FAQs - Home Purchase
How do I get started?
Visit the Home Loans section of our website for details about the products and services we offer. We offer online pre-approvals, rates and detailed information within this section and our Mortgage Web Center.
How do I apply for an LBS Financial Credit Union Mortgage Loan?
What type of loan products do you have?
Click here to visit our Home Loans section for details about all of our home loan products.
Is it a good idea to order a credit report before applying?
Wise investors usually order a credit report to review its accuracy. This step gives them a chance to address any errors or mishaps before approaching the lender. As part of the process, LBS Financial will eventually order your credit report, so it's a good idea to address it beforehand so as to avoid delays.
What type of documentation do I need?
Here is a list of the information you should collect and have ready when you apply for your loan. Original documentation, when requested, is preferred and will be returned to you promptly.
|Loan Application||Loan application form||Loan application form signed and dated by all applicants|
|Self-employed||Most recent two full years of tax returns (individual, corporation, or partnership)|
|Other Income||Child support, alimony, or separate maintenance||
|Assets||Evidence of sufficient funds when closing||
|Obligations||Evidence of financial obligations (debts)||Copy of the fully-executed Divorce Decree indicating amount of child support, alimony, or separate maintenance payments|
What is an origination fee?
A fee collected by the lender for allowing you to borrow money to purchase or refinance property. The fee--also known as "points" is usually expressed as a percentage of the total loan amount. One point equals 1% of the loan amount.
What is LTV (Loan-to-Value)?
A ratio of the amount of money you wish to borrow compared to the value of the property you wish to purchase. An 80% LTV on a $100,000 property would equal an $80,000 loan. The property value is determined by either the appraised value or the purchase price, whichever is less.
What is escrow?
A neutral party who holds the legal documents and funds on behalf of a seller and buyer or a lender and a borrower, until the parties have satisfied all of the conditions to "close."
How much are property taxes?
Plan on 1%-3% of the market value of your home. For example, if your home has a market value of $500,000, property taxes might be $5,000 to $15,000, depending on where you live. If your property is located in a Mello Roos bond area, property taxes may be affected. Ask your LBS Financial loan specialist about your specific property area.
What is PMI (Private Mortgage Insurance)?
PMI is a necessary expense when you buy a house with less than a 20% down payment. PMI is additional insurance written by a private company protecting the mortgage lender from mortgage default.
What type of Mortgage Loan is right for me?
That depends on you and your current financial situation and long term financial goals. The following is a brief analysis of each type of loan, and the benefits of choosing one type over another.
- Fixed Rate Loans
Fixed Rate Loans, by their very nature, are the most stable of the loan categories. With interest rates and payments fixed over the life of the loan (generally 15, 20 or 30 years), homeowners can rely on knowing exactly what their housing costs will be each and every month. If it is important to you to have your rate and payment constant, or if you plan to be in this home for a long period of time without moving, a fixed rate loan may be the best option for you. See Mortgage Loan Rates.
- Adjustable Rate Mortgages (ARMs)
Adjustable Rate Mortgages (ARMs), conversely, often offer low start rates that then change with the marketplace. It is the low start rate that makes ARMs more attractive to many borrowers. An ARM is a great option if you are planning to move from this home within a few years. By having a low start rate, borrowers benefit from increased buying power, with the ability to afford a higher loan amount than with many fixed rate loans. Buyers, however, need to keep in mind that the rates can change dramatically once the fixed-rate period ends. Even with pre-set life caps, which limit how much the rate can "adjust," rates can increase substantially. See Mortgage Loan Rates.
- Fixed/Adjustable Combination Loans
Fixed/Adjustable Combination Loans are described by many as the "best of both worlds." These loans enable borrowers to enjoy the stability of a fixed rate loan during the early years of the loan, while also experiencing the increased buying power of an ARM. Start rates on this type of mortgage are often lower than standard fixed rate loans. Fixed/adjustable combination loans are often ideal for individuals who anticipate earning greater income during the later years of the loan, but would benefit from a lower payment in the beginning. See Mortgage Loan Rates.
Where can I take a First Time Home Buyers test?
If you are a first time home buyer and your home loan exceeds 80% loan to value, you will be required to purchase Mortgage Insurance and attend a First Time Home Buyers Seminar. For information on a First Time Home Buyers Seminar, click here and enter the Buyers Ed Code: email@example.com. This website offers educational information about buying your first home and offers the required online test you will need to take prior to getting your first home loan.
When does my loan actually close?
The closing (or settlement) of the loan is an actual meeting that takes place at the Escrow Office, one of our branches, or the escrow's signer can come to your home or place of employment. At that time, you'll be asked to sign the closing documents and pay any outstanding closing costs you are responsible for.
When do I pay my closing costs?
Prior to the closing, our Residential Lending Department closer will contact you to let you know the amount of funds you must bring to the Closing Meeting. Personal checks are not accepted--cashier's checks only.
What happens at the closing meeting?
The meeting will last approximately 1 hour and will be held either at the Escrow Company’s office or a Notary may come to your home. The steps below explain what happens during and after closing:
- The respective closing agent reviews the settlement sheet with you.
- You sign all loan documents.
- You then present a certified or cashier's check to pay closing costs (if applicable).
- If your monthly payments are to include property taxes and insurance, a new escrow account (or reserve) is opened when the loan is funded.
- The loan is funded by the Lender. The funds are transferred to the Escrow, who in turn, instructs the Title company to set up recording of the documents. The Deed and any other documents are usually recorded the following day. Once recording is confirmed, the Escrow agent can disburse funds for any payoffs. Remaining funds are sent to you with the HUD Settlement Statement.