FAQs

Discover answers to frequently asked home loan questions

· Loan Process Questions:

o How should we prepare for our lender meeting to apply for a home loan?

§ The Omega ‘Home Loan Application - Checklist’ will help you prepare for your lender loan application meeting. Being prepared will make your loan approval process go faster.

o Will we be required to pay a home loan application fee?

§ Lenders generally do not require payment of a loan application fee up front, however you will be required to pay for the appraisal fee and credit report.

o To whom do we send our loan documentation?

§ All loan underwriting documentation goes to your lender loan representative, including documentation that you provide, such as tax returns, divorce decree, etc..

o How long does the loan approval process take?

§ Generally, if your application documentation is complete, you should receive a loan commitment in within 2-3 weeks.

o Who do we contact about our loan status?

§ Your lender loan representative should provide you with information about the status of your loan application. However, your Omega new home consultant and contract processor will is always be available to assist you in this process.

o Who do we contact about our interest rate lock-in?

§ Check with your Omega new home consultant for the projected completion date on your home before contacting your lender loan representative to learn about loan locking and the risk of locking too early. When you lock in the interest rate, it is best to get written confirmation from your lender.

o Who sets the closing date?

§ You and your Omega new home consultant. As your home nears completion, the projected completion date can be updated to a firm completion date. Closing typically occurs within a week of home completion, during which time your new home orientation and walk-through inspection will be scheduled.

· Loan Questions:

o Should we be pre-qualified before looking for a new home?

§ It is definitely not necessary! However, it may help you to know in advance how much you can afford and that you will be approved. Most lenders will “pre-qualify” you for your purchase.

o How do we choose the best loan for us?

§ Answers to the following questions will help your lender narrow your choices and find the loan that is best for you:

· Do you anticipate your income to change over the next few years?

· Do you plan to live in this home for a short while or for many years?

· Can you deal with having a mortgage payment that may change?

· Do you wish to make a large or a small down payment?

o What is a ‘Good Faith Estimate’?

§ A ‘Good Faith Estimate’ lists all fees to be paid before closing, all closing costs, and all escrow costs related to the purchase of your new home. The lender is required to provide it within three days of your application to enable you to make solid decisions about your home loan.

o Will we save on a shorter than 30-year loan term… say 15 years?

§ You will save nearly 60% of the total interest cost with a 15-year versus a 30-year mortgage.

o How will we know our loan is approved and how is it documented?

§ Your lender will provide you a written mortgage loan commitment. Please furnish of copy of the commitment to your Omega new home counselor. A final loan commitment will be issued once all conditions and contingencies have been satisfied.

o How much should we plan for closing costs?

§ Closing costs generally run between 3% and 5% depending on your loan type. There will be a complete disclosure of these costs on your ‘Good Faith Estimate’

o Will making an extra payment each year shorten the life of our 30-year loan?

§ Amazing but true… making just 1 additional payment every 12 months will pay off your home mortgage some 7 – 8 years early!

o What is the benefit of FHA loans?

§ FHA loans are popular because of the low down payment.

o What is the benefit of VA loans?

§ VA loans are popular because of the no down payment feature. They are available to a restricted group and your lender will see if you qualify.

§ Low interest rate programs are available to qualifying veterans and disabled veterans.

o Can non-U.S. citizens buy a home?

§ FHA requires that the home you are buying in this country is your primary residence. You must have a Social Security card, and the other documentation required for FHA buyers.

§ Fannie Mae requires that you have permanent resident alien status - a green card. If you are a nonpermanent resident alien, an additional down payment, plus permission to work in the United States for extended periods through a work visa is required, and you must occupy the property.

§ Freddie Mac underwrites loans for permanent and nonpermanent residents alike, with no special requirements for non-U.S. citizens. It is important to consult with your lender prior to choosing a home so you will know what financing is available for you.

· Closed Loans:

o Will my payments remain the same over the life of the loan?

§ If you have a fixed interest rate mortgage, principal and interest payments will remain constant, however your actual payment amount may adjust, based on your property tax rate or insurance premium amounts.

o When is our first payment due and where do we send it?

§ Your lender will provide this information and you should be sure to find out not later than at Closing.

o Will we be able to arrange ‘Automatic Bank Draft’ payments from our bank account?

§ Most lenders prefer this method of payment and will provide you with an authorization form at or before closing .

o Will we receive an annual interest and property taxes paid statement?

§ Yes, lenders are required to timely furnish this information to borrowers for their income tax purposes.

· Credit:

o Will our loan terms be better if our credit score is higher?

§ Yes. Lenders consider borrowers with a good credit score to be lower risk.

o If we consolidate our debts into one loan, will it improve our chances of getting a new home loan?

§ It could, especially if your credit payment history is good and if the consolidation reduces your total monthly obligations.

o If our credit score is low, can we work to improve it over six months to a year and then reapply?

§ Definitely! Improving your credit score and credit history will increase your ability to qualify for a mortgage loan.

o As we work to improve our credit score, is it better to pay down credit card debt or finance company debt?

§ Finance company debt counts against your credit score more than credit card debt, so by all means, pay down finance company debt first.

o Will a single late credit card payment or loan default disqualify us from getting a loan?

§ While credit requirements are tighter than in the past, a single late pay or credit issues related to an event such as divorce, illness, or temporary unemployment, may be overlooked if you have reestablished a good track record since.