How much money will I have to come up with to buy a home?
The amount of money depends on a number of factors, including the cost of the house and the type of mortgage you get. In general, you need to come up with enough money to cover three costs: earnest money - the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house; the down payment, a percentage of the cost of the home that you must pay when you go to closing; and closing costs, the costs associated with processing the paperwork to buy a house.
How much house should I buy? How much can I afford?
The answer to this has a lot to do with your income and the amount of your debt load. As a rough rule of thumb, most home buyers purchase houses that cost between 1-1/2 and 2-1/2 times their annual income. For example, a home buyer earning $40,000 per year would buy a house costing between $60,000 and $100,000. Talk to one of our DFCU Mortgage Loan Officers so they can help you determine how much house you can afford.
What are the differences between mortgage prequalification, preapproval and final loan approval?
Pre-qualification is the process where DFCU Financial experts will look at a basic copy of your credit report and financial situation and use the information you supply to determine how much mortgage you can afford based on your income. No accounts or employment information is verified.
Pre-approval occurs when we verify all credit and employment information you have provided to us on your application. We will then give you a letter of pre-approval. This gives you a strong position with sellers, who know you’ve been pre-approved and are qualified to buy a new home.
Final loan approval occurs when the property has been appraised, all documentation is in the hands of the lender and all contingencies have been met.
Should I spend the money to have a home inspection?
The $200 to $500 that a professional home inspection costs could be the best money you ever spend on your house. Not only does the home inspection seek out any defects (and gives you some peace of mind), the home inspector will often give you tips on maintaining and repairing your house.
What is an appraisal? Will I need one?
An appraisal is an opinion of value of the home you want to purchase. Almost every lender will require some sort of appraisal before the loan is approved.
What do I need to take with me when I apply for a mortgage?
Good question! If you have everything with you when you visit your lender, you'll save a good deal of time. See the Pre-Approved Checklist to get a list of the items you’ll need.
My offer is rejected, now what do I do?
They often are! But don't let that stop you. Your broker will help you. You may have to offer more money, but you may ask the seller to cover some or all of your closing costs or to make repairs that wouldn't normally be expected. Often, negotiations on a price go back and forth several times before a deal is made. Just remember - don't get so caught up in negotiations that you lose sight of what you really want and can afford!
Is there a pre-payment penalty if I pay the credit union back before maturity?
DFCU Financial does not charge a penalty for early payment of the loan.
Can you save money on foreclosure properties?
Save money, usually. A huge amount of money, occasionally. In many cases, though, these will be homes that need work. Before you purchase a foreclosure, make sure you know what repairs you have to make and how much money you’ll need to make these additional repairs. Weigh out the pros and cons to see if a foreclosure is the right option for you. DFCU Financial will require the home meet city code prior to closing.
What documentation do I need to bring to the application?
In order to obtain accurate information for the quickest approval, you should generally bring the following items to the application with your loan officer:
- Current pay stub
- W2s for the last two years
- Asset and liability information
- Bank statements
- Copy of your legal description (mortgage, survey or appraisal)
- Copy of current homeowner's insurance information
How do I know what type of mortgage is best for me?
There is no easy answer to this question, the right mortgage for you will depend on many factors:
- How long do you plan to remain in this home?
- Are you looking to simply reduce your rate and/or term; or do you wish to borrow some of the equity in your home?
Are you comfortable with a mortgage payment (principal and interest) that may change from time to time?
- Are you in a profession that would normally see a substantial increase in income over the next few years?
How long does it take to get approved?
In most instances, if you bring the items stated above to the application, you will receive an approval before you leave your loan officer's desk (subject to an appraisal on the property). Closing will be set at your convenience upon receipt of the appraisal (if necessary), title work, homeowner's insurance information and survey (if necessary).
Do I have to include my taxes and insurance in my mortgage payment?
DFCU Financial is one of very few financial institutions that does not charge a fee if you choose not to escrow. Due to a member's desire to find the best homeowner's insurance available DFCU Financial has found that members change their insurance carrier often and has instituted a policy of not escrowing for homeowner's insurance so you can shop and change your insurance carrier at any time without any adverse affect on your escrow account. While we do not require an escrow for taxes in most cases, the monthly cost of your taxes and insurance must be considered in qualifying you for a monthly payment based on your income.
How much of my equity can I borrow on a refinance?
This would be dependent on the type of mortgage product you settle on.