Mortgage Loan FAQ's - Frequently Asked Mortgage Questions

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Mortgage Loan FAQ's

Frequently Asked MOrtgage Questions

Simply put, a mortgage is a loan secured by real property and paid in installments over a set period of time. The mortgage secures your promise that the money borrowed for your home will be repaid

  • Mortgage Approval
  • Mortgage Payments
  • Mortgage Programs
  • Closing Costs & Fees
  • Mortgage Rates

Conventional or conforming loans refer to any mortgage that is not insured by the federal government. These loans have stricter qualifying guidelines compared to government insured loans. High credit scores are recommended for this program since it will directly impact your monthly mortgage payment. 

The Federal Housing Administration (FHA) was created out of the National Housing Act of 1934, and was established to increase home ownership and provide affordable housing opportunities for all Americans coming out of the Great Depression. While most people believe that the FHA lends money directly to borrowers, it actually just insures the mortgage financed by FHA-approved lenders.

Frequently Asked VA Purchase Questions:

  • Copy of driver’s license
  • Copy of social security card
  • Two most recent pay stubs
  • Two years of W2′s or tax returns
  • Copy of your DD Form 214 for discharged veterans
  • Statement of service for active military personnel
  • Copy of your Certificate of Eligibility (COE)
  • Contact information for insurance agent

The $36,000 does not represent the maximum loan amount you can obtain through the VA Home Loan Program. The figure merely provides evidence to your lender that you have full VA entitlement. With this entitlement and underwriter approval, you can obtain a loan in an amount up to $417,000 or more; some high cost counties have even higher limits.

The DD Form 214 is proof of your military service and issued upon a military service member’s retirement, separation or discharge from active-duty military.

This is the document issued by the federal government certifying a veteran’s eligibility for a VA mortgage.

Ask you lender to obtain your COE on your behalf using the ACE (automated certificate of eligibility) system.

  • Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use.

The VA Home Loan program guarantees loans for real property that is to be used by the veteran as a primary residence. The program does not cover vacation homes, vacant land, multiplexes in excess of four units, motor homes, small business loans, or commercial buildings.

Yes, a new VA loan with require a new appraisal that will be ordered directly through the VA so an independent appraiser can complete the appraisal.

In order for entitlement to be restored, the prior VA loan must be paid in full and the property disposed of. If you no longer own the property, please state as such on your application form 26-1880 and resubmit. Do note that you can obtain a restoration of entitlement without disposing of the property when the loan is paid in full on a one time basis.

Frequently Asked VA Refinance Questions

  • Copy of driver’s license
  • Copy of social security card
  • Copy of your mortgage note
  • Copy of your DD Form 214 for discharged veterans
  • Statement of service for active military personnel
  • Copy of your Certificate of Eligibility (COE)
  • Contact information for insurance agent

Contact HomeTown Lenders for More Information.

In some cases it may be possible to skip (2) mortgage payments as part of your refinance. It will depend on when in the month you close your loan. With that said, it is recommended that you speak with your VA Mortgage Loan Officer to learn more according to your situation.

Yes, you can. A VA Streamline Refinance Loan will allow you to refinance without an appraisal.

No, the VA Home Loan Lender will only verify if you are still employed but will not verify actual income. That is why debt to income is not a factor in qualifying for a VA refinance.

Typically this is not required since you used the COE to qualify for your original VA Home Loan Mortgage.

If you choose to roll in your closing costs instead of paying for them at closing your loan amount will increase by this amount including the VA funding fee. But by skipping up to (2) mortgage payments in some cases, receiving escrow money back after closing, and the savings per month your breakeven on the streamline is realized very quickly.

Yes you are allowed to subordinate a 2nd mortgage and just payoff your first mortgage as long as the lien holder will allow it.

No, you can cashout up to the full 90% of the appraised value or you can cashout less if you choose without penalty.

Frequently Asked USDA Purchase Questions

  1. Copy of driver’s license
  2. Copy of social security card
  3. Two most recent paystubs
  4. Two years W2’s or Tax Returns
  5. Fully executed sales contract
  6. Contact information for insurance agent

You can finance some of the closings costs into your new USDA loan. The program also allows for gift funds from family members or friends.

Currently the USDA only offers a 30 year fixed mortgage.

The USAD Purchase funding fee is 2% and can be financed into the new loan if you choose.

Yes, As long as you negotiate the sales contract to include a seller contribution the USDA Purchase Program allows for certain costs to be paid by the seller at closing.

Yes, an appraisal will be required for your new USDA home purchase completed by an independent appraiser.

Currently the USDA Purchase Program is only allowed for primary residential property.

Yes, it’s not a requirement to be a first time buyer.

Ask your lender to verify all the qualifying factors for you. By simply applying for a USDA home purchase the lender can determine if you qualify or not.

FREQUENTLY ASKED USDA STREAMLINE REFINANCE QUESTIONS

  1. Copy of driver’s license
  2. Copy of social security card
  3. Copy of your mortgage note
  4. Copy of mortgage statement
  5. Contact information for insurance agent

In some cases it may be possible to skip (2) mortgage payments as part of your USDA streamline. It will depend on when in the month you close your loan.

Yes, you can. A USDA streamline will allow you to refinance without an appraisal.

No the lender will only allow a person to be removed if they are deceased.

If you choose to roll in your closing costs instead of paying for them a closing your loan amount will increase by this amount including the USDA funding fee. But by skipping up to (2) mortgage payments in some cases, receiving escrow money back after closing, and the savings per month your breakeven on the streamline is realized very quickly.

Yes. A lender will review your mortgage payment history. In order to qualify you cannot have any late payments of 30 days in the last 12 months.

No. You can only reduce the interest rate on your current mortgage as part of the USDA Streamline. The program requires a net tangible benefit which means you have to lower your rate by at least 1% to qualify.

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FHA, VA, USDA Loans SPECIAL RESTRICTIONS

Special restrictions and guidelines for bad or poor credit.

All loans FHA, VA, USDA:

  1. FHA –  Minimum loan amount 200K
  2. Alternant trade lines ( utility bill, child care, insurance etc) 12 month history no late payments
  3. BK 7 Discharge over 2 years.  BK CH 13 3 years from file date
  4. Foreclosures over 3 years  
  5. Verifiable Rental history 12 months no lates (Cancel checks, money orders or by management company)
  6. 3 Months of reserves ( 3 months payments in reserves . example in bank, 401k etc)
  7. No excessive late payments in the past 12 months
  8. No Mortgage lates

On FHA with Credit scores less than 580

  • 90% LTV(Loan to Value) with 10% Down payment .

On VA with Credit scores less than 580  

  • 3.  100% LTV(Loan to Value) NO Down Payment

 On USDA with Credit scores  of 580-619

  • 100% LTV(Loan to Value) NO Down Payment

Guidelines