We understand that questions come up throughout the home buying process. Below are answers to some frequently asked questions we receive. If you have other questions, please reach out to us. Our team is happy to help!
How will I know when it’s time to close?
Closing is the final step of a mortgage loan and involves signing the necessary documents.
Closing timeframes can vary depending on the loan type and your circumstances, but it typically takes about 30 to 45 days. Purchase loans sometime close faster than a refinance. Factors that can delay closing include appraisal issues, home inspection issues, claims to a title, and pest damage. Your lender will provide a Closing Disclosure at least three days before your closing date. This is a five-page document containing final details about your home loan.
Why do you need to pull my credit?
Your credit score affects your ability to get a mortgage. Lenders use credit to determine whether you qualify for a loan, and your score also influences your mortgage rate. Additionally, your credit report provides a snapshot of your overall credit history, and lenders use information on your credit file to help calculate your debt-to-income ratio.
If I already received a credit score from an online website, can you use that?
Unfortunately, no. Mortgage lenders use a specific credit score when approving loans, and this score is sometimes different from the one a borrower receives from online websites. Some mortgage lenders use FICO scores to assess creditworthiness. However, some websites only provide VantageScore credit scores, which is a different credit-scoring model. There are variations between these two models, so one score tends to be higher or lower than the other.
Why do you need a profit and loss for my business?
In addition to submitting complete business tax returns for the previous two years, you also need to provide a year-to-date Profit and Loss statement for your business. This statement has information about your revenue and expenses for the current year, thus reaffirming the stability of your business.
Can I pay extra towards the principal?
Yes, you can pay extra toward your principal. An extra principal payment can reduce how much you pay in interest over the life of the loan, lower the mortgage balance faster, and help build equity quicker. Many lenders give the option to make an extra payment toward principal online. You can also send this extra payment via check, but make sure you send a separate check and put “principal only” in the memo section.
Can my spouse be on the title but not on the loan?
Yes, you can put your spouse on the title but not on the mortgage loan. Adding both names to the title means you’ll share ownership of the property. Similarly, if you add both names to the loan, you’re both responsible for making the home loan payments.
Can I make bi-weekly payments towards my mortgage?
Bi-weekly payments involve paying half of your mortgage every two weeks. This results in 26 half payments, which equates to 13 full payments (or one extra mortgage payment a year). This approach can pay down your mortgage balance faster.
However, speak with your lender before making bi-weekly payments. Some mortgage lenders don’t accept partial payments. So despite paying half your mortgage every two weeks, they’ll only apply your payment once a month.
Keep in mind, too, if your lender offers a bi-weekly payment option, they typically don’t give the option to switch back and forth. If you choose this payment schedule, you might be obligated to make a payment every two weeks.
Does insurance automatically come with my mortgage loan?
No, insurance isn’t automatic with a mortgage loan. When you apply for a home loan, you’ll need to purchase homeowners insurance separately and provide proof of coverage prior to closing. You can either pay your annual insurance premium upfront, or monthly with your mortgage payment.
Why do I have to pay all my escrows and taxes up front?
To simplify the process of paying property taxes and homeowners insurance, your lender can pay these expenses on your behalf with funds held in your escrow account. Your lender collects the funds in advance to ensure they’re available when due. You’ll pay 1/12 of both expenses each month, included with your mortgage payment.
Can I receive a copy of my credit report?
A mortgage lender cannot give you a copy of your credit report. They can, however, give information about the credit report used to determine your mortgage terms. You can then request a copy of this report from the respective credit reporting bureau. Every consumer is entitled to one free credit report every 12 months from each of the major credit reporting bureaus (Equifax, Experian, TransUnion).
I don’t receive paper bank statements. Is it okay if I export a bank statement online?
When applying for a mortgage loan, you’re typically required to submit bank statements for the previous 30 to 60 days. This is how your lender confirms you have enough in reserves for your down payment and closing costs. If you don’t receive paper bank statements, you can retrieve copies electronically. Your lender will need the official bank statement, either printed out or downloaded (a phone screenshot is not allowed). Log into your online bank account and print or download the full bank statements (including blank pages at the end) for the selected months.
If you have other questions, our team is happy to answer them!