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Now that you know your credit qualifies you for a mortgage, and the maximum dollar amount you are qualified for, you can shop for homes based on the approval criteria. Not sure about your pre-approval? Check out our Guide to Home Buying – Step One to get started from the beginning.

When to use a “Buyer’s Agent”

Realtor_showing_home If you are buying a home for the first time, it is recommended that you use a realtor to assist you in the home buying process. While realtors usually do represent individual sellers of homes, you can also obtain the services of a realtor as your “buyer’s agent”. A buyer’s agent will assist you in finding homes for sale that meet your criteria and pre-approval limits. They also typically contact seller’s agents to schedule showings of homes that you are interested in possibly purchasing. Your realtor will attend home showings with you, provide guidance to aid in your decision-making, and help you to submit your offer on the home that you want to purchase. You should steer away from simply contacting the buyer’s agent on your own to schedule a showing of a home. This is because the seller’s agent doesn’t represent you, and will do everything that he or she can do to convince you to buy the home you are looking at.

It is important to note your pre-approval cannot be voided unless there is a significant change in your financial circumstances (most commonly a loss of job or income), and/or credit score since you applied. Your approvals are typically good for sixty days and will be voided after they expire.

Understanding your Pre-Disclosure Documents

Federal law requires that you are provided with a set of paperwork known as, the “Real Estate Settlement Pre-Disclosures Act” (RESPA), within three days of submitting your application for a residential mortgage loan. This means, if you applied for a pre-approval BEFORE you have found a home, your Mortgage Loan Originator (MLO) is still required to send you these pre-disclosures within three days. The most important document in this set of paperwork is the “Good Faith Estimate” (GFE). The GFE provides you with an accurate estimation of all origination fees, including points charged, closing costs, and gives you an estimation of what your monthly payment will be for the specific amount you are looking to finance. If you submit an offer on a home that differs from your original GFE that you were provided, your broker or lender is required to re-send you an updated one prior to closing.

Can You Really Afford This Home?

Mortgage industry standards base your pre-approval amount on your gross monthly income before taxes. Many people find that the maximum amount they are approved for is more than they can really afford, since no one receives their actual gross pay. This means you should not automatically assume that you can afford a $200,000 home because that is what you were pre-approved for. You must pay close attention to your GFE and take as much time as you may need to determine whether or not you can really afford the monthly payment on your proposed mortgage amount.

Available Financing Programs and How They Work

Your broker or lender will guide you through the different financing programs available, but it never hurts to know how all of these programs work. A mortgage loan is typically funded by a lender and insured against loss by another entity. Some of the different insuring entities include Fannie Mae, Freddie Mac, FHA, VA, and USDA.

Providing re-assurance to private lenders is the primary function of all of the different insuring entities. The difference between them is that they each have different underwriting guidelines. For a loan to be insured by Fannie Mae, Freddie Mac, FHA, VA, and USDA, it must meet be underwritten by the guidelines established by that entity. Some of the most common insuring entity’s and their underwriting guidelines are:

FHA (Federal Housing Authority):

  • Minimum 3.5% down payment
  • Minimum 500 credit score
  • Mortgage Insurance Premium (MIP) paid monthly with less than 20% down payment

VA (Veterans Administration – for current and former military ONLY):

  • No minimum down payment
  • Usually 620 credit score
  • Private Mortgage Insurance paid monthly with less than 20% down payment

USDA (United States Department of Agriculture):

  • Only allowed on qualified non-urban properties
  • No minimum down payment
  • Allow for closing costs to be financed into the loan amount (not paid out-of-pocket)
  • Generally have less stringent minimum income guidelines
  • No minimum credit score guideline, but applicants must have “reasonable” credit history

While going house-hunting can be exciting, it can also be a stressful and confusing process. Don’t stress; Mariner Finance is here to help! We have an expertly skilled mortgage team readily available to help you with all of your montage needs, including mortgage loans, home refinancing, and more. Simply call 866-382-5080 today to speak with one of our licensed loan officers, or click here to learn more!

Blog posts are for informational purposes only.
   

†We offer personal loans from $1,000 to $25,000, with loans terms from 12 to 60 months. Minimum and maximum amounts dependent on an applicant’s state of residence and the underwriting of the loan. Loans between $1,500 and $15,000 may be funded online. Loans greater than $15,000 or less than $1,500 are funded through our branch network. Specific interest rates and fees are determined as permitted under applicable state law and depend upon loan amount, term, and the applicant’s ability to meet our credit criteria, including, but not limited to, credit history, income, debt payment obligations, and other factors such as availability of collateral. Not all rates and loan amounts are available in all states. Additional fees may apply to some loan offers; some state required and/or permitted fees may be treated as prepaid finance charges. Any such charges shall be in addition to the loan amount requested and/or approved and shall be fully disclosed to the applicant on his/her loan agreement. Not all applicants will qualify for the lowest rates or larger loan amounts, which may require a first lien on a motor vehicle not more than ten years old titled in the applicant’s name with valid insurance. Our loan by phone and online closing process requires a compatible mobile or computer device on which you can access your email and electronic documents. Not all loan types are eligible for loan by phone or online loan closing.

 

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. As a result, under our customer identification program, we must ask for your name, street address, mailing address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.

 

For any stated annual percentage rate (“APR”), the APR represents the cost of credit as a yearly rate and will be determined based upon an applicant’s credit at the time of application, subject to state law limits. A range of APR’s may be applicable, subject to state law limits and individual underwriting. Not all applicants will qualify for a lower rate. APR’s are generally higher on loans not secured by a vehicle, and the lowest rates typically apply to the most creditworthy borrowers. All terms and conditions of a loan offer, including the APR, will be disclosed during the application process. As an example, with an amount financed of $5,000.00 the borrower receives $5,000.00 at an APR of 29.99% and an interest rate of 28.77% which includes a finance charge of $3,640.96. Under these terms, the borrower would make 48 monthly payments of $180.02, for a total of payments of $8,640.96. The amount financed may not be the net proceeds paid if charges other than interest are included in the loan.

 

*The process uses a “soft” credit inquiry to determine whether a loan offer is available, which does not impact your credit score. If you continue with the application process online and accept a loan offer, or are referred to a branch and continue your application there, we will pull your credit report and credit score again using a “hard” credit inquiry. This “hard” credit inquiry may impact your credit score.

 

 

California Residents: Loans made or arranged pursuant to a California Financing Law license.

VA Residents – Mariner Finance of Virginia, LLC, Licensed by the Virginia State Corporation Commission, Consumer Finance Company License No. CFI-114.

 

Mariner Finance, LLC, NMLS No. 166564 (www.nmlsconsumeraccess.com)
8211 Town Center Drive, Nottingham, MD 21236. Telephone Number 877-310-2373.

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