Finance

Mortgage Q&A

Maze of Mortgages

Are you ready to buy a home?  First time? Refinancing?  I know, it can all be overwhelming and too often you just search under “For Rent” rather than take the plunge and buy your own place.  Owning your own is both daunting to get started, and rewarding once you go through with it.  If you’re ready to go for it, I thought having a little guidance through the mortgage maze would be a good thing.  Let’s see what my friends over at Guaranteed Rate can do to help you sort through the numbers.  What’s a conditional loan approval? We put together a list of commonly asked questions for them to answer for you.  Read on… – Ty

Conditional Loans

Mortgage Q&A with Guaranteed Rate

A conditional approval is issued by your underwriter once the loan file has been reviewed – the review and approval process is nearly the same for both a purchase and refinance. The conditional approval basically states that the loan is approved provided the conditions listed are satisfied. Learn more about the mortgage loan underwriting process.

Owning Multiple Properties

Mortgage Q&A with Guaranteed Rate

 

The truth of the matter is there is no limit. However, once you own more than four pieces of property your lender options will begin to shift from nearly any lender to exclusively dealing with the commercial department of your primary financial institution. Quite simply, if you own between:

1-4: Local bank or mortgage banker/broker.
5-10: Mortgage banker/broker.
11+: Commercial department of your primary financial institution.

Learn more about property ownership limits and lending guidelines.

Letter of Explanation

Mortgage Q&A with Guaranteed Rate

You don’t want to over think your letter of explanation. The underwriter wants the bottom line and that’s how your letter should be written – simple and to the point.

For example:

Q: What is the reason for your job gap?
A: My job gap is a result of being at home with our newborn child for the past year.

You’ll want to include the date and be sure to sign your letter (digital signatures are ok).

Learn more about what your underwriter might need.

Down Payments

Mortgage Q&A with Guaranteed Rate

Every loan scenario will vary as will the documents an underwriter will request. The truth of matter is, it depends on: the type of mortgage, type of property, credit health and source of assets. Let’s look at the most commonly requested documents:

  • Proof of earnest money check or wire
  • A letter of explanation (LOX)
  • Gift letter
  • Copy of your Note
  • Source of any large deposits in asset accounts
  • Verification of employment
  • Executed sales contract

Depending on your financial picture, your approval can contain many other requests. Be sure and speak with your mortgage professional about additional paperwork your underwriter may need.

Learn more about underwriting requests.

There are no hard and fast rules about down payment requirements as there are many variables which determine minimum required down payment. The variables that drive down payment include:

  • What are you buying (single family, condo or multi-family)?
  • What type of mortgage program are you using (conventional or government)?
  • Is your loan conforming or non-conforming (conforming or jumbo)?
  • Do you prefer a fixed or adjustable rate?
  • What is the reason you are buying the house (primary residence, second home or investment)?

Learn more about down payment requirements and use our matrix to find out what you’ll be required to put down.

Selene Garcia

Written by Selene Garcia, Guaranteed Rate’s Mortgage Editor. Guaranteed Rate is one of the ten largest retail mortgage lenders in the U.S. and offers industry-leading self-service tools, low rate, low fee mortgages through an easy-to-understand process and unparalleled customer service.

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