FREQUENTLY ASKED QUESTIONS 

Question: Should I prequalify before I start looking for a house?

Answer: Yes. It is easier to buy a home if you have been prequalified, and you don't have to worry about whether you will get the loan or not when you find your dream home. To prequalify, make an appointment with your lender, and take all your paperwork with you, such as bank statements, W-2 forms, and paycheck stubs. The mortgage lender will review your credit report and examine your documents. At this time, you can also decide which financing option best suits your needs. Afterwards, most lenders will write you a prequalification letter which you can show to your real estate broker and the seller so they know that you are a serious buyer. The lender may charge a small fee for this service, but it is well worth it.  YES Financial does not charge a fee fr this service.

Question: How do I plan for a mortgage?

Answer: Be prepared with at least 2 years of financial information. If your lender asks for additional information, get it to him as soon as you can. Have all the paperwork ready in one place. Keep in mind that most loans take 2-4 weeks to process and complete; government loans (such as, FHA and VA) take 4-6 weeks. Always close a little earlier in the month rather than at the end of the month, which is a very busy time for attorneys. Make sure you work with a reputable mortgage company, and get references. And remember, do not go with the cheapest rate quote; you'll end up paying in time or poor service.

Question: I am self-employed. What documentation do I need to get a mortgage?

Answer: You will need to show the following: Two years personal income tax returns, two years business income tax returns (if you are incorporated), a current balance sheet, a current profit and loss statement and a personal credit report. Some lenders may ask for a list of documents. Just be patient and show everything needed.

Question: I've just changed my job. Will this affect my loan approval?

Answer: There is no hard and fast rule to this, but do remember that sometimes a change in employment may not work to your benefit. Make sure that you show your job change as an improvement in your financial life. This is what the lender wants to see. In most cases, it is best to wait 2-3 months after getting a new job before you begin applying for a mortgage.

Question: Can I get a mortgage loan without credit?

Answer: It is possible; but you do have to prove your credit-worthiness. Some "proofs" of good credit are: The fact you currently rent, credit letters from utility companies, short-term notes, rental agencies (such as furniture or appliance), and even car references. Any company or person who gave you credit in the past can be used.
Can I qualify for a mortgage even though I had problems in the past?
Yes, you can qualify - because bad credit in the past meant that you fixed whatever it was that became a financial problem for you. This shows strength and commitment to a lender. Remember, bad credit in the past does not mean the same thing as a bad credit risk.

Question: My spouse has a poor credit history will it affect me?

 Answer: Yes, it will. So if you can manage it, try to arrange a mortgage under your own name. Make sure that your spouse is happy with this arrangement, as he or she will have to sign documents at the time of closing. Also, do consult with your attorney or title company to make sure you have complied with all state laws, since some mortgage loans require various pieces of information on your spouse.

Question: I had a bankruptcy a couple of years ago.  Will personal bankruptcy affect my ability to buy a home?

 Answer: Bankruptcy itself will not keep you from being approved for a mortgage. You can certainly buy a home sooner than you might expect after bankruptcy, because the lender may look at your credit history before the bankruptcy, the cause of bankruptcy, and how you have handled your financial life after bankruptcy.  Each situation must evaluated on an individual basis.  The rules are constantly evolving.

Question: What do I do if my mortgage loan application is rejected?

 Answer: It is very rare that a mortgage loan application is rejected outright. Rather, you are often told that a loan is "not possible at this time." The last three words of this phrase are crucial. You can actually work at getting approved. Meet with the lender who rejected you and ask for the reason of the rejection. Then work at removing this reason. Perhaps in a month's time, you can apply again and be approved. Simply ask the lender bluntly: "Will I be approved if I do this and that?" Chances are, he'll say yes.

Question: What is the "truth-in-lending statement?"

Answer: If you're hunting for a mortgage, no doubt you've heard this phrase come up frequently. This statement gives you the entire list of costs that you will have to pay (loan origination fee, discount fees, and prepaid interest), along with the actual figures of the carrying the loan. These figures are entered into a computer to figure out the annual percentage rate (APR). The end result is a statement that shows you the true cost amortized (see Glossary) over the term of the mortgage.

Question: Should I pay off my bills before buying a home?

Answer: No, do not deplete your cash reserves, because you need to show these reserves to the lender so he knows that you can save and manage your money. A depleted bank account does not inspire confidence in a lender. Proceed paying your bills in a normal way, and get a prequalification letter. That way you won't have to worry about paying off the bills.

Question: Is a large down-payment important?

Answer: This really is a matter of personal choice, and your own "comfort zone". A large down-payment does not automatically qualify you for a mortgage, since approval often depends on what the lender thinks you can comfortably pay back. Speak with your lender and ask him for estimates with both a small or large down-payment.

Question: Am I eligible for VA financing?

Answer: First of all, send for your Certificate of Eligibility from the Department of Veterans Affairs (VA). When you were discharged, you were given a document called a DD-214. Send a copy of this form along with your request for eligibility. You should receive an answer in 1-2 weeks. You need to have a minimum of 90-days of active duty.

Question: I am a first-time home buyer. What is the best loan for me?

Answer: Most first-time home buyers make a home purchase with a Federal Housing Administration (FHA) mortgage, which is especially designed for the first-time buyer, and comes with 3% down-payment. Most lenders and real estate brokers are familiar with this mortgage, and you should simply ask. But, again, get yourself prequalified, so you'll know how much of a home you can purchase.

Question: I am a recent college graduate. Can I purchase a home?

Answer: Yes. Many lenders are interested in lending to recent graduates, if they have good credit. Often, your college courses are seen as your "experience". However, the Veteran loan wants you to actually be on you new job for 6 months before you can qualify to buy a home.