Washington Mortgage Broker / Loan Officer 

How do I get pre-approved for a mortgage loan?

Talking with a good mortgage broker should be your first step in the process of buying a home. With my clients, I usually have a 20-30 minute introductory call to get some basic information from them but, more importantly, give them an opportunity to ask questions and get comfortable. Below is some of the information I gather:

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• What do you want to do?

• What is your timeframe?

• What does your income look like?

• What are your monthly debt payments?

• How much do you have for a down payment?

• What do you want your payment to be?

• How is your credit?

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After the initial phone call, I'm able to quickly put together a quote to give the client an idea of what they'd be looking at, funds needed to close, payment, and approximate interest rate (which can change). After that, it's a matter of filling out an application, running credit, and getting me a few documents to verify income, and I can quickly get you pre-approved and out shopping if everything checks out. 

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What is needed to qualify for a mortgage loan?

After doing the above and getting pre-approved, finding a house, and getting your offer accepted, I gather the below documents and turn your information over to the lender and their underwriter, who goes through everything and approves your loan. Documents I usually need include:

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• Past 2 years W2’s

• Past 2 years Federal Income Tax Returns (usually business owner/landlords only)

• Past 2 Years Business Tax Returns and K-1’s (usually business owner only)

• 1 month most current paystubs – last 2 paystubs

• 2 months most current bank statements – all pages

• Most recent quarterly statement for retirement account(s) (if using for qualification)

• Social Security and/or Disability income award letter (if retired)

• Alimony and/or Child Support court decision (if applicable)

• Copy of Driver’s license

• Visa/Residency documentation *if non U.S. citizen (if applicable)

 

FOR ALL PROPERTIES OWNED: 

• Most recent mortgage statement(s) (if applicable)

• Evidence of insurance, reflecting annual premium amount (if applicable)

• HOA monthly payment coupon (if applicable)

 

How long does the whole process take?

The process can usually go as quickly as you need it to and depends on how fast you can get me what I need. If you've found your dream house and want to make an offer ASAP, if you can fill out the application and get me the required documents, I can have you pre-approved and making an offer within hours.

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If you've got an accepted offer, once I have all the documents I need (listed in the last section), I can get your loan done fairly easily within 15 days in most situations. Sooner if needed.

 

How much home can I afford?

Often what you can afford and what I can approve you for are two different things. In most situations, I can get you approved with total monthly debt payments at about 48% of your gross income. Not only will the mortgage payment count as a debt payment, but your car payment, student loan payments, and credit card payment are all counted toward this number. 

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For instance, if you and your spouse gross $10,000 a month combined, have car payments of $1500 a month, student loan minimum payments of $500 a month, and no other debt payments, there's a good chance I can get you approved for a $2800 a month mortgage payment. That said, by the time you take taxes and other deductions out of the $10,000 income, you might not be comfortable having $4800 a month in debt payments. Yet someone whose income is likely to increase over the coming year might be okay with it. 

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So, in a nutshell, how much house you can afford depends a lot on your other debts, future income prospects, and your comfort level. The best way to find out how much home you can afford and what you're comfortable with is to talk to a mortgage broker about your situation. You can call or email me, and I would happily talk about your options and put together a no-obligation quote to help figure out what makes sense in your situation.

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How much do I need for a down payment?

My personal recommendation is to put at least 10% down. Putting 20% down is optimal as you avoid mortgage insurance, but with 10% down, the mortgage insurance is usually pretty minimal and can be removed once certain thresholds are met.

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I do USDA and VA loans all the time with 0% down. These are both great loans that fill a need. I can do conventional loans for first-time home buyers for just 3% down or 5% down if you aren't a first-time home buyer and FHA loans for as little as 3.5% down. 

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I recommend talking to your mortgage broker and finding out what works best for you and your situation. 

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How do interest rates affect my mortgage?

With higher interest rates come higher payments. If the interest rate is .125% higher or lower may not mean a lot as far as your payment, but swings of .5% to 1% can quickly erode your buying power.

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That said, timing your home purchase to get the very best interest rate is nearly impossible. During 2020 and 2021, we saw some of the most affordable interest rates ever. Today's rates, though higher, are still historically low, so though more expensive, it still represents a great time to buy.

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There are things you can do to decrease your interest expense. A 15-year fixed rate loan is often a good option and has a lower interest rate than the popular 30-year option. A bigger down payment can sometimes help get you a lower interest rate as well as reduces the interest you pay each month. Paying extra principal each month reduces your interest expense and will help you pay your home off sooner.

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As a mortgage broker, my rates and fees are lower than most retail lenders. Contact me today to review your options and see a side-by-side comparison with a retail lender.

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What are mortgage points?

Mortgage points, or discount points, is a fee paid upfront to reduce your interest rate. If you see an ad with a very low-interest rate online, you can bet they are charging you discount points. Read the fine print.

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A mortgage point is equal to 1% of your loan amount. So if you're getting a $500,000 loan and you have two discount points, you'll pay an additional $10,000 in fees to get the loan. 

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Unless you know for sure, you'll have a loan for a long time. It doesn't make much sense to pay for discount points as it usually takes too long to break even. You're usually better off putting the extra money toward your down payment. Talk to a mortgage broker, and they can tell you what makes the most sense for you.

 

What are closing costs?

Closing costs are comprised of several things. Below are bullet points with an explanation on each:

 

• Pre-Paids: These are the property taxes, insurance, and interest you pay upfront when you get a loan. This is usually the biggest chunk of closing costs and would be the same with any lender.

• Title: The Title Company manages closing, among other things. Their fee would be the same from lender to lender.

• Lender Fees: Origination, processing, and underwriting charges are all examples of lender fees. These charges will differ from lender to lender.

• Points: Discount Points, Mortgage Points, and Discount fees are all examples of the cost of lowering the interest rate. Again, be wary of online ads or lenders touting a rate that seems to be good to be true. Likely points are being charged. They don't always make this obvious.

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How do I lock my interest rate?

Interest rates change daily. Locking your rate is a crucial part of the mortgage process. Locking guarantees your interest rate for a specific period of time, usually 30 to 60 days. More extended lock periods are available but usually come with an increased cost.

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In most instances, you get pre-approved, and once you find your home and get an offer accepted, you lock your interest rate. It is possible to get pre-approved and do a "Lock and Shop." That locks your interest rate before you've found a home. If you're fearful of interest rates rising and relatively confident that you'll find a home within a specified period, this could be a good option. Talk to your mortgage broker to get more info and see what makes sense in your situation.

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What does my monthly mortgage payment include?

Your mortgage payment. What are you actually paying? It would be nice to think it was all going to pay down your principal balance, but that's not the case. Below is what the typical monthly mortgage payment includes:

 

• Principal

• Interest

• Property Taxes

• Homeowners insurance

• Private mortgage insurance (PMI), if you put down less than 20% on your home

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What exactly is an escrow account and what does it do?

You can choose to have additional costs for your homeowners insurance and property taxes added to your monthly payment. The money you pay each month for these costs goes into your escrow account which is managed by a third party to ensure payments are made on time.

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How do I start the process of getting pre-approved and buying a home?

Talk to a mortgage broker or loan officer. If you don't have one or just even want to compare a quote you've recently received I'd be happy to help. Email me today or just click here to get started >>> FREE NO OBLIGATION RATE/QUOTE

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