Home Buyers Ask
Loan Officers Answer

A continuing series of questions from consumers and answers from experienced loan officers about home finance. Homefinders.com will publish the mortgage questions and answers below. Stay tuned to find the answers to your questions. Or, you may submit a question to E-MAIL HOMEFINDERS, and we'll get the answer for you. Or, you can telephone Lenn Harley, Broker, Homefinders.com with your question. The answer will be published for your review.

Question: My husband took a job at NASA. We'll be at Executive House for 2 months. What kind of documents do we need to get approved for FHA. Our agent is sending us homes in the $400,000 price range.

Answer: July 18, 2008

Great News! The documents needed for a FHA loan are VERY similar to those you would need when applying for most other types of financing these days! Here's our "Scavenger Hunt" list!

• Most Recent pay stubs for 1 full month.
• The name, address and telephone number of someone who can verify employment. (We will be sending them a form to complete) We will be verifying your income for the last 2 years.
• If either of you are now, or have been self-employed, or earned income OTHER THAN W-2 income in the last two years, we will need full copies of your tax returns. If you ONLY earned W-2 income, we will need a copy of the W-2s for the last 2 years.
• Any data regarding the relocation package, and specifically what NASA is covering.
• If you owned property, and you've sold it, we'll need a copy of the HUD-1 Settlement Statement. If you own a property that is leased, then we will need a copy of the lease agreement. We need to document 2 full years of residence.
• If you've been renting during the last 2 years, we will need the name, address and telephone number of the landlord.
• We need copies of bank statements for the last 2 months. If you are changing banks, remember that we will need to verify the money going out of one account and into another! (PLEASE try not to have any NSFs!) We will need ALL pages of the bank statements.
• If you are receiving a gift for the your down payment - we will provide you with a gift letter to have completed. We will also need to verify that the person giving you the gift has the money in their account. In the event that you, or the donor, do not keep money in a bank - we do have other options, so you will need to speak with us directly about that situation.
• In the event that you do not have sufficient "lines" of credit, we can look at "alternative lines." This means that if you have only 1 credit card, and no other credit, we will likely need to use your cell phone, and your insurance (for instance) to establish that you pay your bills on time. If you think you might be in this situation, please have the last statement available for us.

In every single loan file, there are other items that we might also request... it's difficult for me to anticipate every different situation... for instance, if you sold a car before moving, and deposited $5000 from that sale - we are going to ask for evidence of the sale... but for the most part... this should be a VERY complete list.

In addition to gathering items for your loan officer, there are a few things you should NOT DO while you are waiting 60 to 90 days to purchase a new home.

• Do NOT close a credit card without speaking with a mortgage lender who has reviewed your credit.
• Do NOT apply for ANY new credit without speaking with a mortgage lender who has reviewed your credit.
• Do NOT even purchase a refrigerator until AFTER you close on your home and have the keys... without speaking with a mortgage lender who has advised you about the purchase.
• Do NOT quit your job, buy a new car, or invest in a new business (all things I've seen people do that made a MESS of closing!) without speaking with a mortgage lender who has advised you about these options.

Congratulations on your move, and your new opportunities! I know this is an exciting time! I strongly encourage you to choose a real estate agent who can guide you towards a mortgage lender that is familiar with the laws and underwriting guidelines in your new area!

Steve and Eleanor Thorne
Meridian Residential
919-459-1313
http://www.ncfhaexpert.com

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Question: I'm eligible for VA benefits and would like to buy a home in Prince William County, VA.
I've never purchased a home before. What are the benefits if I finance my home purchase with a VA loan?

Answer: 07/07/2008
VA Loans happen to be the only program out there today that provides 100% financing. In addition to this, it allows the seller to pay all the closing costs. What this means for you is that you may be able to close on the purchase of your first home with little to no money out of pocket. This allows you the opportunity to have money in the bank (reserves) to make any applicable home improvements and/or provide you a financial cushion for other expenses.

In a nutshell, a VA Loan could provide you a wonderful financing outlet to help you buy your first home. Best of luck and have a wonderful week!

Regards,

Jason Sardi
Mortgage Consultant

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Answer: 07/07/2008
The best answer to this question is that the VA allows Veterans to purchase a home with no down payment, although there are many benefits to using your eligibility.

The VA is fairly strict about it's qualifying guidelines - both for the property and the Veteran. This means that the appraiser is going to be a "little" more picky than other appraisers about the condition of the home. The VA considers items like child care costs, and heating and utility costs when qualifying you for a home. This is important, because you can feel confident that once you qualify for a VA loan, you will probably be able to make your payments and won't run into problems later on!

Remember - the VA does not actually make loans - they guarentee them. They charge a fee for this insurance, commonly referred to as a "Guarantee Fee." For this reason, if you are able to make a three to five percent down payment on a home, there are other financing options that might better meet your long term goals.

Also - because you will be borrowing a little more than the purchase price (due to the Guarantee Fee), it's vitally important that you seek the services of an experienced real estate agent. A realtor will help you negotiate the best terms, and give you the best information regarding market conditions!

Steve and Eleanor Thorne
Meridian Residential
919.459.1313