Depending the situation, Borrower(s) is expected to bring up 25% to the table.
2How do I get approved for a mortgage ?
After filling out an application with the lender, you’ll have to provide the following information, including:
Pay stubs (last 30 days)
Two years of W-2s or T4's
Two years of tax returns
Bank statements from the last three months
Investment statements (if applicable)
Proof of where you got money for a down payment, such as bank statements or a statement from someone saying it was a gift
Proof of identity
Social Security number
Once you provide the necessary documents, the lender will review your information and pull your credit report and score. If you meet their requirements — usually a minimum credit score, cash for a down payment and low debt-to-income ratio — you may be approved. There are a number of things that can derail your home purchase (even after a preapproval), so don’t open any new lines of credit or spend a ton of money until after your loan is finalized.
3What’s the difference between preapproval and prequalification ?
A prequalification requires less paperwork and verbal confirmation of credit scores. A prequalification does not mean you will be preapproved, it just means you are likely to qualify. A preapproval requires more documentation, including tax returns and bank statements. The lender pulls your credit report and offers a conditional loan. This number should help narrow your search to homes you can afford. If you are preapproved for a loan, you still have to wait for the bank to offer a commitment. This step entails a home appraisal, and the bank may ask for more information from you or the seller if they feel it’s necessary.
4Is there a fee to submit my application online?
No, applying online is free.
5What is the difference between the interest rate and the annual percentage rate (APR)?
The interest rate is the rate you agree to pay for your mortgage loan. It is used to determine the interest portion of your monthly payment. The annual percentage rate (APR) includes your interest rate and prepaid finance charges to give you an average yearly rate.
6Adjustable or fixed rate ?
An adjustable rate means your interest rate and your monthly payment may vary. The payoff is that you can take advantage of lower interest rates. The risk: Your mortgage payment won’t be the same every single month. A fixed rate loan means the interest rate (and your payment) stay the same for the life of your loan.
7 What are closing costs, and how much should I expect them to be ?
The term "closing costs" refer to all of the charges you'll need to pay before your loan is completed. This can include origination fees, title insurance, prepaid escrows, and more. Closing costs can vary significantly, but generally, expect to pay around 3% to 6% of the home's price in closing costs.
8What is an escrow account ?
When you obtain a mortgage, you'll probably be asked to put money into an escrow account to guarantee the lender that the ongoing expenses of owning the property will be handled -- specifically taxes and insurance. You'll pay a lump sum into the escrow account at closing (also known as your "prepaids"), and add to it further with each of your monthly mortgage payments.
9How is my mortgage payment determined ?
Depending on your situation, there are typically three or four parts of your mortgage payment:
Principal: Repayment of your outstanding balance.
Interest: Payment of the interest charged on the outstanding balance.
Taxes: See question 12. One-twelfth of your expected annual property taxes will be included in your mortgage payment, and deposited into your escrow account.
Insurance: This includes homeowner's insurance, as well as any other hazard insurances you're required to have, such as flood or windstorm.
10 When is the first payment due?
This depends on when you close your home loan and if you pay prepaid interest at closing. For example, if you close late in the month, chances are your first mortgage payment will be due in just over 30 days.
Conversely, if you close early in the month, you might not make your first payment for nearly 60 days. That can be nice if you’ve got moving expenses and renovation costs to worry about, or if your checking account is a little light.