To close out our home buying guide, we have compiled answers to questions (FAQ’s) you may have about the home buying process. Refer to Step 1 and Step 2 of our home buying guide to help you with basic home-buying terminology such as pre-approval and loan points, and to understand your pre-disclosure documents, available financing options, and more!
Q. The Mortgage Loan Originator (MLO) asked about my race, gender and ethnicity. Is this legal?
A. Yes. Under Federal Law, the MLO is required to ask you these types of questions. Should you refuse to answer them, the MLO must answer the questions for you; based on visual or auditory observations. The Home Mortgage Disclosures Act (HMDA) requires that all MLO’s collect and submit this data in order to prevent discrimination in residential mortgage lending.
Q. What kind of documentation will I need in order to obtain a final approval on my loan?
A. Written documentation of all income MUST be obtained prior to final approval/closing. This includes, but is not limited to:
• Up to 6 months’ worth of paystubs for W2 employees
• Up to 6 months’ worth of personal bank statements from any checking and/or savings accounts
• Last 2 years of filed federal income tax returns
Q. Is there a limit to how many Good Faith Estimates (GFE) I can request?
A. No, there is not. A lender/broker is prohibited to charge you a fee, regardless of how many you have requested.
Q. I put an offer on a house, but want to withdraw it. Is there a penalty for that?
A. You are typically required to submit a sizeable deposit to the seller’s agent (about $1,000) when you submit an offer in writing on a home. This deposit goes toward your closing costs if/when you close on the home. If you withdraw the offer without a justified reason, then your deposit is forfeited. However, there are a number of circumstances where you would get your deposit back. For example, if the seller rejects your offer, makes a material change to the conditions of the home for sale, neglects to satisfy any pre-close conditions you set during the sale, or incorrectly disclosed anything on the seller’s disclosure.
Q. If I obtain the services of a real estate agent, will I have to pay higher realtor commissions at closing?
A. No. A realtor’s commission on a transaction is around 6% of the total. When more than one realtor is involved (one for the seller, one for the buyer), the 6% commission is typically split evenly between the two parties. If you don’t obtain a buyer’s agent, and the only realtor involved in the transaction is the seller’s agent, the entire 6% will go to that agent.
Q. What are closing costs, and can they be financed into my loan?
A. Closing costs are any fees charged by third parties as part of your real estate transaction. USDA backed loans allow for ALL closing costs to be financed. The most common closing costs include:
• Appraisals: determine the market value on the home
• Title Search: check for any unknown liens/encumbrances on the home
• Title Insurance: for your lender. Protecting their lien on the home from any unexpected or unknown problems that weren’t discovered on the title search
• Escrow Deposit: if your taxes and insurance are being escrowed, you’re typically required to make the first-month’s deposit prior to closing
• Down Payment
• Title Company or Settlement Fees
Q. What is a seller assist?
A. A seller assist is when the seller of the home contributes toward the closing costs. You (the buyer) can ask for either a partial or a full seller assist. In a partial seller assist, you would request that the seller pay a certain percentage of the closing costs, but in a full seller-assist, the seller pays all of the closing costs. A seller’s assist is requested when an offer on a home is made.
Q. My credit score isn’t high enough for me to qualify for a mortgage loan. What can I do to improve it?
A. When a bank/lender denies your application for a mortgage, they are required by law to mail you an official credit denial letter within 30 days of when you applied. This is called a “Notice of Adverse Action”, and will disclose to you all the reasons why your application was denied, and what your credit score was when you applied.
Federal law allows for you to request a free copy of your credit report from all three credit reporting agencies (Equifax, Experian, and Transunion), once a year. You can access these reports for free at www.annualcreditreport.com. Once you have obtained these reports, you can use our Understanding Your Credit Score and How to Improve Your Credit Score blog posts to eliminate negatives that are affecting your credit score.
If we did not answer your question, we have an expertly trained mortgage team readily available to assist you. From mortgage loans to home refinancing, buying a home can be a confusing process, but Mariner Finance is here to help! Simply call 866-382-5080 today to speak with one of our licensed loan officers, or click here to learn more!
This material was prepared for general distribution. Although all blog posts are intended to be accurate, the information and third-party links provided in the Mariner Finance’s blog are intended for general knowledge and educational purposes only without any warranties, implied or express, of any kind. The posts do not constitute investment, financial or other advice. Authors may or may not be licensed financial professionals; for specific advice, seek the input of a licensed and trained financial expert. Mariner Finance’s blog entries may also be viewed at www.pioneercredit.net and www.personalfinancecompany.com.
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