- Current monthly income
- Current monthly expenditures
- Desired monthly mortgage payment
- Anticipated sale price or home value
- Anticipated down payment amount
Obtaining A Loan
You need to “prove” your eligibility for a mortgage. The following factors are considered in determining your borrowing eligibility:
You typically need to prove both your monthly income and income-earning history.
Both your current and projected monthly obligations are compared to your monthly income. As a general rule, your monthly housing expenses should not exceed 28% of your gross (pre-tax) monthly income. Overall, your total monthly expenses (e.g. housing, auto, student loans, credit card, etc.) should not exceed 36% of your gross monthly income. It is important to note that these are general guidelines and can vary depending on the loan program you select.
- Credit History
A demonstrated track record of handling financial obligations in a timely manner is a characteristic lenders actively seek. Lenders use your credit report to assess and qualify this track record. By clearly understanding your financial history, lenders can judge the likelihood that you will also handle your mortgage obligation responsibly.
- Down Payment Size
Although some loan programs only require a small down payment, a larger down payment can be considered favorable. Often, the size of your down payment can be increased through a gift from an immediate family member or by borrowing against another asset (such as a 401k plan).
- Anticipated down payment amount
The following income and employment information is generally required as part of the loan process:
- For the employed:
Current pay stub(s) covering 30 days and showing year-to-date income
Current W-2 Form
- For the self-employed:
Current, signed business and personal income tax returns covering a two-year period
Current balance sheet
Year-to-date profit and loss statement
- For retired homebuyers:
Social Security Award Letter
Either a 1099 Form or bank statement spanning a two-month time period (all pages)
Copy of your pension check and all supporting documentation
- Bank account information — Bank account statements spanning the most recent two-month time period (all pages).
- Investment information — Including account numbers, current values, and statements spanning two months. (all pages)
- Credit card information — Including credit card company names, account numbers, monthly payment amounts, and outstanding balances.
- Other loans (auto, student, etc.) information — Including lending company names, account numbers, monthly payment amounts, and number of remaining payments.
- Rental information (if applicable) — Landlord’s name, address, and telephone number.
- Other information:
Name of settlement agent/attorney, firm’s name and telephone number;
Divorce decrees and separation/alimony agreements (if applicable);
List of other real estate owned, including value, mortgage balance, monthly payment.
There are several steps involved in approving your loan. At The Bank of Southside Virginia, we will take care of the following:
- Ordering a home appraisal
- Ordering your credit report
- Requesting any missing information necessary to complete your application
- Keep you continually updated
- Promptly contact you with your loan decision
When all the I’s are dotted and the T’s are crossed, whether the house is ready to change hands or you are obtaining another type of home, you can breathe easily. At this stage in the mortgage process, the realtors, BSV or other party work together to close, or settle, the transaction.
At the closing may be:
- Your settlement agent/attorney
- The home seller
In preparation for this meeting, you’ll need to provide the following information:
- Your desired closing time and date
- Your settlement agent/attorney’s name, address, and telephone number
- A survey and/or termite inspection (if required by your loan program)
- A certified or cashier’s check as payment for your closing costs
- The other closing participants will provide the following information:
- Loan closing documentation-provided to the settlement agent/attorney by the lender;
- Title search and notification of final closing costs-provided to you by the settlement agent/attorney.
Making arrangements to keep the financial commitments you made in buying the house can be a challenge. After closing, your loan servicer should provide you with the following:
- The option of setting up an automatic draft payment plan after your first payment
- Property tax and insurance escrow account management
- Annual escrow account balance information
- Customer support
If you are not yet ready to buy
Here are a few hints that can help you increase your future purchasing power:
Focus on saving money. One of the easiest ways to accomplish this is by developing and adhering to a strict budget.
Click Here for a Monthly Budget Worksheet
- Repair your credit.
Consistency is the key. Make sure your bills are consistently paid on time. Our Online Bill Payment service can automatically pay your monthly mortgage and other bills for you.
- Manage debt.
Refrain from accumulating additional debt while simultaneously paying off or down existing debt.
- Look for interest rate reductions.
Your purchasing power increases as interest rates decrease. Keep track of your desired rate or payment amount by checking the rate often.
All mortgage loans are subject to credit approval, verification, collateral evaluation and eligibility. Rates change daily and can only be guaranteed when a rate lock has been issued. Programs, terms and conditions are subject to change without notice.
First and foremost, you want to know how much house you can afford. Getting a prequalification is a great way to do that. Click here to get prequalified
Based upon information you provide in your prequalification we will determine the approximate amount of money that you will be able to borrow. You will be “pre-qualified” for that loan amount. By allowing your Loan Officer to verify your credit, income, and assets, it will give use the information necessary to provide a prequalification letter that can be used while shopping for your home.
The number of days from application to closing can vary from a couple of weeks to 45 days or more depending on several factors. Some of the factors are loan type, whether an appraisal is needed, title clearance, etc. Time elays also occur if outside sources or the borrowers do not promptly provide documents to the lender.
A good rule of thumb is to have all housing expenses equal to or less than 26% of your gross monthly income. Click here to use our calculator
A prequalification is used for purchases only. It is an important step that helps in figuring out how much “Home” you can afford. Get Pre-Qualified Today
The requred down payment depends on the type of loan program but can be as low as 3%. Ask your BSV Banker for information on different loan programs.
Loan-to-value (LTV) is the loan amount divided by the lesser of the sales process or appraised value. For example, if you are paying 15% of the total cost of the home as a down payment, you would only be borrowing 85% of the total sales price from the lender. Therefore, your LTV would be 85%.
DTI stands for, Debt-to-Income, and is calculated by dividing your total monthly debt by your total monthly gross income.
If you do not have enough established credit, your Loan Officer can work with you to document alternative credit information. If you have been renting, a rental verification from your landlord is also a way of verifying your payment history.
A new job can work in your favor when you apply for your loan. Loan program guidelines look for a 2-year job history in the same field, but a job change for a better position is looked on favorably. If you are a recent college graduate, you may be able to obtain a loan even though you don’t have a 2-year work history.