The first step in purchasing a home is getting pre-approved from a mortgage lender. Not only does this inform you of how much home you can buy, but it also lets sellers know you’re a serious buyer. Be sure to reach out to a mortgage lender to learn about pre-qualifying.
- Darien Pearce
- NMLS # 211134
- Office (757) 213-1206
- Cellular (757) 696-0505
- dpearce@southerntrust.com
- Kevin Warren
- NMLS #261072
- Office (757) 340-0013
- Celular (757) 237-4920
- kevin.warren@vu.com
Mortgage Information
Types of Loans
Your loan officer should be an expert on the different types of loans available in our market today. Here are some popular programs offered today:
Types of Loans
The fixed rate mortgage is the most popular mortgage program in use today. Fixed-rate loans offer the borrower a fixed interest rate for the life of the loan, typically 15 to 30 years. Borrowers have peach of mind knowing that their monthly P & I payment will not change over time.
Conventional fixed-rate mortgages have underwriting requirements established by Freddie Mac and Fannie Mae, and require certain down-payment and debt to equity ratios to qualify.
Adjustable Rate Loans
With an Adjustable Rate Mortgage (ARM), the interest rate changes periodically and payments to up or down accordingly. Rates are tied an index that reflects the cost of money at any given point in time. Generally speaking, lenders change a lower initial interest rate for the ARM than for the fixed rate mortgage. If you are expecting interest rates to decrease in the future, or if you are trying to maximize your purchase power today knowing that your income will rise in the future, then this loan may be right for you.
FHA and VA Loans
The Federal Housing Administration (FHA), offers loans for low-to-moderate home buyers. FHA loans have lower down payments and have relatively easier requirements than conventional fixed rate mortgages. FHA mortgages have no income restrictions and even those with lower credit scores may be considered.
In addition, the Department of Veterans Affairs (VA) offers a zero-down mortgage program. To take advantage of this program, borrowers need to be among those listed as veterans and service personnel in the U. S. military.
The Approval Process
- Prequalification is the first state of the mortgage process. Credit, income and asset information is used to help the lender make a determination as to which loan programs you are eligible for and how much you may be able to afford.
- Approval- this is a substantive analysis and determination of the borrower’s ability to purchase a home. It consist of 3 parts:
- Application is the completion of a l003 residential loan application. When it is completed, the loan officer will request items needed to support claims made on the application. (pay stubs, tax returns, W-2 forms, bank statements, and various other documents which may be requested)
- Processing – all of the items of application are compiled and turned over to a processor who will verify employment, review bank statements, credit history, calculate debt to income ratios and verify that the loan application meets the criteria for the specific type of loan for which you are applying.
- Underwriting – this is the last stage of approval where all of the information gathered in processing is reviewed. The underwriter verifies the applicant meets all of the criteria of the loan program and an approval letter is issued.
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