Purchasing (What You Need to Know) Purchasing a home is a very exciting time! It can also be a stressful time. There are many things to take care of and many things to learn, if you are not familiar with the process. I will make sure that obtaining your home loan is as easy as possible. Whether you are buying your very first home, a new home, a vacation home, or an investment property, I have a loan program that will meet your needs. To help you get started, I have outlined the major steps of the home buying process below. This will help you get organized and know what to expect.

Getting Organized - There are some things you will need in order to get started with the financing process. They include: 1. Past two years of W-1's and one month of most recent pay stubs for salaried employees. 2. Past two years of tax returns including all schedules 3. Past two months of bank statements for all accounts 4. Most recent statements of your assets, IRA/401K, Stocks, Bonds etc. 5. If you own rental property, provide recent rental agreements and tax returns for the previous two years, including all schedules 6. If any borrower has filed bankruptcy, provide the Discharge Notice, Filing and Schedule of Creditors. Getting Pre-Qualified - Getting pre-qualified is the process of determining how much money the bank will let you borrow based on some basic financial information you will need to provide. This is an important step because many realtors will not show houses to anyone who has not been pre-qualified by a lender. This is a service that I provide free to you. After a preliminary review of your financial information, I will provide you with a pre-qualification letter. You will need to give this letter to your realtor and it will be included with any written offer you make to buy a house. If you need to be pre-qualified, please visit the Pre-Qualifying page. If you would like to get an idea of how much you can afford to borrow, you can use my How much can I afford to borrow calculator (please be sure to read the side note). Finding a House Finding a house will require assistance from a realtor. Your realtor will help you locate the type of home you are looking for, assist you in submitting an offer on the home, while looking out for your rights as a buyer, as well as organize and schedule any inspections that may need to be done. If you are not currently working with a realtor, I know several excellent realtor professionals who I would be happy to refer you to. Completing the Application After your offer to buy a particular home has been accepted we will need to meet to complete the application (1003). We will make sure the application has no errors, update it with the correct address of the property you are buying and make sure that you understand each disclosure in the application package before signing everything. Processing and Approving Your Application After we have completed the application, I will turn it into my processor, Michele Kahl, and include all of your employment, income and asset documentation. Michele will, among other things, verify your employment, verify your assets, verify your income and get your loan package organized for our underwriters. You will have direct communication with Michele while your loan is being processed. Our underwriters will then make sure that we have followed all the rules and determine if your loan will be approved!

Loan Programs Available

• Conventional - A conventional loan is the most common form of loan used for residential mortgages. There is generally less paperwork involved in processing a conventional loan than with government (FHA) loans. Private Mortgage Insurance (PMI) is only required when you are making less than a 20 percent down payment. Qualifying standards for a conventional loan are higher than those of a government loan.
  
   
• FHA - A FHA loan is a loan that is insured by the Federal Housing Administration. Therefore, FHA loans are also known as government loans. Private mortgage insurance (PMI) is required on all FHA loans regardless of how much money is put down. FHA loans are a great alternative to conventional financing.
  
   
• VA - A VA loan is also a government loan. However, VA loans are only offered to veterans of the military. 100 percent financing is available and there is no Private Mortgage Insurance (PMI).
  
   
• First Time Buyer - There are programs available that help qualified first time buyers obtain assistance with their down payment and closing costs. Some programs alllow for 100 percent financing as well as reduced PMI. I have helped many people buy a home with very little or even no money of their own. These loans can be Conventional, FHA or VA.
  
  
• Jumbo Loans - A Jumbo loan is a loan that exceeds the $417,000 limit to be considered conforming. Non conforming or Jumbo loans can be considered more risky therefore, the interest rate is usually slightly higher than on a conforming loan or a loan less than $417,000
  
   
• Construction/Permanent Loans - A Construction to Permanent loan is a loan that allows you to borrow all of the money needed to build a house. A Construction loan usually only lasts for six months while the house is being built. After the house is complete, the construction loan gets converted into a regular mortgage loan for the normal 180, 240 or 360 months. Construction loans work very differently than a loan to purchase an existing home. If you have questions, please contact me. Trying to explain it on this page would leave room for nothing else.
  
   
• Investor Loans - Carrollton Mortgage Services, Inc. offers loans that allow investors to purchase multiple properties. We also have an Investor Rehab loan that works much like a Construction Loan and allows the investor to borrow all of the money needed to acquire and fix up the property. Please contact me for more details on this program.
  
  

  Frequently Asked Questions Here are the answers to some of the most common questions from people who are about to buy a home: What is a point? - A point is equal to one percent of your loan amount. So if you are borrowing $100,000 a point would be $1000. Why do I have to pay points? - First of all let's get something out in the open. Sometimes a point is required depending on the loan program but some lenders use points for the sole purpose of making more money. They call it a loan origination fee and act as if it is a normal charge. Points do have a very practical and useful purpose when used properly. Paying points may allow you to get a reduced interest rate and, in turn, save you money on your interest charges. Depending on how long you will be in your house, it could make good sense to pay a point or two to get that reduced rate. One thing to keep in mind is that paying points means your closing costs will increase. So, if you are trying to get to the settlement table with as little cash as possible paying points may not be an option. If you would like to know if you should pay points use my should I pay points calculator. What is PMI (Private Mortgage Insurance)? - PMI or Private Mortgage Insurance is insurance that is taken out on your loan in the event you default and your house goes into foreclosure. If this unfortunate event should transpire the institution that lent you the money will be reimbursed for most of it's losses. PMI is required on Conventional loans when the buyer is making a down payment less than twenty percent of the sales price (The LTV is higher than 80). On FHA loans PMI is always required regardless of the size of the down payment however, it is less expensive on FHA loans than Conventional loans. For more information on the difference between FHA and Conventional loans visit the loan programs page. What is LTV (Loan to Value)? - Your loan to value ratio should be simply thought of as the percentage of the sales price that you are borrowing. For example: if you are buying a house for $100,000 and making a $10,000 down payment, your are borrowing 90 percent of the sales price (90,000/100,000 = .90). Your LTV is 90%. Having a low LTV may improve a persons chances of qualifying when other components (such as good credit) are missing. What is a Debt to Income (DTI) Ratio? - Your DTI is the percentage of your monthly income that will go toward your financial liabilities. Typically, we like to see that your liabilities will not exceed 43 percent of your income. However, in some instances, if a person has excellent credit and significant assets, a higher DTI may be acceptable.

  *All information presented on this page is provided by Shawn Jensen who is a loan officer working for Carrollton Bank.  For the most up-to-date information, please click on the following link: 2getfinanced.net/index.php