Applying for a home loan can be an intimidating process. It’s very important to enlist the help of the experts to make sure you’re getting the most favorable type of loan and rate of loan for you. KRE partners with the best in the business, The Shealey Team at Encompass Lending who’ve put together these helpful FAQs:
What are the different loan types available in the market today?
There are several different loan types, but the four most common are:
1. Conventional – Minimum credit score of 620, minimum down payment of 3% (first time homebuyers only) to 5% down, maximum loan amount of $417,000.00
2. FHA – Minimum credit score of 580, minimum down payment of 3.5% down, maximum loan amount varies based on county (Houston and surrounding areas is currently $330,050.00)
3. VA – Minimum credit score of 600, minimum down payment of 0%, maximum loan amount of $417,000.00
4. Jumbo – Minimum credit score of 700, minimum down payment of 10%, loan amount starts at $417,001.00
How many days does it take to close a loan?
It takes approximately 30 days to close a loan. Can we close sooner? – yes! It depends on the circumstance and the involvement of all parties to ensure a timely closing. It is advisable to write a contract for 45 days. If all parties agree to moving up the date once a clear to close is obtained, then most of the time we can accommodate. This is a case-by-case basis and is always wise to check with the lender first to make sure it is possible.
What can cause closing delays?
There are several players involved in closing a transaction – agents, lenders, title closers, underwriters, buyers, sellers – just to name a few! In order to close a loan on time, one word can sum it up: COMMUNICATION. If you know there is a potential road block in the beginning of a transaction, then let all parties know…if something comes up during the transaction the same rule applies. The sooner all parties know of a potential change in the transaction the better (buyer is going on vacation for 2 weeks during the process; the seller lives out of town and needs a courtesy close in a different location; you name it, we’ve seen it!)
Why do repairs on an addendum to the contract hold up the process?
If repairs are on an addendum, they must be completed – and we need proof of completion – prior to closing. Depending on the size of repairs the underwriter may request the appraiser go back out to the property to show the work was completed. For example, if a new roof is agreed upon by all parties a week before closing then the closing will most likely be delayed. We need to show that the work was completed and paid for by the responsible party. The underwriter could require the appraiser to go back out to the property to confirm the work was completed and to take pictures of the work to ensure it was done properly. Furthermore, if the seller agrees to give money in lieu of repairs to the buyer to cover closing costs, simply input the agreed upon dollar amount in number 4 of the amendment……DO NOT give special instructions on number 2 or 9 of the amendment giving a dollar amount “in lieu of repairs”. The underwriter will automatically want to know what the repairs are and will most likely request the full home inspection. At that point they may ask for even more items to be repaired. This can kill a transaction all together.