Frequently Asked Questions
1. What types of documentation do I need for the application?
Based on the loan program you choose, the exact documents required will vary. In general, you should have available:
-Federal income tax statements and verification of any additional income
-Your two most recent W2’s.
-Current paycheck stubs
-Recent bank statements
-Asset and liability information (stocks, bonds, other real estate, etc.)
2. How do I know which type of mortgage is best for me?
There is no simple answer to this question. The right type of mobile home loan for you depends on many different factors:
-Your current financial situation
-Your credit rating (FICO score)
-How much you expect your finances to change
-How long you intend to stay in your house
-The age of your manufactured home.
We can help you decide which loan program is best for you. Give us a call and we’ll review your situation with you and show you what programs best suit you.
3. How much of a down payment will I need?
Many buyers are surprised to learn there is no fixed answer to this question. Usually, down payments range anywhere from 5% to 30% of the property’s value. Some government assistance programs require as little as $3,000 down.
4. What is escrow or impound?
In addition to the principal and interest portion of your monthly payment, the terms of your loan agreement allow the lender to collect funds from you for the payment of your real estate taxes, insurance bills, and sometimes other items. These additional funds are referred to as the escrow or impound portion of your payment. They are collected throughout the year and paid on your behalf.
5. What is amortization?
This is the length of time used to calculate your loan payment, usually 10-20 years. Sometimes you can make payments for that entire period, at which time your loan will be paid in full. Sometime, however, your loan will have a "balloon payment". This means your loan needs to be paid in full or refinanced sometime prior to the full amortization period.
6. Will my monthly payment always stay the same?
No. Your monthly payment can change for the following reason: Escrow Analysis. At least once a year, your lender will analyze your escrow account, and adjust the portion of your monthly payment collected for real estate taxes, insurance, and other escrow items. Your new monthly payment amount shown on the analysis will typically be effective on the anniversary of your first payment due date.
7. How does the lender decide the maximum loan amount that I can afford?
The lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing debts. Housing expenses include principle and interest on the loan, space rent (if any), taxes, and hazard insurance. Non-housing expenses include such long-term debts as car or student loan payments, alimony, credit cards, or child support. Typically, mortgage payments should be no more than 35% of gross income, while the mortgage payment, combined with non-housing expenses, should be no more than 45% of income. The lender also considers your cash available for a down payment and closing costs, credit history, and employment history when determining your maximum loan amount.
8. Do I really need homeowners insurance?
Yes. Proof of a paid homeowner’s insurance policy is required at closing, so arrangements will have to be made before then. Plus, involving the insurance agent early on in the home buying process can save you money. Insurance agents are a great for tips on how to keep insurance premiums low and information on home safety.
9. What is loan-to-value and how does it determine the size of the loan?
The loan to value ratio is the amount of money you borrow compared with the appraised value of the home you are purchasing. Each loan has a specific LTV limit. For example: With a 80% LTV loan on a home priced at $100,000, you could borrow up to $80,000. The higher the LTV, the less cash homebuyers are required to pay out of their own funds.
10. What are loan origination points?
Origination points are a fee paid to the originating lender which are part of the profit margin for the services that they provide. It is usually measured as percentage of the loan amount and is factored into the loan’s APR. Generally, origination fees are tax deductible provided they are expressed as a percentage.
11. What is the difference between the mortgage rate and the APR?
The APR (Annual Percentage Rate) of a loan is supposed to be an overall interest rate with all the applicable closing costs factored in. Use the APR as a general guide to the overall cost of the loan but keep in mind that you have to look at the details of what’s included to be sure. The mortgage rate is slightly different and is used to calculate your monthly payment.
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