Join Farmers National Bank Vice Presidents Amanda Geuns and Jo Lea Holevoet as they discuss some of the most frequently asked questions regarding residential lending and mortgages with Justin Nichols.
Prophetstown office:
(815) 537-2348
Geneseo Office:
(309) 944-0580
1. What is the Mortgage Process?
The journey of securing a mortgage loan begins with completing an application and submitting essential documents such as the last two paystubs, two years of W2s, and statements demonstrating the source of your downpayment funds. The loan officer meticulously examines your financial situation, including income, credit history, and existing debts, to determine the suitable mortgage options. Your plans with the property, whether it’s a forever home or a starter home, influence the choice of mortgage. Throughout the purchase process, the loan officer facilitates necessary inspections, appraisals, and title work, ensuring a smooth transaction from application to closing.
2. How do I Get Started with a Mortgage Loan?
Initiating the mortgage process is straightforward. All you need to do is provide a completed application along with the last two paystubs and two years of W2s.
3. Comparing Mortgage Loan Officers & Financial Institutions: What to Look For
When selecting a loan officer or financial institution, ensure they possess an NMLS# and offer a variety of loan products tailored to your needs. Look for a loan officer who is approachable, communicates effectively, and guides you through the entire process, from application to closing. Avoid red flags such as limited loan options and unresponsiveness.
4. Factors That Could Affect Your Mortgage Approval
Late payments exceeding 30 days, inconsistent employment history, and high credit card debt are factors that could negatively impact your chances of securing a mortgage.
5. Precautions Before Applying for a Mortgage
Avoid opening new lines of unsecured credit or taking on additional debt before applying for a mortgage, as this can adversely affect your financial profile and loan eligibility.
6. The Importance of Pre-Approval
Most realtors require a pre-approval letter before showing you properties. Getting pre-approved helps you understand your budget and streamlines the home-buying process.
7. Does Pre-Approval Affect Credit?
Pre-approval typically involves a single credit inquiry, which remains valid for 120 days. A second credit check may occur if your closing extends beyond this period or if you acquire new debt during the process.
8. Minimum Age Requirement for Mortgage Loans
You must be at least 18 years old to enter into a legally binding mortgage contract.
9. Determining the Need for a Co-Signer
The necessity of a co-signer depends on factors such as your credit history, income, and debt-to-income ratio. Each application undergoes thorough evaluation to assess individual eligibility.
10. Assessing Affordability
To determine if you can afford a $100,000 house, evaluate your current income, monthly expenses, potential downpayment, real estate taxes, and insurance costs. Ensure your total debt-to-income ratio remains within the recommended range.
11. Will Interest Rates Decrease?
While future interest rate trends are uncertain, if rates decline, refinancing your mortgage could be an option to secure a lower rate. Keep in mind that refinancing involves certain fees.
Navigating the mortgage process can seem daunting, but with the right information and guidance, you can make informed decisions and achieve your homeownership goals.
