate Mortgage to take advantage of a lower initial interest rate and plan on moving, refinancing or simply absorbing the higher rate after the introductory rate expires. ARMs are risky if property values decrease and borrowers can't sell or refinance their loan.
Locking It In
When you are promised a "rate lock" from your lender, it means that you are guaranteed to get a specific interest rate for a certain number of days while you work on your application process. This protects you from getting through your entire application process and discovering at the end that your interest rate has gone up.
While there are several lengths of rate lock periods (from 15 to 60 days), the longer ones are generally more expensive. You can get a longer period for your lock, but in choosing this option, will likely have a higher interest rate than you would have with a shorter span of time
More Ways to Get a Great Interest Rate
In addition to opting for the shorter rate lock period, there are several ways you can get the best rate. The bigger down payment you pay, the smaller your interest rate will be, because you will be entering the loan with more equity. You can pay points to improve your rate over the loan term, meaning you pay more initially. For a lot of people, this makes financial sense
Certain standard costs are associated with closing the sale of a home. Sellers and buyers customarily share these closing costs, as specified in the real estate sales contract.
Many of the costs associated with buying residential real estate are associated with getting the mortgage loan. At Queen City Mortgage Company, LLC, we have extensive experience in residential mortgage lending, so we can compile a comprehensive list of mortgage-related costs in your "Loan Estimate".
Loan Estimate (LE)
Soon after you apply for a loan, we'll provide you with a "Loan Estimate" of your closing costs. We base this closing cost estimate on our many years of past experience. It's important to note that while our LEs are very accurate, we can't always predict costs to the penny. We will be glad to review the "Loan Estimate," answering questions and pointing out costs that can vary a little bit at the closing table.
Below is a fairly generic list of costs for buying residential real estate. We will always provide a specific list of your closing costs when we deliver your Loan Estimate.
Standard Closing CostsLoan-Related Costs
- Costs associated with "originating" your loan
- Points — These are costs you pay up-front to lower your interest rate (optional)
- Appraisal Costs
- Credit Report
- Interest Payment
- Escrow Fees
- Various Taxes
- Transfer Taxes and Recording Fees
- Private Mortgage Insurance (PMI)
- Title Insurance
- Flood or Earthquake Insurance if applicable