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Home purchase & mortgage loan

Learn what a mortgage loan is and its influence on your home purchase.
Discover the main mortgage loans we work with and their features.
Understand the main terms used when applying for a mortgage loan to purchase a house.
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Preparations For Purchasing a Home

Before you start looking for a home to purchase, you will need to know how much you can spend. The best way to do that is to get prequalified for a mortgage loan.

To get prequalified for a mortgage, you just need to provide your mortgage broker with some financial information. This includes the amount of your income, savings, and any investments you have.

WHAT IS A MORTGAGE AND HOW DOES IT AFFECTS YOUR HOME PURCHASE?

A mortgage loan or mortgage is a type of loan from a bank or other financial institution that helps a borrower purchase a home. The collateral for a mortgage is the home itself. This means that if the borrower doesn't make monthly payments to the lender and defaults on the loan, the bank can sell the home and recoup its money.

HOW DOES A MORTGAGE WORK FOR YOU?

When you get a mortgage, your lender gives you a set amount of money to buy the home. You agree to pay back your loan – with interest – over several years. You will not fully own your home at the beginning but you can still enjoy and live in it. Eventually, when the mortgage is paid off, you will have full ownership of your home.

Financial Plan for Buying a House

Creating a financial plan for buying a house is important. A financial plan can help you manage your income, expenses, debt, and investments so that you can achieve your goals. For most, homebuying will involve saving a significant amount of money.

Having a financial plan will allow you to save money while at the same time having enough for your current needs. Here are a few tips to help you start a financial plan for buying a house:

•  Know Your Budget
•  Check Your Credit Report
•  Maximize Your Credit Score
•  Avoid Major Purchases

WE WORK WITH THE MOST POPULAR MORTGAGE PACKAGES

Selecting the right mortgage loan is very important. As mortgage brokers we make sure you get the best deal available for your home loan.

Conventional Loan

No PMI required with a 20% down payment.
Can be used for a wide range of property types.
Higher loan limits than some government-backed programs.
Flexible loan terms with adjustable-rate and fixed-rate options.

VA Loan

100% financing available with full VA entitlement.
No private mortgage insurance required (PMI).
No prepayment penalty.
Guaranteed by the government.
Lenders have limitations.
Loans are assumable.

FHA Loan

Low minimum credit score of 500.
Government-insured Loan program.
Flexible qualification for first-time homebuyers.
3.5% down payment with a credit score of 580+.
Closing costs could be paid by the seller, home builder, or lender.

USDA Loan

0% down payment or lower down payment than other loan products.
Low private mortgage insurance (PMI).
Easier qualifying requirements for those with lower credit scores.
Can finance 100% of the home's purchase price.

COMPARISON BETWEEN MORTGAGE PACKAGES

Not all home loans are the same. Some are geared towards those who have already built their credit score, while others are better for those who are just starting. There are home loan options that are great for those who want to have a quiet life in the countryside and there are also loan options fit for those who serve the country. To help you get an idea of the differences between these mortgage packages, here's a quick rundown of the important requirements for each type.
Requirements
Conventional
FHA
VA
USDA
Down Payment
3%
3.50%
0%
0%
Mortgage Insurance
PMI 0.5 - 1% of the loan amount
UMIP 1.75% of loan amount
Annual MIP 0.45 - 1.05% of loan amount
Funding fee 0.5 - 3.6% of loan amount
Upfront Guarantee Fee 1% of the loan amount and an Annual guarantee fee 0.35% of the loan balance
Loan Limit
$647,200
$420,680
$647,200
$336,500
Credit Score
620+
580+
640+
580+
Debt-to-Income (DTI) Ratio
43%
31% front-end DTI
43% back-end DTI
29% front-end DTI
41% back-end DTI
41%
Employment and Income
No income limits. Requires at least 2 years of consistent work history.
No income limits. Requires at least 2 years of consistent work history.
No income limits. Requires at least 2 years of consistent work history.
Household income should not be more than 15% of the area's median income.
Cash Reserves
At least 6 months f cash reserves
Cash reserves required depending on property type and creditworthiness
No cash reserves required
No cash reserves required
Occupancy
Any purpose
Primary residence
Primary residence
Primary residence
Property Type
Any type
1- to 4-unit property
Single-family homes
1- to 4-unit property
Home Appraisals
Required
Required
Required
Required
Other Requirements
Available for anyone eligible.
Available for anyone eligible.
Available only to eligible veterans, service members, and their spouses.
Can only be used to purchase a property in a USDA-designated rural area.

OUR MORTGAGE PROCESS

Working with Ebenezer Mortgage Solutions means we'll be with you from application to closing. Our mortgage process was created in a way to streamline your application and ensure that you have a stress-free experience.
Application
15%
Prequalification
30%
Home Shopping
45%
Processing
60%
Appraisal
75%
Underwriting
90%
Closing
100%
Learn more about our loan process

DOCUMENTS YOU WILL NEED WHEN PURCHASING A HOME

Buying a home involves a stack of paperwork. Preparing these documents ahead of time might help you get to closing day faster.
Proof of Income
Proof of Employment
Bank Statements and Assets
Tax Returns
Gift Letters
Proof of Identity
Proof of Address
Purchase Agreement
Certificate of Eligibility

MORTGAGE GLOSSARY

If you start applying for a home loan, you'll most likely encounter a lot of mortgage jargon. And although professionals like a mortgage broker can help explain most of these words, being familiar with these terms can help you go through the process more confidently.

Adjustable-Rate Mortgage (ARM)

An adjustable-rate mortgage is a type of mortgage that has a variable interest rate. For the first few years, your mortgage will have a fixed interest. But after that, the interest rate will fluctuate based on the market index.

 

Amortization

Amortization is an accounting method of paying off debt by making smaller payments spread out over a certain period of time. With a mortgage amortization, part of your monthly payment goes toward paying off your principal loan, and the other part is for the interest.

Initially, you'll be paying more on the interest than the principal. But over time, more of your monthly mortgage payment will go into paying off the principal loan and less on the interest.

 

Annual Percentage Rate (APR)

An annual percentage rate is a calculation that includes both the interest rate of a mortgage and the lender's fee. When shopping for a loan, you'll often see two percentages listed. The larger number is the APR. The bigger the difference is between the APR and the interest rate, usually means that you'll be paying higher lender fees.

 

Balloon Loan

A balloon loan is a type of loan that involves lower monthly payments and a larger one-time payment at the end of the mortgage term. Usually, the borrower will only pay for the interest throughout the term. And by the end of the term, they would have to pay the rest of the loan balance. Balloon loans might be a good choice for those who have an excellent credit score and a sizable income.

 

Closing Disclosure

A closing disclosure is a five-page document that defines the important factors of your mortgage. This includes the purchase price, interest rate, loan principal, closing costs and other expenses. You'll have three days to review the closing disclosure. So always go through it thoroughly before you sign.

 

Deed

A legal document that transfers the ownership of property from the seller to the buyer. In other words, it's proof that you are now the owner of the property you bought.

 

Discount Points

Discount points are optional prepaid interest that borrowers can buy to lower the interest rate of their homes. Each discount point is equal to 1% of your loan amount. Discount points are also known as mortgage points.

 

Earnest Money Deposit

Also known as a good faith deposit, an earnest money deposit is a check that a buyer writes to a seller when making an offer on the property. Earnest money shows that you are serious about purchasing the home. This reassures the seller when they have to take the property off the market while waiting for you to get the financing, property appraisals, and inspections before closing.

Usually, earnest money would cost about 1 - 10% of the purchase price, depending on the market and condition of the property.

Earnest money will be deposited into an escrow account or in a non-interest-bearing trust. It will stay there until closing. Upon closing, you can then use the earnest money on your down payment or closing costs. If the sale did not push through because of situations such as the home not passing the inspection, the earnest money will be refunded to the borrower.

 

Escrow

An escrow is a financial arrangement wherein a third party holds the assets or funds on behalf of two other parties involved in a legal transaction.

There are two main purposes for an escrow account. Firstly, an escrow account can be used to hold earnest money when buying a home. Secondly, it can be used to hold a portion of your monthly mortgage payments to pay for your taxes and insurance when they are due.

 

Fixed-Rate Mortgage

A fixed-rate mortgage is a type of home loan that has the same interest rate throughout the life of the loan. Most borrowers prefer fixed-rate mortgages because it's easy to understand and makes budgeting easier.

 

Home Inspection

Home inspection and home appraisal are oftentimes used interchangeably. But they are actually two different things with two different purposes.

As mentioned above, an appraisal examines the condition of a home, as well as the location, features, and market trends, to provide an estimation of its value. It's also required by most lenders.

On the other hand, a home inspection is a thorough examination of a property. A home inspector checks the safety and condition of the property. This includes assessing the heating and cooling systems, electrical work, sewage, and more. The findings will allow you to identify what needed repairs, renegotiate the sales, or cancel the sales agreement.

Although a home inspection is not required by lenders, it is good to have one to identify problems before you actually buy the property.

 

Homeowners Insurance

Homeowners insurance is a policy that covers damages to a home which includes interior and exterior damages, loss or damage to assets, and injury incurred while on the property.

 

Interest Rate

An interest rate is a fee that is paid to a lender for borrowing money from them. It is expressed as a percentage of the principal. Interest rates change often, but they can either be fixed or adjustable. There are lots of tools online to help you explore interest rates in your area.

 

Loan Servicer

A loan servicer is the one responsible for managing your loan. They send you your mortgage statements, process your monthly payments, track your principal and interest rate, manage your escrow account, and respond to any inquiries you might have about your loan.

 

Mortgage Term

A mortgage term refers to the length of time it takes to pay off your loan. The common terms are 15 and 30 years. Generally, the shorter mortgage term has lower interest rates but higher monthly payments.

 

Mortgage Payment

A mortgage payment is how you pay off your home loan. It is a monthly obligation that is made up of four components—principal, interest, taxes, and insurance (PITI).

 

Pre-Approval

A pre-approval shows the loan amount a lender is willing to give you. Although it's similar to a prequalification, a pre-approval requires you to provide more financial information to the lender. Other than the loan amount you are qualified for, pre-approvals may also include your interest rates. However, these terms only last until the pre-approval validity which is usually 60 to 90 days. Keep in mind that being pre-approved is not a guarantee that you will be offered a loan.

 

Principal

A principal is the unpaid portion of your loan balance. For example, if you borrowed $300,000 from a lender, then your principal is that $300,000. As you pay off your monthly mortgage, your principal will also decrease.

 

Property Taxes

Property tax is the levy that a property owner pays to their local government. The amount you pay in property tax is usually based on your property's assessed value and where you live.

 

Promissory Note

A promissory note is a legally binding document in which the borrower promises to pay the lender. Promissory notes often include the loan amount, interest rate, mortgage term, conditions and obligations between the two parties.

 

Real Estate Agent

A real estate agent is a licensed professional who can assist you in real estate transactions. The duty of a real estate agent includes helping you find potential properties, drawing up offer letters, and negotiating to get you a great deal.

 

Refinance

To refinance a mortgage means to pay off your current mortgage loan in order to get a new one. Borrowers refinance to take advantage of lower monthly payments, lower interest rates, or shorter mortgage terms.

 

Seller Concessions

Seller concessions are closing costs that a seller agrees to pay on behalf of the buyer. Offering seller concessions might make the property more appealing to potential buyers. Additionally, it also helps buyers pay less at closing.

 

Title

A title means ownership of a property. The transfer of title, along with the description of the property, is written on the deed.

 

Title Insurance

Title insurance is meant to protect the buyer or the lender against potential loss if the property has unknown issues.

FREQUENTLY ASKED QUESTIONS

How can I find out how much home I qualify for?

Getting prequalified or pre-approved can help you determine how much home you can afford. Keep in mind that a prequalification is just an estimation of how much you are qualified for. A pre-approval, however, is closer to what you can actually receive based on your creditworthiness.

Is there anything I shouldn’t do before applying for a mortgage?

There are several things that you should avoid prior to applying for a loan. Here are a few examples:

1. Switching jobs
2. Closing credit accounts
3. Making large purchases
4. Making large deposits into your accounts

Is there anything I shouldn’t do after getting pre-approved?

Getting pre-approved is not a guarantee that you'll be given a loan. Therefore, you should still apply the same precautions mentioned above such as not switching jobs, not closing credit accounts as well as opening new ones, and making large purchases.

Can I still get a mortgage if I have bad credit or have filed for bankruptcy?

Yes, but it'll take some time and work. Depending on your loan type, you'll usually need to wait 2 -4 years after the dismissal of your bankruptcy before you can apply. During this period, you are expected to pay down your debt and reestablish your credit.

I just got a new job. How does this impact getting a mortgage?

Depending on the nature of your new employment, switching jobs is not necessarily a deal-breaker. If your new job is within the same field as your previous job and has the same or higher pay, then it wouldn't be a problem.
To prove that you are indeed employed by your new company, your lender might ask for your employer's contacts as well as your most recent pay stub.

What’s prepaid interest?

Prepaid interest is part of the upfront closing costs. It involves the charges accumulated between the closing date and your first monthly mortgage payment.

What should I bring to closing?

Before closing day, borrowers are often given a list of what to bring which includes:
• Your photo ID
• A copy of the purchase agreement
• Proof of homeowners insurance
• Your lawyer or agent
• A certified cashier's check

When will I get my money?

It usually depends on how long the escrow company can write a check or wire the funds. In most cases, the seller will receive their home sale profit right after closing or within 1 - 2 business days.

ARE YOU LOOKING FORWARD TO BUYING A HOME?

Getting frustrated because you don't know where to start?

Is it hard to keep up with so much mortgage information?

LET OUR MORTGAGE BROKERS DO THE HARD WORK FOR YOU

AND TURN YOUR DREAM HOME INTO A REALITY

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