Frequently Asked Questions

1.  How much can I borrow?

Affordability depends on your income and current debts.  Loans obtained during times of high interest rates will have higher monthly payments. Consequently, the lower the interest rate at the time you get your mortgage, the lower your monthly payments and the more you may be eligible to borrow.  Lenders generally state your monthly mortgage payment for principal, interest, taxes and insurance should not exceed 40-45% of your monthly pre-tax income. 

2.  Can I buy a home without a down payment?

Years ago buying a home required a 20% down payment. Currently many homebuyers make a down payment of 10% or less.  100% financing is also available for qualified buyers.

3.  Can I use my IRA retirement funds a down payment on a house?

For most first time buyers, you can use the funds in these retirement accounts without penalty.  According to the IRS, if both husband and wife are first-time homebuyers, they each can withdraw up to $10,000 for qualified acquisition costs penalty-free for a first home

4.  Can my parents or a relative gift me money towards my purchase or down payment?

Many lenders have rules regarding the amount of gift money you can receive and how much money you may need to contribute towards the loan.  It is advisable to discuss gift money in advance before your pre-approval.

5.  Can I get a mortgage if I have less than perfect credit or no credit?

A less-than-perfect credit history doesn’t have to stand in your way of reaching your homeownership goals.  In addition, alternate sources of credit can be used such as mobile phone accounts, utility accounts, etc

6.  Isn’t it cheaper to rent than buy?

You may be surprised how much home you can afford for the same rent check you are giving your landlord, especially when you consider the tax advantages of home ownership. As a homeowner, you’ll be building wealth as your home equity grows.

7.  What documents will I need to apply for a mortgage?

You must complete a standard mortgage application and your credit report will be pulled.  Income will be verified through your 2 most current pay stubs and 2 years’ W-2.  If you are self-employed, tax returns for the last 2 years are required, along with a year-to-date financial statement.  Two of your most current bank statements are also verified.

8.  How long does the pre-approval process take?

Once a completed application and documents are received, it generally takes 24-48 hours.

9.  How do I choose between a fixed or adjustable rate mortgages?

There are many different types of mortgage to choose from:  fixed rate, adjustable rates, balloon payments, interest only, deferred payments, graduated payments, reverse mortgages, commercial, etc.  It is best to discuss your goals with your purchase with a loan consultant to review all your options to match your goals.

10. Why would I use a mortgage broker?

A mortgage broker provides one stop shopping in the world of loans.  He or she will search the wholesale marketplace for the buyer’s desired product and terms at the most competitive rates.  With access to a large pool of banks/lenders, a mortgage broker can ensure financing for most borrowers and property types.  All information given to your loan consultant is personal and confidential and is not shared with the Realtor. 

For more information contact the Urban Bay Financing Team Specialists: