Every home buyer has home loan questions. Whether you are a first time home buyer or an experienced home owner, you need answers. This is our ever expanding Frequently Asked Questions about the Home Loans and Mortgages. Experience shows that a quick phone call with a seasoned LOCAL Loan Consultant can answer most questions more thoroughly than an FAQ page so feel free to give Doug Fouts from Fairway a call during regular business hours.

Frequently Asked Home Loan Questions

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Q. What if I have a history of credit problems?

A. Negative or lack of previous credit can affect an applicant's ability to obtain a loan. Positive trade/payment history over the last 12 to 24 months can many times offset poor credit history that occurred in the past. Customers know how difficult it can be to get a mortgage today and believe that their credit will not be good enough to qualify for a mortgage. Many times they are pleasantly surprised once I actually pull the credit report. Together, we will review your credit report in detail to determine exactly what steps are needed, if any, to ensure that you qualify for the best possible mortgage for your particular situation and financial success as quickly as possible.

Q. What is the minimum down payment needed to buy a home?

A. Most conventional fixed rate loan programs require at least a 5% down payment for qualified buyers. Fairway Independent Mortgage Corporation is a leader in government secured financing through the Veterans Administration which requires Zero Down for those eligible and FHA Financing which currently requires a very low down payment of 3.5%. In addition, Fairway offers Zero Down financing through the USDA. Some restrictions apply so please call me directly to answer you questions on all of these programs.

Q. When does it make sense to refinance my home?

A. There are many reasons why refinancing may be right for you. Perhaps you are trying to pull equity out of your home to use for other reasons such as college expense, home improvements, or pay off credit card debt. You may just want to improve your cash flow situation every month by virtues of having a lower monthly payment. A need to remove a co-borrower from the current note is also common. In short, there are many reasons why you may want to consider refinancing. However there will be costs associated with your refinance and we will conduct an in-depth analysis to see how quickly this cost will be recouped to ensure refinancing is in your best interest.

Q. Can I use gift funds as a down payment?

A. Loan applicants can accept cash gifts from family members such as parents, grandparents, siblings, aunts and uncles in order to save for a down payment. Gifts from non-family members such as friends or coworkers are typically not acceptable. We will furnish a "gift letter," which states the relationship between the parties, the address of the purchased property, the amount of the gift, and the source of the funds used to make the gift. You and the donor must sign this letter, which states that the funds are a gift and not required to be repaid. Make a copy of the check used to make the gift and keep a copy of the deposit receipt when you deposit the gift funds into your bank account or escrow.

Q. When should I lock my Interest Rate?

A. Interest rates will likely change between the time you apply for a mortgage and your closing date. Mortgage Rates are connected to the bond market and more specifically mortgage backed securities. You are likely very aware of the extreme volatility in the market at this time and interest rates can change several times in any given day. I follow analyst, market conditions daily and pay for services that keep me up to date in real time on any movement in the markets which could affect your interest rate. This attention to detail provides me with the necessary tools and information to provide my clients with quality information to determine the best possible time to lock an interest rate.

Q. What is PMI, and how can I avoid paying it?

A. PMI is insurance for the benefit of the lender. If a property is abandoned or goes into foreclosure, this policy protects some of the value of the home. This policy is usually required if the loan-to-value (LTV) is greater than 80 percent. LTV means the percentage relationship between the amount of the loan and the appraised value or sales price - whichever is lower. There are many exceptions. There are loans for 100 percent of the purchase price that do not require PMI, and some loans at 75 percent LTV that do require PMI. FHA and other first-time homebuyer programs require mortgage insurance, regardless of LTV.

o If you provide less than 20 percent down payment, or obtain an FHA loan, mortgage insurance will typically be required. The lender takes care of obtaining the mortgage insurance, but it will be part of your normal monthly payment.

Q. How long will it take to get my loan approved?

A. If you provide all the necessary documents, your loan will typically be approved in 7-10 business days. Conditional Loan Approval, which is usually a good indicator of whether or not the actual loan will be approved, can be completed within hours.

Q. How much will I pay in closing costs?

A. There are closing costs and additional items such as taxes and insurance that typically but not always are paid at closing. These costs can very greatly depending on allowable paid closing costs by the seller of lender, loan amount, credit scores, interest rate, etc. I will provide you with a detailed break down of all the possible fees that are associated with your specific monthly financial goals and cash flow needs.

Q. Can I qualify for a mortgage if I'm self-employed?

A. Absolutely. We will perform and in-depth analysis of your income and expenses as identified on your federal income tax returns. Usually two full years of personal tax returns will be analyzed along with corporate returns if applicable. oThis usually means no income documentation, such as tax returns or check stubs, is required.

Q. What documents will I need when applying for a home loan?

A. W-2 and federal tax returns for the last (most recent) two years.