As a real estate lawyer in Florida, I am asked a ton of questions about next steps when it comes to getting a mortgage for your new home.
At Grimaldi Law Firm, we are always happy to answer these questions and remain a trusted partner in this process. We know how challenging it may feel to get the right mortgage information in Florida, especially if you’re a first-time home buyer.
In the interest in helping you move full speed ahead towards the home purchase of your dreams, here are some answers to our most frequently asked questions about the mortgage process.
1. Should I bother trying to get a loan if my credit isn’t perfect?
Of course! Perfect credit is not very common, after all. If you’ve had any hiccups in your credit past, an FHA loan is what you’ll need to consider. Federal Housing Administration-insured loans are appealing because they're widely available to borrowers with imperfect credit. You need a credit score of 580 or higher to get an FHA-insured mortgage with a down payment as low as 3.5 percent. If your credit score is between 500 and 579, you need to make a down payment of at least 10 percent to get an FHA mortgage.
2. How much can I afford to borrow?
The golden rule here is that you should never borrow more than you are able to repay. A common mistake first-time home buyers make is that they often stretch themselves thin to pay a mortgage that is higher than they’re able to pay, thinking they’ll be bringing in higher salaries over time. While this is a nice thought to have, you can’t buy a home based on what you don’t yet have, otherwise you end up house-poor, and this is not a fun place to be.
3. How long will underwriting take?
Underwriting is the process between applying for your loan and finding out whether or not you are approved. Yes, this can take a while, and yes, you will be on the edge of your seat the entire time – this is normal, though! If your underwriting process is taking longer than usual, this isn’t a bad sign – it’s just the nature of the mortgage beast. Expect to wait a few weeks and in the interim, keep your credit as steady as possible by avoiding and extreme credit card purchases.
4. Do I need to have money in the bank to secure a mortgage approval?
Yes! And this means a savings “reserve” that is not depleted once you purchase your new home. Lenders want to know that there will be enough money in your name to cover the mortgage payments they are approving you for so give yourself a little wiggle room and don’t spend your entire life savings on your new home’s down payment.
5. What kind of down payment should I be prepared to make on my new home?
This is probably the most common question of all. Many people are under the impression that 20% is a typical down payment percentage, however this is not always the case. In some cases, some loan programs allow qualified buyers to make no down payment at all, or will even accept down payments as low as 3%.
The Department of Veterans Affairs guarantees zero-down VA mortgages for qualified borrowers: veterans, active-duty service members and certain members of the National Guard and Reserves.
The U.S. Department of Agriculture guarantees zero-down mortgages as part of its Rural Development program. The loan guarantees are available in eligible areas -- mostly rural areas, though some are suburban.
Navy Federal Credit Union offers zero-down mortgages for qualified members to buy primary residences.
6. Do I need to hire a Real Estate Attorney?
This is a given. Any time you are dealing with large sums of money when it comes to buying or selling property and signing contracts, it’s always best to have a trusted attorney on your side. Grimaldi Law Firm works with all types of lenders to ensure that all the lender's request are satisfied and the ensure that the property is free and client of any liens to protect the buyer and lender's investment in the property.
For answers to any more of your mortgage questions, contact us today!
At Grimaldi Law Firm, your future is our present.
We can be reached at (954) 491-8707
Special Note: The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an experienced real estate attorney. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.