We’re proud to be ranked the #1 FHA Lender in America for the second year in a row by the Scotsman Guide! This is a testament not only to our team’s dedication but also to the number of clients we’ve helped and loans we’ve closed. We recently polled our team to come up with this list of common loan and home-buying questions. Whether you’re a first-time home buyer or a seasoned property investor, this guide will be an invaluable resource in your home purchase journey! If you have additional questions, be sure to contact a loan officer at the Potempa Team.
Who is Timothy Potempa?
Tim Potempa is the founder and president of the Potempa Team! With more than 19 years of experience as a loan officer, he consistently ranks in the Top 100 loan originators nationwide. Considered a leading mortgage industry expert, he loves helping people secure loans and finance their real estate goals. He is a wealth of knowledge, an exceptional leader, and an all-around great guy. He has built a mortgage team comprised of over fifty exceptional individuals to help give you the best experience possible. Most of our clients don’t communicate directly with Tim, however, you may see his name pop up through our marketing and communications. He is involved behind the scenes in EVERY transaction. Originally from Chicago, he’s a huge sports fan and dreams of wearing a Chicago Bulls uniform.
My Family Wants to Gift Me Money for My Home Purchase, Is That Allowed?
When it comes to getting a mortgage, lenders like to see a nice, neat paper trail. That means if you’re getting a gift from family or friends, you’ll typically need to provide documentation showing where the money came from and who gave it to you.
Now, as for when to deposit the money, it’s usually best to do it sooner rather than later. Why? The longer that cash sits in your account, the more time it has to season, which basically means it’s been sitting there long enough to prove that it’s not a last-minute cash infusion and a potential red flag.
Is Now a Good Time to Buy?
It depends on your financial situation, goals, and the local market! Interest rates, home prices, inventory, and the economy are in constant flux. However, if you’ve got your finances in order, you’re ready to settle down, and you’ve found a home you love in a great neighborhood, now could be a great time to take the plunge into homeownership! Consult with your real estate agent and your loan officer to decide if now is the right time.
When Are 2% Rates Coming Back?
Never say never, but it’s going to be a long time before we see a 2% interest rate again. However, there are several ways to get your interest rate down below market—consult with your real estate agent and your Potempa Team loan officer and ask how! Our team is very experienced in writing offers in such a way to help get your rate to a comfortable amount for you.
Do I Always Need to Put 20% Down?
No, you don’t always need to put 20% down on a home! There are many home loan options available that allow you to put as little as 3% or even 0% down! If you’re a first-time home buyer, in the military, a veteran, or able to qualify for a special homeownership program in your area, you may have options beyond the conventional loan with its 20% down payment. The best way to find out? Click here to start the preapproval process with the Potempa Team!
Why Do You Need My Spouse’s Information?
When you’re applying for a mortgage, we want to get the full picture of your financial situation. That means we’re interested not just in your income and credit score but also your spouse’s if you’re married. Why? Well, because in many cases, both spouses contribute to household expenses and financial decisions. Plus, if you’re applying for a joint mortgage, your spouse’s income and credit history can strengthen your application and help you qualify for a larger loan or better interest rate.
What is the Typical Closing Time on a Home?
Our average closing time is twenty-one days or less, though other factors could delay your closing date. Things like the property purchase being contingent on either the seller or the buyer securing or selling another property, necessary repairs that must be completed to close the loan, and other extenuating circumstances. In super competitive markets, we have been able to offer ten to twelve day closings which will make you stand out when there are multiple offers on a property and get your offer accepted!
What is the Difference Between the Down Payment and Closing Costs?
While they’re both important parts of the home purchase process, down payments and closing costs are not the same thing. Your down payment is essentially the upfront cash you must provide when you’re buying a home. It’s a percentage of the purchase price, usually around 3% to 20% of the total, depending on the type of loan you’re getting and your lender’s requirements. Closing costs are the fees and expenses you’ll incur to finalize the deal and officially become a homeowner. Closing costs can include things like appraisal fees, title insurance, and various other administrative costs. They typically add up to around 2% to 5% of your purchase price.
What is Mortgage Insurance?
If you’re putting down less than 20% of the home’s purchase price as a down payment, you’ll often be required to get mortgage insurance. It’s there to protect the lender in case you can’t make your mortgage payments and end up defaulting on the loan.
How Long Do I Have to Pay Mortgage Insurance?
If you’re getting a conventional loan with mortgage insurance, you might be able to stop paying mortgage insurance once you’ve built up enough equity in your home. Typically, that means reaching a loan-to-value ratio of 80% or less, either through paying down your mortgage or your home increasing in value (or a combination of both). Now, if you’ve got an FHA loan, the rules are a bit different. With an FHA loan, you’re typically required to pay mortgage insurance for a set period of time, regardless of how much equity you’ve built up. For most FHA loans, that means you’ll be paying mortgage insurance premiums for the life of the loan. However, you may be able to refinance into a different type of loan later on down the line.
Is There a Prepayment Penalty?
Different loans have different policies regarding prepayments, or early loan repayment. Be sure to ask before you sign on the dotted line! It’s good to be aware of any prepayment penalties as it could come into play if you later refinance or sell your home.
What Are Seller Concessions?
Seller concessions come in many forms, but they typically involve the seller covering some of your expenses associated with buying the home. This could include covering your portion of the closing costs, paying for repairs or upgrades to the home, or even offering to buy down your interest rate to make your mortgage more affordable. Seller concessions aren’t guaranteed, but if it happens to you, it could be a win-win for both sides! An experienced real estate agent may try to win you some seller concessions during the negotiation process. This is why it’s so important to work with a knowledgeable agent—you never know what you could be leaving on the table!
Do I Need a Real Estate Agent to Purchase a Home?
While there’s no rule that says you must use a real estate agent to purchase a home, we highly recommend hiring one to represent you. Particularly if you’re a first-time home buyer, a knowledgeable real estate agent will be an invaluable resource and guide during the process.
Why Should I Use a Real Estate Agent to Purchase a Home?
Real estate agents do so much more than find you a home and open the door. While we could go on and on about all the help and guidance real estate agents provide their clients, here are four major reasons to consider using a real estate agent to purchase a home.
- Expertise and Guidance: An experienced agent is worth their weight in gold, helping you navigate the purchase process with ease.
- Insider Access and Network: Your agent’s connections within the industry can make all the difference in finding and securing your dream home.
- Negotiating Power: You want your own agent advocating for you at the negotiating table and working hard to secure you the best possible terms.
- Peace of Mind: While you may feel capable of purchasing a home on your own, working with an agent will give you incredible peace of mind that no detail was overlooked.
Do I Need to Re-apply When My Loan Preapproval Expires?
In many cases, you can simply reach out and ask your lender to update your preapproval. They’ll probably want to take another look at your financial documents to make sure everything’s still in order, but assuming your financial situation hasn’t changed drastically, it should be a relatively easy process. However, it’s a good idea to ask your lender what you personally can expect so you’re not surprised.
I Had a Bankruptcy in the Past. When Can I Qualify to Buy a Home?
While bankruptcy can put a damper on your home-buying dreams, it’s not necessarily a permanent roadblock. If you filed for Chapter 7 bankruptcy, you typically must wait at least two years after your bankruptcy discharge before applying for a home loan. If you filed for Chapter 13 bankruptcy, the waiting period might be a bit shorter. A short sale usually has a penalty period of two to four years, while you might have to wait as long as seven years after a foreclosure to buy another home.
Still got questions? We’ve got answers! Click here to get in touch with us at the Potempa Team!
