Category: Mortgage Tips

How to get the Best Mortgage Loan

getting the best mortgageWhen it comes to home loans, there are hundreds of loan programs and options that you may want to consider. Many first time home buyers do not know where to start when they want to buy a home. It is overwhelming to most people who do not have experience buying a home or getting a mortgage. The good news is, a loan officer can be your tour guide to help you get the best mortgage loan.

A loan officer’s job is to review your financial situation and provide home loan options. They will help to narrow down mortgage programs that do not fit your goals and also ones that you may not be eligible for.  Here are the basic categories that you should review with your loan officer to get the best mortgage for your situation.

What Mortgage Program is the Best?

There are several loan programs that you can apply for including Conventional Loans, FHA Loans, VA Loans, USDA Rural Development Loans, Jumbo loans, and Portfolio Loans. Each loan program has its pros and cons.

Related: Conventional Loan vs FHA Loan vs VA Loan vs USDA Home Loans

You may not be eligible for some programs. VA Loans, for example, require that you have served in the military. If you haven’t served, then this would not be a loan option for you. Conventional loans typically require higher credit scores and are more rate sensitive to lower credit scores. USDA RD Loans, have income limits and restricted areas where you can purchase.

As you can see it is nearly impossible to quickly learn all the ins and outs of each program when you are buying a home. A loan officer can help offer options on what loan program may be the best fit for your situation.

What Mortgage Term is the Best?

loan term

Once you decide on what mortgage program will be the best fit for your situation, you will need to decide on a mortgage term. Loan terms range anywhere from 10 years to 40 years for some programs.  For most loan programs we could even offer a 17 year loan or a 27 year mortgage based on your goals.  The most popular mortgage option is a 30 year mortgage.

Many financial advisers recommend a 15 year fixed rate mortgage. This allows you to get a great rate and pay off your mortgage quickly. Typically loan rates are lower for shorter term loans. The downside is that the monthly payment will be higher the shorter your loan term is.

A traditional 30 year mortgage term has low payments but most of the payment goes directly to interest for the first several years. Many people are shocked at how little their loan balance goes down after a year or two of mortgage payments.

Be sure to ask your loan officer what mortgage term is best for your goals.

Include Escrows or Waive Escrows?

escrows or waived escrows

When you get a mortgage you may have the option to include escrows into your mortgage payment. An escrow account is a savings account held for you by your mortgage servicer that is specifically for paying the property taxes and home owners insurance on your home.

Typically, government insured mortgages including FHA, VA and USDA require you to have an escrow account included with your mortgage.

Conventional loans may allow you to waive escrows. This means that you would be responsible to pay your own taxes and home owners insurance bills when they become due.

Many people like escrow accounts for the ease of payment. It is one less thing homeowners need to worry about when buying a home. On the other hand, some people would rather waive escrows and keep their own savings where they can earn interest and be more in control of their funds.

Fixed Rate or Adjustable Rate?

A major choice to consider when getting a mortgage is if you would rather have a fixed rate or an adjustable rate. Most homeowners choose to have a fixed rate that does not change for the life of your loan. This gives predictable payments and certainty that your payment will not adjust.

Other homeowners wish to choose an adjustable rate mortgage, commonly refereed to as an ARM Loan. Typically ARMs start off with a lower rate which is locked for a set number of years (3, 5, 7, or 10 years). Once the initial fixed period is up, the rates are subject to adjustments to the LIBOR or other indexes. If the rates go up, your mortgage payment goes up. If the rates go down, your mortgage payment goes down.

Choosing a fixed rate is thought to be a more safe and secure loan option. ARMs should be carefully considered for financially savvy homeowners. Be sure to ask your loan officer about ARM Loans if you are interested otherwise a fixed rate mortgage is most likely the best choice.

What Interest Rate Should I Pick?

picking your interest rate

Lastly, when getting a mortgage, you have to pick a mortgage rate. Many people do not realized that they have options for different mortgage rates. Once you select all of your other mortgage details, your loan officer will present your mortgage rate options.

When it comes to mortgage rates, you also need to consider the fees associated with getting the loan. Typically, the lower the rate, the higher the fee. Conversely, the higher the rate, the lower the fees.

Should I Pay Discount Points?

pay discount points

If you want the lowest rate possible, you can certainly request a rock bottom interest rate but be prepared to pay discount points for a rate lower than the market rates.

If you want to make sure you are having the lowest costs to get a mortgage, then you may want to consider a slightly higher interest rate. Picking a higher rate may allow you to have no lender fee or even receive a lender credit that will apply towards other closing costs and pre-paid items like taxes and insurances.

Deciding what rate and fee combination can seem difficult, but your loan officer can help you do a break even analysis to compare the time to break even on your investment of paying points for lower rates.

Lets look at an example: If you were to pay 2 points on a $100,000 loan for a lower rate, this would cost you $2,000 in extra closing costs. By getting the lower rate, lets say you save $50 per month.

To find your break even point, you will divide your extra costs of $2,000 by your savings of $50 which would give you 40 months, or 3.33 years to break even on your up front investment.

If you plan on staying in the house for 5 years, then you will save more than your costs therefore paying points may make sense. If you plan on selling your home in 2 years, then you would not benefit from the up front investment and you would be better off taking the higher rate with lower fees.

There are many factors to consider to get the best mortgage for your situation. It is not as easy as simply picking the lowest rate. Be sure to work with a trusted loan officer that can help review all the mortgage programs to get you the best mortgage for your situation.

For more information on home loan programs or to review the best loan for you, request information below or call a loan officer at 800-555-2098.

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Doctor Home Loans In Michigan

Michigan Doctors Loans

Are you currently in, or recently completed a medical residency or fellowship? Our Doctors’ Loans exclude student loans from your debt-to-income ratio! Call us today at 800-555-2098 and let us discuss your options!

Benefits of Doctors Loans in Michigan

Doctors can now easily qualify for a mortgage without including student loans in the debt to income ratios. Let’s face it, becoming a doctor costs a lot of money. Most doctoral graduates have hundreds of thousands in student loans which may prevent them from becoming home buyers. With our Michigan Doctor Loan Program, recent graduates can stop renting and buy a home.

  • Up to 97% Financing
  • No Monthly PMI
  • Free Appraisals for all loans that close by December 31st, 2018 (credit given up to $525)
  • Student Loan Deferment up continue at lease 12+ months from closing date

For more information on our Physician’s Mortgage Loan, call us at 800-555-2098 or request information below:

Request Information Now!

Free Conventional Appraisals

We have some exciting news! Conventional Appraisals are now FREE for new loans submitted to us from 08/26/2018 that close by 12/31/2018!

Free Conventional Purchase Loan Appraisals

If you are buying a home, then take advantage of the our Free Appraisal program to keep up to an extra $525 in your pocket when we take care of the appraisal expense.  Saving money for your down payment and closing costs can be a hurdle for some home buyers. This is just another way that Riverbank helps to make buying a home affordable for all.

Free Conventional Refinance Loan Appraisals

Many of our clients are finding now as the perfect time to refinance their mortgage. Refinancing with a conventional loan, you will be able to take advantage of our Free conventional appraisal program. Refinance benefits include:

  • Drop PMI
  • Lower your Interest Rate
  • Refinance to a 15 Year Mortgage
  • Consolidate High Interest Debt

To get started with a refinance mortgage with a free appraisal call us at 800-555-2098

Free Appraisal Eligibility & Requirements

  • Conventional Loans Only
  • Eligible for New Applications Submitted on or after 08/28/2018.
  • Loan Must Close on or before December 31st, 2018.
  • Eligible Property Types: Single Family Residences, 2 Units, 3-4 Units, Site Condos, Condos, PUDs (Manufactured Homes Not Eligible)
  • 640+ Credit Scores
  • Appraisal Transfers Not Eligible
  • Program Not Available on Portfolio Loan Products

Not all will qualify. For more information, simply complete the form below or call a loan officer at 800-555-2098.

Request Information Now!

GENERAL DISCLAIMER: Program may not be available for all clients applying for conventional financing. Free Appraisal Promotion will be applied as a credit to the borrower’s closing costs on the final closing disclosure as a reimbursement of the appraisal fee limited to a maximum of $525. Appraisal rush fees will not be reimbursed. Loans that do not meet the requirements for this promotional program listed above will not be given this credit and must pay the cost of their own appraisal expenses as required by standard lender requirements. Loans that do not close, for any reason, including withdrawal or denial, will not be given the appraisal credit advertised. All loans must close by the December 31st, 2018 deadline to take advantage of this promotion. Loans that do not close by this date will not be given the promotional credit.

Breakdown Your Credit Score

Credit Score Breakdown

When buying a home, your credit score is an important factor in your home loan approval. It is important to know what is on your credit and what credit score you have when applying for a mortgage.

While, the exact scoring models are proprietary and not released by the credit bureaus to the public, credit experts have determined the weight of each factor that determines your credit score.

Related: Buying a home with Bad Credit may be possible with FHA Home Loans. We accept applications down to a 580 credit score!

What Makes up your Credit Score

Payment History

Paying your bills on time is the most important factor for your credit score. Weighted at 35% of the total score, paying bills late can devastate your credit rating.

Amounts Owed

Credit to Debt ratios are the second most important factor which is weighted at 30% of the overall score. The good news about this is that it is a quick and easy fix to improve your credit scores. For example, if you have a credit card with a $500.00 limit and you owe $490.00, it is essentially “Maxed Out” which reflects poorly on your credit rating. Paying down this debt to under 30% of the limit ( $150 or less in this example) would boost your scores quickly!

Length of Credit History

The length of time you have had accounts open is the next rating factor. At 15% of the credit rating, the credit bureaus know that maintaining long credit relationship with banks and lenders proves that you are a good credit risk and positively affects your score. For this reason, it is important to keep old credit lines open even if you are not utilizing them.

New Credit Inquiries

Having your credit pulled is an necessary evil when applying for a mortgage. What is not necessary is having it pulled by 10 different institutions for different credit types. If you apply for credit cards, auto loans, and mortgages over a short period of time, your credit rating may drop.

Types of Credit

The final major category that determines your credit score is the types of credit that you hold. Long term investments such as a mortgage can positively impact your credit. If you only have revolving credit such as credit cards, your credit depth is shallow and may not give you the highest credit scores possible.

Click here to Download Our Credit Tip Flyer!

How to Improve your Credit Score

There are simple techniques to improving your credit scores. It is important to monitor your credit from time to time and make sure all of the information is accurate. If there are errors, you can dispute the information directly with the bureaus to have it corrected. It is not suggested that you do this before or during the mortgage process as it may cause delays.

Additionally, paying down revolving account balances can quickly boost your credit scores. While there are no magical fixes to your credit, there are several best practices that you should do to increase your credit score.

Tips to Improve your Credit Rating

  • Correct inaccuracies on your credit
  • Pay all your bills on time.
  • Do not apply for too many lines of credit.
  • Do not max out credit cards.
  • Keep older credit lines open.

Contact a mortgage expert today by calling us at 1-800-555-2098 or simply apply online below. We are happy to help!

Request Information Now!

Hundreds of Mortgage Options

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As local mortgage experts, we are here to help all types of families. We do mortgages. Only mortgages. We do not offer auto financing or credit cards. This allows us to be experts at what we do and have many types of mortgage options for all financial situations.

If you have a unique financial situation, there is no better spot to get a loan than a local mortgage broker. We can shop rates and mortgage programs at multiple banks and underwriting companies at once.  This insures that you will receive the best mortgage package available for your situation.

Low Rates. Low Costs. Expert Advice

To get expert advice, call us at 1-800-555-2098 or simply apply online below. We are happy to help!

Request Information Now!

How to Get Your Offer Accepted

tips to get your offer accepted

If you have been searching for a house in the last couple of years, you will be familiar with what the real estate industry calls a “lack of inventory”.  This means that there are more people looking to buy houses than there are people interested in selling homes and there is more competition on each home.  This imbalance causes a housing shortage which can be a frustrating situation for families looking to buy a home and makes getting your offer accepted a tough task.

The housing shortage has created a spike in home prices. According to the National Association of Realtors, “The median existing-home price for all housing types in March was $250,400, up 5.8 percent from March 2017 ($236,600).” This increase in prices has been affecting home affordability nationwide.

Infographic from http://www.simplifyingthemarket.com/en/2018/04/27/existing-home-sales-grow-despite-low-inventory-infographic/

Locally in West Michigan, it is very difficult to find affordable homes under the $200,000 range. For first time homebuyers and those looking to downsize they are seeing multiple offer situations and bids far over the home’s listing price. Some desperate buyers are going as far as to waive their right to inspections and guaranteeing to pay above appraisal amounts. For those that do not have access to large amounts of cash, they may have a hard time competing with their bids.

How to Get your Offer Accepted to Buy a Home in a Sellers Market in Michigan

Getting your offer noticed in a stack of multiple offers is not an easy feat. Many sellers are reviewing several offers for their home and simply disregarding lower priced offers and also offers with contingencies and what they consider riskier financing. Here are 8 tips on how to make your offer stand out and get your offer accepted to buy a home in Michigan.

1) Get a Strong Pre-Approval to Strengthen your Offer

To get your offer accepted there are several things a buyer can do. First of all you should speak with a local, knowledgeable, licensed loan officer that can Pre-Approval you for the strongest type of mortgage that you can qualify for. Typically sellers see conventional as the best type of financing because it has less requirements for the home’s condition than other loan types and can close quickly. Receiving a strong pre-approval from a local lender will put you a leg up on the competition with generic automated letters from the big national companies.

2) Consider Alternatives to Seller Paid Closing Costs

If a buyer does not have enough funds to cover their own closing costs then it is a common practice to ask the sellers to pay their closing costs as part of their offer. The sellers will view this as additional costs and reduce their proceeds from the sale. Alternatives to Seller Paid closing costs should be considered including:

  • Pay your own closing costs
  • Ask about low down payment or zero down loans
  • Get a gift from a family member for your costs
  • Ask the lender for lender credit option to reduce your costs
  • Look for ways to reduce your closing cost by shopping insurance and title company fees

3) Give the Sellers Occupancy After the Closing

Many sellers are hesitant to sell because they are fearful that they will not be able to find a new home in time to transition their belongings to a new house. It may help to calm their fears by giving them extra time to move after you close on the purchase of their house. It is common these day to offer 30 days after close for the seller to vacate the property. This may be an important reason why they choose your offer over others.

4) Personalize your Offer By Writing a Letter

As cheesy as it sounds to write a heart felt letter, my experience shows that it works! Many times there are a lot of emotions and memories that come with a house. It may be the place where they raised their children.

They may have put sweat and tears into building the house. It might have been a house that was in the family for generations.  All these factors compel the sellers to want to make sure it goes to a deserving family that will appreciate it as much as they do. Simply tell them why your happy little family would be deserving and that you will take great care of the place.

5) Offer to Pay Seller’s Closing Costs

If you have access to cash and feel strongly about getting your offer accepted, you could offer to pay for the sellers closing costs. In Michigan, Property Transfer Tax and Owner Title Insurance are typically paid by the seller unless otherwise agreed to by the buyer. If a buyer agrees to pay the sellers closing fees, the sellers would net more from the sale and walk away with more money.

6) Remove Contingencies from your Offer

Many times families will have contingencies before they can buy. For example, if you plan on selling your home before buying your next home, then you may write your offer contingent upon the sale of your home. This is a risky unknown for sellers. Your house may take a long time to sell which would not work with the seller’s timeline.

If you are able to qualify for a new home while still owning your other home, then it may be advantageous to submit your offer without a contingency for the sale of your home. Other contingencies you could remove would include appraising at sales price, or even waiving property inspections. These should be carefully considered as a last resort to get your offer accepted.

7) Adding an Escalation Clause as Part of your Offer

Speak with your real estate agent about how an escalation clause may work for your situation. In general, a clause would be added stating that if someone else offers higher than your offer, you will automatically increase your bid higher than theirs. You would want to make sure you set a cap on the maximum amount you are willing to offer.

8) Ask your Loan Officer to Call the Listing Agent to Confirm your Pre-Approval

Having a loan officer that will go above and beyond to fight for you is an important part of buying a home. Studies show that having a local loan officer versus a big bank or online lender increases the strength of your pre-approval. Part of a seller’s concern when reviewing offers on their home is that the buyer’s financing may fall through. If your loan officer has already received your documentation and confirmed that you are a well qualified buyer, then ask them to call the listing agent to confirm the details and give the sellers confidence in accepting your offer!

To review home loan options with a Licensed Loan officer simply complete the form below to request a free consultation or call us now at 1-800-555-2098.

Request Information Now!

Conventional Loan vs FHA Loan vs VA Loan vs USDA Home Loans

compare home loan options

When shopping for a mortgage it is a good idea to compare loan options. Many lenders offer a variety of home loans that might fit your needs. Each mortgage options has it benefits and weaknesses that should be considered for your individual loan needs.

Lending guidelines are not the same for all mortgage lenders.  All banks and mortgage companies operate off the same set of guidelines for the specific mortgage programs however each may have its own overlays. Lending overlays are additional conditions or interpretations of the set guidelines.  For example, FHA loans with a 3.5% down payment allows as low as a 580 credit score but most banks and lenders add an overlay that requires a 640+ credit score.

The best way to review mortgage options is to speak with a licensed loan officer that will be an expert on the loan options. They will help to review the pros and cons and assist with comparing home loans that may be the best for you.

The chart below compares Conventional Loans vs FHA loans vs VA loans vs USDA Rural Development Loans.  These are the most popular loan options that most borrowers will review. As you can see below, if you have had a recent bankruptcy or foreclosure then Conventional would not be an option.

If none of these options seem to fit your life situation then a portfolio loan may be your last resort. Portfolio mortgages are home loans that do not fit the agency guidelines. They take a more common sense approach and make exceptions on loan requirements if the borrower is has financial strength in other areas. The trade off is that they typically require larger down payments and have higher rates than other loan programs.

Home Loan Comparison Chart

April 11th, 2018:Conventional LoansFHA LoansVA LoansUSDA Loans
Minimum Required Down Payment3% of Purchase Price3.50% of Purchase Price
(Only 1.5% required for our FHA Down Payment Assistance Program)
Zero DownZero Down
Annual Mortgage Insurance Rates (Paid Monthly)Private Mortgage Insurance (PMI)  ranges from .10 to 1.5% of the loan amount annually based on Residency Status, Credit and Loan to Value.Mortgage Insurance Premiums (MIP) ranges from .80% to .85 % for loan terms over 15 years and .45% to .95% for loan terms of 15 years or less.NONE.5% of loan amount
Additional CostsIncrease to rate or loan fees based on credit score1.75% Upfront Mortgage Insurance Premium added to your loan balance or paid in full at closing.0% fee if Disabled Veteran or surviving spouse
2.15% for First VA Loan Standard Military
2.40% for First VA Loan National Guard or Reserves
3.3% Subsequent Loans
2.00% Funding Fee added to your loan balance.
Minimum Credit Score620+ credit score530+ with 90% loan to value and 580+ for 96.5% loan to value550+ credit score580+ (Additional requirements including proof of Rental History under 620 score)
Maximum Loan Amount$453,100 Loan Limit
(Read More)
$294,515 Loan Limits for Single Family Homes
$377,075 for Two Units
$455,800 for Three Units
$566,425 for Four Units
$453,100 Loan Limit$453,100 Loan Limit
Allowable Seller Contributions

Principal Residence & Second Homes
LTV Greater than 90% = 3%
LTV 75.01-90% = 6%
LTV 75% or less = 9%

Investment Properties
ALL LTV ratios = 2%

6% Seller Contributions payable towards Buyer Closing Costs and Pre-Paid items.4% Seller Contributions payable towards Buyer Closing Costs and Pre-Paid items.USDA sets no maximum however most lenders set 6% Seller Contributions payable towards Buyer Closing Costs and Pre-Paid items.
Required Waiting Period after BankruptcyChapter 7 requires 4 Years from discharge date
Chapter 13 requires 2 Years from discharge date
Chapter 7 requires 2 Years from discharge date
Chapter 13 requires 1 Years from discharge date
Chapter 7 requires 2 Years from discharge date
Chapter 13 requires 1 Years from discharge date
Chapter 7 requires 2 Years from discharge date
Chapter 13 requires 1 Years from discharge date
Required Waiting Period after Foreclosure

7 Years from Completion

3 Years from Completion2 Years from Completion3 Years from Completion

To review home loan options with a Licensed Loan officer simply complete the form below to request a free consultation or call us now at 1-800-555-2098.

Request Information Now!

Budgeting to Become a Homebuyer

budgeting for home ownership

You have found yourself in debt, but you have also found yourself wanting to buy a home.  You want to pay off the money that you owe all while saving up money for your dream home. It is possible? First off, you should know that you are not alone. Many people find themselves in situations such as this, but there is a way to come out of this and end up in a home that you love.

Budgeting is the Place to Start to Prepare for a Home Purchase

Let’s be real budgeting can be overwhelming, but hear me out! Instead of thinking of budgeting as a restriction think of it as a guide. A guide that will lead you down to a path of financial stability. And besides what is more terrifying — budgeting or being in debt?

Step 1) Budgeting: Track your expenses

Start by writing down your expenses. How much do you spend on food? Gas? Going out? Track what you are spending for one month and when you are done determine if that amount of money is over or under what you can afford.

Step 2) Budgeting: Reduce expenses

Figure out what things you can cut back on. Do you really need to do things like going out to eat five times a month? Probably not.

Look for alternatives to the things you normally do. Instead of going out to eat for lunch at work, pack your lunch. Instead of going out to the movies, rent one and have a comfortable night in with your friends, family, or significant other. If you want to go out try finding coupons for the place you are going and save money that way. One thing you should ask yourself when shopping for things that you really do not need is if you would rather have that particular item or a home.

Step 3) Budgeting: Save Money

Once you have figured out ways to cut back on spending, put the extra money into a savings account. Try and save up an emergency fund of at least $1000 or whatever you feel comfortable with. It can be hard to eliminate credit card debt, for example, when you do not have an emergency fund established because something expected can happen and force you to use your cards and bring you more into more debt.

One way to earn money is by selling your possessions that you do not want or need.  You can use the profits from this to reduce debt or save up for a down payment. Just make sure that you are receiving sales receipts for the items that you sale so that you have documentation for the lender on how the money got into your account. You could also use the money from the things that you sell to live off instead of taking money out of the bank.

Step 4) Budgeting: Pay down debt

When you have an emergency fund saved up, then it is time to start paying off your debts and raise your credit score! At the very least you should make sure you are making your minimum payments. Lenders usually look at the minimum balances that are reported to credit companies in order to calculate your debt-to-income ratio.

So once you have your emergency fund established use the money that you were putting into the fund into either the card/loan with the smallest balance to get it paid off quickly or into the card/loan with the highest monthly balance (if you are able to pay it off in a relatively decent amount of time).

This can take time. It can take up to 30 to 60 days to show that you have paid on a credit card or a loan. You can try calling your credit card companies to figure out when they report to the credit companies. This can help you find out when it will be best to pull your credit when applying for a mortgage.

What About Loans that Require Zero Down?

Piggy Bank

If you do not have money saved, you may still be eligible for a zero down home loan with Riverbank Finance.  We offer great zero down programs including the USDA Mortgage and VA Loan. USDA loans only apply for rural homes and VA loans acquire you to be eligible for military benefits. Ask your loan officer if you are eligible for these options.

Keep in mind, even with zero down loans, there are costs in addition to the down payment. those trying to get a mortgage would also need funds saved up for appraisals and closing costs. To save on cash at closing, a buyer could as the seller to pay for these costs as party of the sales agreement.

Low Down Payment Mortgages

A common misconception is that you need to save 20% for your down payment. While there are benefits to applying a large down payment, most people do not have access to that large of a bundle of cash. We have several low down payment options that might be perfect for your situation!

1% Down Conventional Loan

Riverbank Finance LLC is pleased to offer the Conventional 1% Down Mortgage with Equity Boost home loan program. In this program, you can purchase a home with 3% equity, but only 1% down payment. How does that work? You, the buyer, contribute 1% and we, your lender, contribute 2% giving you a total of 3% equity at close.

FHA Loan with Down Payment Assistance

Another great low down payment options is our FHA loan with down payment assistance. With this program you will get a gift of 2% of the sales price towards your down payment. This means that you would only need 1.5% down for the required down payment.

One of the most important things is to not make budgeting and saving money seem like a chore or else it might make you want to stop trying. If you need advice on what you should do in your situation give Riverbank Finance a call and let our trusted loan officers help you find a solution to your debt issues and help you get the home that you want.

Request Information Now!

8 Common Mortgage Questions

For some, buying a home can be a scary experience, but it doesn’t have to be. The first step of the homebuying process should be to do research. Researching is one of the most important things that future homebuyers could and should do. Here are some commonly asked questions about mortgages and the homebuying process.

1. Am I able to get a mortgage if my credit is not that great?

Even if your credit score is not the greatest you may still be able to qualify for a loan. Having a higher credit score is beneficial though as it allows for buyers to get better interest rates. This saves them from paying thousands of dollars more than someone who has a low credit score. The minimum credit score for conventional loans is 620, while the minimum score that the FHA, VA Loan, and USDA Mortgage will allow is 580. That being said, lenders have their own minimum scores that they will accept.

2. What type of home loan is best for me?

It all depends on your situation. If you have a high credit score and money for a down payment, conventional would probably be a good choice for you. At Riverbank Finance, we have loan options that will pay up to 2% of the 3% down payment requirement if the client has a credit score of 720 or higher for conventional loans. This is great because then it means you only have to put 1% down on your home.

If your credit score is between 620 and 720, the down payment can be as low as 3%. If your credit score is not that great, a FHA loan would probably be the best for you, but you will need a 3.5% down payment. A USDA loan is great for those who are looking to live in a rural area and want to put zero down. Veterans can apply to get a VA loan which is also zero down.

Related: Michigan Down Payment Assistance Program

3. How do I get pre-approved for a mortgage?

Call up Riverbank Finance today if you are looking to get pre-approved. Our loan officers will be able to tell you over the phone whether or not you are pre-approved. You will be asked about your income, available assets, current debts, employment, details about the property, and credit. It is beneficial to get pre-approved because it not only lets the seller know that you have a lender ready to work with you, but it also tells the seller that you are a serious bidder.

4. What documents are required for a home loan?

Typically, you be required to send in the following documents:

  • Driver’s License
  • Social Security Card
  • 1 Month Worth of Paystubs
  • 2 Years of Most Recent W2s
  • 2 Years of Most Recent Tax Returns (if self-employed or commission)
  • 2 Months Bank Statements
  • Most Recent Quarterly Retirement Statement
  • Home Owner Insurance Quote
  • Purchase Agreement

Once your file is in processing you will be asked for additional documents specific to your situation.

5. Should I buy mortgage discount points?

That depends on your situation. One point usually costs about 1 percent of the mortgage and usually reduces your interest rate by 0.25 percent. Sometimes it does not make financial sense to buy points. Especially if you do not plan to live in the house for that long of a time. It can take a long time to make up the expenses that it cost to buy the points. If that is the case, then buying points may not be so beneficial for you. On the other hand, if you plan on keeping the property for a long time then buying the points can potentially save you thousand of dollars in interest.

6. How much do I have to pay for closing costs?

Closing costs will vary for each loan. They could range anywhere from 0 to 5 percent but usually average to about 2 to 5 percent of the purchase price. Closing costs typically include fees from title insurance, property taxes, mortgage application fees, and homeowners insurance. If you ask for seller’s paid concessions that can cut down on the amount of closing costs that you need to pay.

7. How long does it usually take to close?

At Riverbank Finance, we aim to close our loans within 20 to 30 days. The industry average time to close a mortgage is currently around 43 days according to the Ellie Mae mortgage survey. The amount of time can vary though depending on your situation. It is important to keep in touch with your loan officer and processor though the whole course of the loan. It is also extremely important to get the additional documents that are asked for in order to keeping the loan moving.

8. What does the process look like?

First, your loan officer will take you through the pre-approval process listed above. Your loan officer will then help you complete a loan application. After you are pre-approved or if you are pre-qualified you will be asked to send in your official documents. Your loan officer will check these over and make sure that they match up to the information given early.

After you have sent in a purchase agreement your loan will go into processing. You and your loan processor work together to send in the additional documents that the underwriter asks for in your conditional approval. Once all of these conditions are met your loan can be scheduled to close.

If you have any additional questions, please call Riverbank Finance at 800-555-2098 and ask to speak with one of our loan officers. Or sign up on our website. Remember the homebuying process does not have to be hard if you do your research up front!

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