Frequently Asked Questions:
Contact us:
Apply for a Loan
Q.
A.
How will I know how much I can qualify for?
We can work with you to get you qualified BEFORE you look for a home. Based upon
information you present to us at the loan application, we will determine the
approximate amount of money you will be allowed to borrow. You will be "pre-
qualified" for that loan amount. By allowing us to run your credit report and verify
your assets and income, your loan application can be submitted to the underwriter for
a full credit approval. We can provide you a complete written credit approval (subject
to an appraisal) before you make an offer on a home, if you desire.
What are Housing and Total Debt ratios?
The Housing Ratio is your total monthly housing expense (principal, interest, taxes,
hazard insurance, and mortgage insurance, if applicable) divided by your gross
monthly income (before taxes). The Total Debt Ratio is your total monthly housing
expense PLUS any recurring debts (i.e. monthly credit card minimum payment, car
payments, or other loan payments) divided by your income. Standard underwriting
guidelines suggest a maximum of 28% on the Housing Ratio and 36% on the Total
Debt Ratio, but these ratios can vary based on the loan program, the financial
strength of the borrower and the down payment.
What are "Cash Reserves"?
Cash Reserves are the funds a borrower has remaining after their loan funds. The
normal requirement could be monies equal to 2 months of the mortgage payment. The
amount of Cash Reserves varies by loan program, but larger reserves are a strong
compensating factor.
How much money do I need for a down payment and closing costs?
In today’s mortgage environment most programs will require a 3 to 5% down
payment. There are some very specialized programs (VA loans, for example) that
allow for 100% financing, but they are limited to a restricted group of borrowers who
meet specific eligibility requirements. Network Funding is very competitive in regards
to closing costs and we will provide you with a detailed Good Faith Estimate that will
clearly lay out all the closing costs and prepaids required for the loan program you
have selected. We are firm believers in delivering financing that will allow the
borrower to minimize closing costs. We will take the necessary time to create clarity
in regards to your financial goals and objectives, and use this information to structure
the most advantageous financing for you.
What is Mortgage Insurance?
Mortgage Insurance insures lenders in the event of a borrower's foreclosure. It is
paid for by the borrower, and allows lenders to grant loans they otherwise would not
consider. Depending on credit scores and loan structure, mortgage insurance may
be required when the down payment is less than 20%.
Can I qualify for a VA loan?
VA loans, guaranteed by the Veteran's Administration, are for veterans who meet
certain criteria. VA loans do not require any down payment and in some cases the
seller may be willing to pay all or part of the closing costs. This allows the veteran to
purchase a home with little or no money down. To find out if you qualify for a VA
loan, ask us for an 1880 form for you to complete. After you have completed this
form, take it and your discharge papers (or DD214) to your local VA office to
determine your eligibility. Active military personnel may also be eligible for a VA loan.
How do my credit scores affect my mortgage qualification?
When you make application with us, we will order a tri-merged credit report for each
borrower on the application. This is a report with information pulled from all three
credit bureaus (Equifax, Experian, and Trans Union). Each credit bureau will
calculate a credit score for each borrower using a proprietary formula that includes
multiple, weighted facets of your credit history and profile. Of the three scores
issued for each borrower, we will use the middle score for that borrower. This
score will determine if you meet the minimum requirements for the particular loan
program you have selected and it will also affect the pricing (i.e. interest rate) you will
receive for the loan.
What if I don't have any established credit?
If you do not have enough established credit, we can work with you to document
alternate credit information. If you have been renting, we can obtain a rental rating
from your landlord as a way of verifying your payment history. Or, we can contact
your utility companies, phone service, cable companies or car insurance carrier to
obtain a rating on your payment history. Not all loan programs will accept alternative
documentation on your credit. There are both government and conventional programs
that will accept this type of payment history to establish credit qualifications.
What if I have had credit problems in the past or have filed bankruptcy?
Your credit payment history lets the Lender know your intentions to repay the loan.
Therefore a good credit history is important, but a perfect credit history is not.
Credit counseling agencies specialize in meeting with clients and reviewing your
credit history. If you have any outstanding credit obligations that need to be dealt
with, the credit agency can work with you and help you make arrangements to pay
any outstanding debts you may have. First time home buyers can also attend
seminars that will go through the home purchasing process and requirements with
you.
What if I am new on my job?
A new job can work in your favor when you apply for your loan. Loan program
guidelines look for a 2 year job history in the same field, but a job change for a
better position is looked on favorably. If you are a recent college graduate, you
may be able to obtain a loan even though you don't have a 2 year work history.
What does "loan to value" mean?
Loan to value (LTV) is the loan amount divided by the lesser of the sales price or
appraised value. For example, if you are paying 15% of the total cost of the home as
a down payment, you would only be borrowing 85% of the total sales price from the
lender. Therefore your LTV would be 85%.
How do I "lock-in" my interest rate?
We can "lock-in" the interest rate quoted over the telephone during
the pre-qualification interview with you. We will provide you a written Interest
Rate and Price Determination Agreement which details the interest rate and terms
of the loan you have requested, as well as the period of time the rate is locked.
This may vary between 10 days and 60 days depending upon your projected
closing date.
What is an 80/10/10 and an 80/15/5?
An 80/10/10 is an 80% first lien, a 10% second lien and a 10% down payment.
The 80/10/10 structure allows for 90% financing without mortgage insurance.
When a borrower chooses to put less than 20% down for a down payment, he
may either split the loan amount into two liens (80/10/10 for example), or he may
opt to have one 90% lien and pay mortgage insurance (see below). In the same
manner, an 80/15/5 is an 80% first lien, a 15% second lien and a 5% down
payment.
What do I need to bring to closing?
The closing will normally take place at a title company. Each borrower will need to
bring a valid driver's license the day of closing. Per state law, the funds due at
closing must be in the form of either a cashier's check made out to the title company
or a wire transfer. You may write a personal check up to $1,500.
How much do I need to insure my home for?
It is your responsibility to secure homeowner's insurance on the home you are
purchasing prior to closing. The minimum dwelling coverage required is the lesser of
either:
a) The total combined loan amount
or
b) The replacement cost on the appraisal
Because you may begin shopping for homeowner's insurance before the appraisal is
in, it may be necessary to begin gathering quotes with a minimum dwelling coverage
of the combined loan amount. You will be notified of the replacement cost once your
appraisal is in.
What is the Annual Percentage Rate on my Truth in Lending Document?
The Annual Percentage Rate (APR) is the cost of your credit expressed as an annual
interest rate. Points and other prepaid finance charges are factored into the APR to
show the true yield on the loan, which is why the APR is often higher than your note
rate. The APR can be compared to the APR on other loan programs to give you a
consistent means of comparing rates and programs.
We can work with you to get you qualified BEFORE you look for a home. Based upon
information you present to us at the loan application, we will determine the
approximate amount of money you will be allowed to borrow. You will be "pre-
qualified" for that loan amount. By allowing us to run your credit report and verify
your assets and income, your loan application can be submitted to the underwriter for
a full credit approval. We can provide you a complete written credit approval (subject
to an appraisal) before you make an offer on a home, if you desire.
What are Housing and Total Debt ratios?
The Housing Ratio is your total monthly housing expense (principal, interest, taxes,
hazard insurance, and mortgage insurance, if applicable) divided by your gross
monthly income (before taxes). The Total Debt Ratio is your total monthly housing
expense PLUS any recurring debts (i.e. monthly credit card minimum payment, car
payments, or other loan payments) divided by your income. Standard underwriting
guidelines suggest a maximum of 28% on the Housing Ratio and 36% on the Total
Debt Ratio, but these ratios can vary based on the loan program, the financial
strength of the borrower and the down payment.
What are "Cash Reserves"?
Cash Reserves are the funds a borrower has remaining after their loan funds. The
normal requirement could be monies equal to 2 months of the mortgage payment. The
amount of Cash Reserves varies by loan program, but larger reserves are a strong
compensating factor.
How much money do I need for a down payment and closing costs?
In today’s mortgage environment most programs will require a 3 to 5% down
payment. There are some very specialized programs (VA loans, for example) that
allow for 100% financing, but they are limited to a restricted group of borrowers who
meet specific eligibility requirements. Network Funding is very competitive in regards
to closing costs and we will provide you with a detailed Good Faith Estimate that will
clearly lay out all the closing costs and prepaids required for the loan program you
have selected. We are firm believers in delivering financing that will allow the
borrower to minimize closing costs. We will take the necessary time to create clarity
in regards to your financial goals and objectives, and use this information to structure
the most advantageous financing for you.
What is Mortgage Insurance?
Mortgage Insurance insures lenders in the event of a borrower's foreclosure. It is
paid for by the borrower, and allows lenders to grant loans they otherwise would not
consider. Depending on credit scores and loan structure, mortgage insurance may
be required when the down payment is less than 20%.
Can I qualify for a VA loan?
VA loans, guaranteed by the Veteran's Administration, are for veterans who meet
certain criteria. VA loans do not require any down payment and in some cases the
seller may be willing to pay all or part of the closing costs. This allows the veteran to
purchase a home with little or no money down. To find out if you qualify for a VA
loan, ask us for an 1880 form for you to complete. After you have completed this
form, take it and your discharge papers (or DD214) to your local VA office to
determine your eligibility. Active military personnel may also be eligible for a VA loan.
How do my credit scores affect my mortgage qualification?
When you make application with us, we will order a tri-merged credit report for each
borrower on the application. This is a report with information pulled from all three
credit bureaus (Equifax, Experian, and Trans Union). Each credit bureau will
calculate a credit score for each borrower using a proprietary formula that includes
multiple, weighted facets of your credit history and profile. Of the three scores
issued for each borrower, we will use the middle score for that borrower. This
score will determine if you meet the minimum requirements for the particular loan
program you have selected and it will also affect the pricing (i.e. interest rate) you will
receive for the loan.
What if I don't have any established credit?
If you do not have enough established credit, we can work with you to document
alternate credit information. If you have been renting, we can obtain a rental rating
from your landlord as a way of verifying your payment history. Or, we can contact
your utility companies, phone service, cable companies or car insurance carrier to
obtain a rating on your payment history. Not all loan programs will accept alternative
documentation on your credit. There are both government and conventional programs
that will accept this type of payment history to establish credit qualifications.
What if I have had credit problems in the past or have filed bankruptcy?
Your credit payment history lets the Lender know your intentions to repay the loan.
Therefore a good credit history is important, but a perfect credit history is not.
Credit counseling agencies specialize in meeting with clients and reviewing your
credit history. If you have any outstanding credit obligations that need to be dealt
with, the credit agency can work with you and help you make arrangements to pay
any outstanding debts you may have. First time home buyers can also attend
seminars that will go through the home purchasing process and requirements with
you.
What if I am new on my job?
A new job can work in your favor when you apply for your loan. Loan program
guidelines look for a 2 year job history in the same field, but a job change for a
better position is looked on favorably. If you are a recent college graduate, you
may be able to obtain a loan even though you don't have a 2 year work history.
What does "loan to value" mean?
Loan to value (LTV) is the loan amount divided by the lesser of the sales price or
appraised value. For example, if you are paying 15% of the total cost of the home as
a down payment, you would only be borrowing 85% of the total sales price from the
lender. Therefore your LTV would be 85%.
How do I "lock-in" my interest rate?
We can "lock-in" the interest rate quoted over the telephone during
the pre-qualification interview with you. We will provide you a written Interest
Rate and Price Determination Agreement which details the interest rate and terms
of the loan you have requested, as well as the period of time the rate is locked.
This may vary between 10 days and 60 days depending upon your projected
closing date.
What is an 80/10/10 and an 80/15/5?
An 80/10/10 is an 80% first lien, a 10% second lien and a 10% down payment.
The 80/10/10 structure allows for 90% financing without mortgage insurance.
When a borrower chooses to put less than 20% down for a down payment, he
may either split the loan amount into two liens (80/10/10 for example), or he may
opt to have one 90% lien and pay mortgage insurance (see below). In the same
manner, an 80/15/5 is an 80% first lien, a 15% second lien and a 5% down
payment.
What do I need to bring to closing?
The closing will normally take place at a title company. Each borrower will need to
bring a valid driver's license the day of closing. Per state law, the funds due at
closing must be in the form of either a cashier's check made out to the title company
or a wire transfer. You may write a personal check up to $1,500.
How much do I need to insure my home for?
It is your responsibility to secure homeowner's insurance on the home you are
purchasing prior to closing. The minimum dwelling coverage required is the lesser of
either:
a) The total combined loan amount
or
b) The replacement cost on the appraisal
Because you may begin shopping for homeowner's insurance before the appraisal is
in, it may be necessary to begin gathering quotes with a minimum dwelling coverage
of the combined loan amount. You will be notified of the replacement cost once your
appraisal is in.
What is the Annual Percentage Rate on my Truth in Lending Document?
The Annual Percentage Rate (APR) is the cost of your credit expressed as an annual
interest rate. Points and other prepaid finance charges are factored into the APR to
show the true yield on the loan, which is why the APR is often higher than your note
rate. The APR can be compared to the APR on other loan programs to give you a
consistent means of comparing rates and programs.
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direct: 713.542.1189
office: 281.362.2721
office: 281.362.2721
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R E S I D E N T I A L M O R T G A G E Company
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