Get your top questions answered
Whether you have questions about how to start house hunting or what type of home loan is right for you, or you want to learn more about the home buying process, we’ve got answers.
We have valuable resources and answers to some of the most frequently asked questions about buying a home. And as soon as you’re ready to begin, contact us.
Common home buying questions answered
No. The Fair Isaac Corporation (FICO) allows you to rate shop during a 14-day window without impacting your credit.
The answer is…it depends.
Our Mortgage Bankers can prequalify you by phone if you meet qualifications. The process normally takes 15 to 20 minutes and the applicant will receive a prequalification letter.
This takes more time, because we must verify not only your credit, but also your income. Further, you will need to submit documentation such as your Social Security number, proof of income, assets and debt records. The process can take 20 minutes if you come prepared, or in some cases up to 2 business days.
- Home appraisal
Once your offer to purchase a home is accepted, the lender will need to conduct at least one appraisal to ensure that the property value is sufficient. A licensed appraiser will need to visit the property to conduct the appraisal. Estimate time is 2 days to 2 weeks, depending on the type of appraisal and the location of the property.
Closing, generally, is when you sign your loan documents and become obligated on the mortgage loan, and when the seller signs documents to transfer you title to the property. The timing may depend on state laws and local practices, as well as on the type of home loan you choose and how fast we can process your application.
This is repayment period on a loan during which payments of both principal and interest are required to be made to pay down the balance on the loan according to the terms of the loan documents prior to its maturity date. The amortization period may vary by the loan product and whether the loan has an interest-only period. For example a 30-year fixed rate mortgage loan, which requires principal and interest payments from the beginning, has a 30-year amortization period.
Interest may be tax deductible. Consult your tax advisor for more information. Tax laws have recently changed and Bank of the West cannot provide tax advice.
Yes. In most cases, we will need to obtain an appraisal from a qualified appraiser who will provide an independent estimate of the fair market value of your home. In some cases, more than one appraisal is required.
Appraisers complete a visual inspection of the interior and exterior of the property and note any conditions that might adversely affect the property's value, such as needed repairs. Further, they compare the home to other similar homes in the area and their recent sales prices.
Many factors are considered when a mortgage interest rate is established. Rates vary based on loan term, loan amount, property type and location. Some lenders may use a risk pricing model, which means they offer lower interest rates for well-qualified borrowers. Each lender has a way of determining risk. Speak with one of our Mortgage Bankers to find out the best rate that we can offer you.
Pre-house hunting, here’s what to do
Improve your credit score
- Keep balances low on credit cards and other "revolving credit" cards
- Pay off debt rather than transferring it to another credit card
- Don't close unused credit cards as a strategy to raise your score
- Don't open a number of new credit cards just to increase your available credit
And before you can even begin to look for a home…
- Do a review of your finances
- Check into programs, benefits and credits for first-time home buyers
- Find a realtor
Take the first step towards home ownership
Shopping for a home is exciting, especially if you’re a renter looking for your first home. While it may be one of the biggest purchases you may make in your lifetime, we can help to simplify the process.
- Get a copy of your credit report at annualcreditreport.com -- Federal law requires each of the three nationwide consumer credit reporting companies - Equifax, Experian and TransUnion - to give you a free credit report every 12 months if you ask for it.
- Know your credit score – Your credit score is among the most important factors when it comes to qualifying for a loan.
- Evaluate assets and liabilities - You should have a good idea of how much money you owe and how much money is coming in.
- Organize documents - When applying for a mortgage, you’ll have to provide asset information, employment and income history, debt information, social security information, and other information as requested.
- Qualify yourself - By calculating your debt-to-income ratio and factoring in a down payment, you’ll have a good idea of what you can afford, both upfront and monthly.
- Figure out your down payment – Even if you don’t have a lot of money saved for a down payment, there are potential options if you’re looking for low-down-payment and/or zero-down-payment home mortgages.
Evaluating homes can be an emotional roller-coaster. Make a list of must-haves, nice-to-haves and deal breakers. Bring your list when you visit open houses or interview real estate agents.
Purchase offers are usually legally binding (depending on state law) if a seller accepts the terms and it is signed by both parties. Make sure that you set aside funds for an earnest money deposit, typically 1% of the total offer price. If the offer falls through, the earnest money deposit may not be refundable depending on state law and the terms of your purchase agreement.
Learn more about home buying and making a down payment.
Find the home loan that’s right for you
A fixed rate mortgage is exactly what it sounds like — the interest rate remains the same during the life of the loan.
If you plan on staying in your home for longer than 5 years, a fixed rate mortgage is a great option. A fixed monthly payment makes budgeting easier and protects you against rate increases.
An adjustable rate mortgage is a loan with an interest rate that fluctuates based on a publically-available interest rate index (such as Prime or LIBOR). Many adjustable rate mortgage loans have a fixed interest rate period, typically 3, 5, 7, or 10 years. After the fixed rate period has ended, your interest rate can go up or down depending on the interest rate index in effect at that time.
An adjustable rate mortgage is a good option if you don’t plan on living in the property for the full term of the loan or if you relocate frequently. Since you don’t need a longer term loan, you may enjoy a lower rate and payment during the fixed period.
A Federal Housing Administration loan (FHA) is provided by a mortgage lender and insured against loss by the Department of Housing and Urban Development (HUD). The qualifications for an FHA loan are different from a conventional loan, but you’ll find the same loan terms of 15 or 30 years. In many cases, a smaller down payment is required and the loan qualification requirements are easier to meet. Subject to limitations, you can refinance a conventional loan into an FHA loan and vice versa, or refinance a FHA loan to a different type of FHA loan.
These loans are designed to be more flexible and accommodate a lower down payment. They may be a great option for first-time homebuyers.
- You must be able to put a minimum down payment of 3.5%.
- Down payment may be gifted by a family member.
- FHA loans are only for a primary residence, which you must occupy.
- Property must meet certain minimum standards established by Department of Housing and Urban Development (HUD).
A Fannie Mae HomeReady loan is an affordable, low down payment mortgage product designed for creditworthy low- to moderate-income borrowers, with expanded eligibility for financing homes in low-income communities.
A HomeReady® loan is a good option for first-time or repeat homebuyers that have low to moderate income and limited cash for a down payment
- Limited cash for down payment (as low as 3%)
- Credit score 620+
- Low to moderate income
- First-time or repeat homebuyer
Mortgage prequalified vs. preapproval. There IS a difference.
A lender can prequalify a buyer after they discuss the buyer’s financial situation, such as credit, income, debt and assets. Prequalification letters are quick and can usually be completed in a few minutes. A prequalification letter is based on your credit but does not include a verification of your income. It’s an easy way to find out how much you can afford.
A preapproval letter is based on a high-level analysis of your credit and income. You have a better chance of your home offer being accepted with a preapproval. After you get your preapproval letter, our mortgage banker can let you know what to expect when you apply for a loan.
How to “hire” a real estate agent
Think of finding the right real estate agent as a job hiring process. In many ways, you’re interviewing them to see if they’ll be a good fit for the role as your real estate agent. You might even find that you have to interview multiple real estate agents to find the right fit.
Questions to ask when selecting an agent include:
- What’s your experience and education?
- Is this your full-time job?
- Are you a member of the National Association of Realtors?
- What’s the price range of most of the homes you have bought or sold?
- How many homes did you buy or sell last year?
- What geographic areas and types of properties do you handle?
- How many homes have you bought or sold in my desired neighborhood?
- On average, how close to the asking price is the final sale price on homes you have bought or sold?
- Do you work on your own or as part of a team?
- How many clients are you currently representing?
Real estate terms you need to know
A conventional mortgage has qualifying guidelines that are set by Fannie Mae and Freddie Mac. The guidelines consider loan amount, loan-to-value, debt-to-income, credit score and history. This loan may have a fixed or adjustable rate and is generally limited to $453,100, although the amount varies from time to time and may be different in some geographies.
A credit score is a statistical number assigned to a person that indicates their creditworthiness. The higher the score, the more financially trustworthy a person is considered to be and is a factor in determining the cost of your mortgage.
A debt-to-income ratio (DTI) is a formula used by lenders (including mortgage lenders) to measure your ability to manage monthly payment and repay debts. DTI is calculated by dividing total recurring monthly debt by gross monthly income.
An FHA loan is a type of government-backed mortgage insured by the Federal Housing Administration (FHA), a branch of the U.S. Department of Housing and Urban Development (HUD). FHA loans typically have more flexible terms and lower down payment requirements.
Also called a “High-Balance Mortgage Loan”, is a mortgage which exceeds the conforming loan limits, but does not exceed the loan limit for the high-cost area in which the mortgaged property is located.
Jumbo loans are typically for borrowers who require loan amounts greater than the conforming loan amount, up to a limit of $4 million. They typically have more restrictive credit score, loan-to-value, and property requirements than conforming loans.
Relationship pricing, also known as relationship-based pricing, is a banking-industry pricing concept, where the pricing, or interest rate and fees on a loan, is determined, in part, based on your overall relationship with the lender, such as whether you have other accounts with the lender.
Underwriting is the process by which a lender measures and verifies the eligibility of a potential borrower. During this process, among other things, the lender assesses a borrower’s ability to repay the loan, based on the borrower’s income, debt, and credit history. The lender also uses the appraisal of the home to ensure that the collateral provides sufficient value.
- Must be a US Citizen, Resident Alien or Non Resident Alien who resides in the United States.
- Must be 18 years of age or older.
- Must reside in the bank’s 19-state retail footprint.
No, anyone that meets the qualifications identified above can apply.
Poor credit scores are the most common reason that people do not qualify, although there could be other reasons. Refer to your loan denial notice for the specific reason your application was denied. Please read this article, Good Credit Planning, for tips on how to improve your score.
When you refinance, you pay off an existing mortgage with the funds from a new mortgage with a new rate and term. As a homeowner, you may find that refinancing your mortgage benefits you, such as by getting you a lower interest rate and/or reducing your monthly payments. The process is as follows:
Get your finances in order
We can help you figure out which refinance option meets your financial goal.
Apply for a loan
Is it the right time to apply? Our Mortgage Bankers would be happy to review your current situation and provide additional information to help you make an informed decision. When you’re ready our Mortgage Bankers can help you submit your application.
Have your home appraised
After you have applied for a mortgage, we will contact you to schedule a professional appraiser to come out to your home to establish the value of the property.
Sign your loan
Yay! Assuming your application has been approved, you are almost at home plate. Make sure that you are available to sign your loan documents to ensure a timely closing of your loan.
It usually takes 6 to 8 weeks from the date of your application until the HELOC funds are available, if your application is approved.
Step 1 - We call you in 1 to 3 days after you submit your application to request any additional information.
Step 2- Depending on how you prefer to be contacted, we’ll email or call you with our credit decision.
Step 3 - We will arrange for an appraisal of your home. Whenever possible, for HELOC applications we will obtain only exterior appraisals, but some cases warrant an interior inspection such as a high property value, unique property type, or if the home sits on a parcel of land over 5 acres.
Step 4 - Sign your closing documents. Bring your paperwork and government-issued ID to the branch to have it notarized. Or we can schedule a notary to come to you. Be sure that each person on the home’s title, including the trustees of a revocable living trust (when applicable) can be present in addition to the HELOC applicant(s). We will let you know who is required to sign your loan documents.
Step 5 - The deed of trust or mortgage granting the Bank a security interest in the property is recorded. If your line of credit is secured by a primary residence, there will be a 3-business day waiting period before we can provide access to your funds. In some cases, the wait could be longer while the Bank waits for the deed or mortgage to be recorded. If requested, at the end of the waiting period, funds from your line of credit can be deposited directly to your Bank of the West account.