Mortgage FAQs

Published on August 10th, 2018

If you’ve never bought a house, the whole process can seem scary and intimidating.  You practically have to learn a whole new language.  The following are some of the terms that you’re going to have to learn:  mortgage, appraisal, inspection, down payment, FHA, VA, HUD, PMI, Debt to Income, FICO, Flood Zone, Title Insurance, Earnest Money, etc.

The mortgage is key item in that list of terms and the rest of the terms somehow involve getting your mortgage.  The mortgage is the loan that you take out that uses the house as collateral to secure the loan.  You can rely on our credit union near Northlake to finance your first mortgage at a competitive, fixed rate! Here are some frequently asked questions to help you get started when you’re looking to purchase your first home. 

How Do I Begin the Process?

It is important to find a reliable mortgage lender, such as our credit union near Northlake. When formally applying for a mortgage, formal documentation is needed, such as your social security card, pay stubs, tax returns, Bank Statements, Identification and more.

Do I Need Pre-Approval?

Keep in mind that pre-qualification is not the same thing as pre-approval. Pre-qualification is an estimate of how much money you as a buyer can borrow. It’s preliminary because the lender is using limited information — such as your income, assets and debt — without actually verifying whether that data is accurate.  There are many tools available to help you with this, including our website at www.leydencu.org/loans/first-mortgages.

Mortgage pre-approval, on the other hand, is a written commitment from a lender to a buyer that lets the seller know that your bid is strong.  In the event that you’re bidding against another buyer for the same house, the bid from a buyer that has a pre-approval will often be looked at more favorably than the offer from a buyer that has not yet secured mortgage financing.   Getting a preapproval is a much more complex process that includes submitting a loan application and supplying information about your financial status, including tax returns, pay stubs, a W-2 for several years and financial institution statements. The lender verifies this information to determine if you’re eligible for a loan. When you receive a pre-approval, it signifies that a lender has scrutinized your loan file. For this reason, realtors and sellers prefer an actual loan preapproval over getting prequalified. Preapproved homebuyers can act faster because they already have their financing in place. Having a preapproval also shows the seller you’re a serious, qualified buyer and don’t need to make an offer contingent on financing.

How Much of a Down Payment is Necessary?

There is a misconception that you have to have a considerable amount of money for a down payment in order to get a mortgage.  Years ago, a large down payment was more common than it is today.  However, there are more options for mortgages with smaller down payments such as FHA loans or VA loans for Veterans. 

If you have more questions about the mortgage process and you want to learn more, contact our mortgage partner CU/America at 630-620-5200.


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