Frequently Asked Questions
Expert answers to your mortgage questions from Jimmy Joseph MBA
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Getting Started
How do I know which loan program is right for me?
The best loan program depends on your financial situation, credit score, down payment amount, and homeownership goals. During your consultation, I'll review all available options including Conventional, FHA, VA, USDA, and specialty programs to find the perfect fit for your needs.
What credit score do I need to buy a home?
Minimum credit scores vary by loan program. FHA loans can accept scores as low as 580 (or 500 with 10% down). Conventional loans typically require 620+, while VA and USDA loans generally need 580-620. Higher scores unlock better interest rates and terms.
How much do I need for a down payment?
Down payment requirements range from 0% to 20% depending on the loan program. VA and USDA loans offer 0% down. FHA requires as little as 3.5%. Conventional loans can go as low as 3% for first-time buyers. I'll help you determine the best down payment strategy for your situation.
Should I get pre-qualified or pre-approved?
Pre-approval is strongly recommended. While pre-qualification gives a rough estimate, pre-approval involves verifying your financial information and provides a conditional commitment from the lender. Sellers take pre-approved buyers more seriously, giving you an advantage in competitive markets.
Application Process
How quickly can I get pre-approved?
Our online pre-approval process takes just 3 minutes to complete. You'll receive an initial response immediately. A full pre-approval letter with verified documentation typically takes 24-48 hours. Rush processing is available for competitive offer situations.
Will checking rates affect my credit score?
No! Our initial pre-qualification uses a soft credit inquiry that won't impact your credit score. A hard credit pull is only performed when you formally apply for the loan. Multiple mortgage inquiries within a 45-day window typically count as a single inquiry for scoring purposes.
What documents do I need to apply?
You'll typically need: recent pay stubs (last 30 days), W-2s (last 2 years), federal tax returns (last 2 years if self-employed), bank statements (last 2 months), photo ID, and documentation for any additional income sources. I'll provide a personalized checklist after your initial consultation.
Can I apply if I'm self-employed?
Absolutely! Self-employed borrowers are welcome. You'll need 2 years of personal and business tax returns, year-to-date profit & loss statement, and business license if applicable. We have specialized loan programs designed for self-employed individuals and business owners.
Loan Programs
What's the difference between FHA and Conventional loans?
FHA loans are government-backed with lower credit score requirements (580+) and smaller down payments (3.5%). They require mortgage insurance for the life of the loan. Conventional loans need higher credit scores (620+) but offer more flexibility and can eliminate PMI once you reach 20% equity.
Are VA loans really 0% down?
Yes! VA loans require no down payment for eligible veterans, active military, and qualifying spouses. They also have no monthly mortgage insurance, competitive interest rates, and limited closing costs. The VA funding fee can be rolled into the loan amount.
What is a jumbo loan and do I need one?
Jumbo loans exceed conforming loan limits ($766,550 for most areas in 2024). If you're purchasing a high-value property in Bergen County, you may need a jumbo loan. These typically require larger down payments (10-20%), higher credit scores (700+), and more cash reserves.
Can I use a loan to renovate a fixer-upper?
Yes! FHA 203(k) and Conventional HomeStyle Renovation loans allow you to finance both the purchase and renovation costs in a single loan. This is perfect for buyers who want to customize their home or purchase properties that need repairs.
Costs & Fees
What are closing costs and how much should I expect?
Closing costs typically range from 2-5% of the loan amount and include appraisal fees, title insurance, attorney fees, origination charges, prepaid taxes and insurance, and recording fees. I'll provide a detailed Loan Estimate within 3 days of your application showing all expected costs.
Can the seller pay my closing costs?
Yes! Seller concessions are allowed on most loan programs. FHA allows up to 6% seller contribution, Conventional allows 3-9% depending on down payment, and VA allows up to 4%. This can significantly reduce your out-of-pocket expenses at closing.
What is PMI and how can I avoid it?
Private Mortgage Insurance (PMI) is required on conventional loans with less than 20% down payment. You can avoid PMI by: putting 20%+ down, using a piggyback loan (80-10-10), choosing a VA or USDA loan, or selecting lender-paid PMI with a slightly higher rate.
Are there any programs that help with down payment assistance?
Yes! New Jersey offers several down payment assistance programs including NJ HomeSeeker, NJHMFA's DPA program, and local county programs. These can provide grants or low-interest loans for down payment and closing costs. Eligibility varies by income and location.
Timeline
How long does it take to close on a home?
Typical closing timelines range from 30-45 days from contract acceptance. This includes application processing, appraisal, underwriting, and final approval. Purchase contracts often specify 30-day closings. We can accommodate faster closings when needed for competitive situations.
Can I lock my interest rate?
Yes! Rate locks protect you from rate increases during your transaction. Standard locks are 30, 45, or 60 days. You can lock your rate at application or wait until you have a contract. I'll help you time your rate lock strategically to secure the best rate.
What happens after I submit my application?
After submission: (1) Loan processing reviews documents, (2) Appraisal is ordered, (3) File goes to underwriting for approval, (4) Conditional approval issued, (5) Final conditions cleared, (6) Clear to close issued, (7) Closing scheduled. I'll keep you updated throughout every step.
Credit & Approval
I have student loans - can I still qualify?
Yes! Student loans are factored into your debt-to-income ratio, but there are strategies to minimize their impact. Income-driven repayment plans, deferments, and certain loan programs have favorable treatment of student debt. We'll optimize your application to maximize approval odds.
Can I buy a home with a previous bankruptcy or foreclosure?
Yes, but waiting periods apply. FHA allows purchases 2 years after bankruptcy discharge or 3 years after foreclosure. Conventional loans require 4 years after foreclosure, 2-4 years after bankruptcy. Extenuating circumstances can shorten these timelines. I'll help you understand your options.
Do I need to pay off all my credit cards?
Not necessarily. Underwriters look at your debt-to-income ratio, not just whether you have debt. However, paying down high-balance cards (especially those over 50% utilization) can improve your credit score and approval odds. I'll analyze your specific situation and provide personalized advice.
Can I buy a home if I'm already a homeowner?
Absolutely! Whether you're relocating, buying an investment property, or purchasing a second home, we have loan programs for existing homeowners. Requirements vary based on property type. You'll need sufficient income to qualify for both mortgages or a plan to sell/rent your current home.
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