Home Loan Guide
As part of the many ways Bank of England Mortgage works to help you secure a bright financial future, we offer stable and secure mortgage loans for all our clients. We have great pride in being the most knowledgeable and capable home lending team in the nation. We understand that a home is largest debt you will ever incur. As not only a lender, but a debt manager, we work with our clients throughout the history of homeownership to make sure your current debt structure is the best possible. Our mortgage management program provides notices to our clients when savings opportunities are available, insuring that you are in the best financial position possible.
here are some basic steps you will take on your path to homeownership. Even if you’ve bought and sold several times in the past, the information here may help you buy better the next time. Processes and guidelines have changed greatly over the past decade.
Getting Pre-Qualified and Pre-Approved
Before you start house hunting, it is a good idea to find out what homes are in your price range. This can be done through a simple process of pre-qualification. To Pre-Qualify, your loan officer will use financial information you provide to give you an estimate of the maximum mortgage you should be able to obtain. Call (518) 324-5544 to set up a time to get Pre-Qualified. You can also call if you have any general questions about this Home Loan Guide.
Once you receive the Pre-Qualification, the next step in the process is to become Pre-Approved. A Pre-Approval letter can be provided once the Mortgage Company has reviewed your income, asset, and credit documents. Pre-Approval is more formal than Pre-Qualification and takes more time. Pre-Approval guarantees your loan but it is not a mortgage contract. You cannot obtain the loan for the property until an appraisal is completed on the property and the title commitment has been provided.
To get Pre-Approved you will be asked for the following Documents
Pre-Approval Document Checklist
Lenders use a certain formula to determine how much house you can afford. Typically, your monthly house payment should be around 30% of your total monthly gross income (Your income before taxes are deducted) Your total monthly debt, which includes your house payment, car payment, credit card, loans, etc… should typically not be more than 44% of your gross income.
Note: These figures vary from program to program and an applicant with a good credit history may be able to exceed the limits stated above
Your housing payment is your basic mortgage payment consisting of Principal, interest, real estate taxes, and Homeowner’s Insurance. This amount is known as PITI. Your payment may also include mortgage insurance and/or a monthly homeowner’s association fee if required.
The Down Payment is the difference between the purchase price and the loan amount and is due at time of closing. This amount can be $0 or could be as much as 20% of the sales price. Loans with small or no down payments typically require you to pay mortgage insurance in addition to you monthly mortgage payment.
Money for the down payment may come from your savings, the sale of another house, or a gift from a relative. Your Mortgage Consultant can advise you about the regulations regarding down payments.
Suggested Article: The Difference Between Pre-Qualification and Pre-Approval
Suggested Article: What to Do If You Are Turned Down For a Mortgage
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Working With a Real Estate Agent
A Realtor can save you time and assist you in finding your new home by:
- Pre-selecting homes that are within your price range and match your requirements for size, location, etc.
- Scheduling appointments for you to see homes
- Giving you current prices for houses similar to the ones you are considering
- Getting up-to-date information about taxes, school districts and conditions in the area.
- Handling negotiations regarding the price and terms of your offer
- Arranging for a home inspection
Websites like Zillow and Realtor.com also list home for sale but there is no alternative to working with an agent that has knowledge of the local market and relationships to help negotiate your home purchase.
Making an Offer
Once you find the house you want, your next step is to negotiate what to include in the offer you make. Your Realtor will help you with the offer and take it to the seller. If possible, ask your Realtor to give you a blank copy of a purchase agreement when you first begin looking at homes. You’ll have a better
understanding of what you want your own agreement to cover when the time comes.
- Get recent selling prices of similar homes in the area from your Realtor.
- If your fist offer is rejected by the seller, a second round of negotiations often takes place. Even if you can’t agree, don’t get discouraged. There are likely several other similar homes in the area.
- Ask a lot of questions: How long has the house been on the market? Why is it being sold? What are its good and bad points?
- Don’t be afraid to check out the neighborhood and even talk to neighbors.
- Consider the home’s resale value.
- Negotiate the offer price and other items to be covered in the offer before you sign any formal papers. When you offer is formally accepted, you sign a purchase agreement, which is a legal contract. It covers many items, such as the price, total down payment, and closing date. The closing date is when you sign the closing or settlement agreement that officially makes the home yours. This date may change if all the necessary paperwork is not finished.
The offer also states which party (buyer/seller) will pay for which settlement costs, the type of loan you are applying for and the interest rate. Here are some things that are usually part of an offer:
Offering Price $ __________________________
Earnest Money $__________________________ (This is part of your down payment that you provide up front to secure an initial agreement with the seller. It shows the seller that you are “in earnest” (serious) about buying. It protects your offer for a certain period of time while you obtain financing.
Contingencies $___________________________ these are special circumstances such as the date by which the sale must be completed or repairs the seller must remove Items included in the sale: (such as appliances, window treatments, rugs, furnishings) _________________________________________________________________________________________________________
To protect yourself, be sure that the purchase agreement is conditional. This means you can cancel it if you do not secure a loan or if the house has major problems that can’t be corrected before closing.
Always consult your mortgage lender before making an offer on real estate. We provide detailed loan quotes so you know the costs before you sign the sales contract.
Appraisal and Inspection
After the offer is accepted, your loan application will be reviewed. At the same time, these steps must be taken.
The Appraisal: an evaluation of the property’s value. The appraiser visits the house and reviews recent selling prices of similar homes in the area.
The Inspection: an evaluation of the property to find out if there are any problems that could change its value.
The inspection also helps you determine if there are any items that you want the seller to repair before the final contract is signed. The buyer usually hires the inspector. Because the inspector is an important member of your home-buying team, you want someone who is trustworthy and experienced. Your Realtor or Lender can refer you to an inspector. It’s also a good idea to go to the inspection if possible.
Walking through the house together gives you the opportunity to see first hand with the inspector what is wrong or right with the house. Inspectors check the entire house for the following:
- General condition
- Electrical system
- Heating and cooling system
- Exterior structure
- water damage
- garage doors
- roof and chimney
- Interior structure
- windows and doors
- Pest control
- Risk of earthquakes and landslides
- Most areas also require a termite inspection. If termites are found, you must have proof that the house has been treated and that any termite damage has been repaired. This is usually the seller’s responsibility.
Suggested Article: Common FHA Appraisal Issues and How to Fix Them
Once your offer has been approved, a title search is conducted. The search is performed by a licensed title company. This step is needed to uncover any possible problems with the title, which is legal ownership of the property.
Problems could arise if there is a dispute by outside parties about the ownership of the property, its size, or the way it can be used (for example, there may be an unknown heir, a secret spouse, or a faulty land survey). Title searches are generally set up by the buyer’s Realtor or lawyer. If no problems are found in the search, the title company issues title insurance.
Title insurance guarantees that the property you buy is as it is stated in recorded deeds, surveys and other documents. You may pay a onetime title insurance premium when you buy the house. Then you do not have to pay another premium unless you refinance your mortgage.
Types of Mortgages
We provide a wide range of choices for home loans and financing options. Some choices are yours to make. Others are based on your special circumstances.
Conventional Loans: This mortgage is a contract between the lender and the borrower, at the lender’s risk. The borrower’s property is security (which means the lender can take your home for nonpayment of the mortgage). This mortgage is not insured by any federally insured program. However, it may be insured with private mortgage insurance.
FHA (Federal Housing Administration): The FHA will insure the loan for the lender against loss in case the buyer cannot make payments. It requires the buyer to carry mortgage insurance through FHA. FHA loans require a lower down payment amount than most other loan options.
VA (Veterans Administration): The federal agency will guarantee the mortgages offered by private lenders to qualified members of the armed forces, active military personnel, veterans or their widows. In some cases one can buy a home on a VA loan with no down payment.
Jumbo: A loan with special terms for properties of very high value that fall outside typical lending standards. Adjustable Rate Mortgage (ARM): The interest on an ARM may vary up or down at a fixed intervals. The ARM often offers a low beginning interest rate. However, this rate will go up after a certain time. If interest rates are low, an ARM may be a good option, especially if its cap (the highest interest you may be charged) is not more than a few points higher than the current fixed rate.
Bank of England Mortgage has tried to provide accurate and timely information; however, the content of this site may not be accurate, complete or current and may include technical inaccuracies or typographical errors. From time to time changes may be made to the content of this site without notice. Bank of England Mortgage may change the products, services, and any other information described on this site at any time. The information published on this site is provided as a convenience to visitors and is for informational purposes only. You should verify all information before relying on it and decisions based on information contained in our site are your sole responsibility. If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at (518) 324-5544. This contact information is for accommodation requests only.
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