For your initial pre-qualification, we’ll ask questions about your income, assets, credit history, and employment. In addition, you will be required to pay a minimal fee to cover the cost of your credit report so that we can verify your credit history.

Once you start the application process we’ll need to verify the information you gave us with specific documentation, such as your last two years of income tax returns, bank statements, pay stubs and documents pertaining to other personally owned real estate.

The first step in buying a house is determining your budget. There’s an often-quoted rule of thumb that says that you can afford a house that costs up to two and one-half times your annual gross income. In reality, everyone’s individual situation differs and your maximum mortgage eligibility is determined by weighing your income, existing debts, the purchase price of the house, your down payment, the interest rate on the loan, and the cost of property taxes and insurance.

This calculator steps you through the process of finding out how much you can borrow. Simply enter in your information into the required fields to determine the maximum purchase price of the home for which you qualify.

According to the situation and Sunshine Financial policies and guidelines, we generally require that two to seven years have passed before you can qualify for a mortgage. In the case of a foreclosure the waiting period is 7 years. With a short sale, the seven-year wait may be reduced to a minimum of 2 years with a down payment of at least 20%. In the case of a bankruptcy, we require that 4 years have passed. In addition, in all cases you must have re-established an acceptable credit history with new loans or credit cards, and your minimum credit score must be 640.

Your credit standing impacts many of the financial and life decisions that are made about you, including the ability to secure loans, obtain the best interest rates, and in some cases, even gain employment. Your credit score is used to predict how likely it is that you will repay a new loan.

The credit scoring system was developed based on experience with millions of consumers. In general, the computer model assigns points to information in a credit report. For example, making payments on time every month is positive for the score. Charging the maximum amount available on a credit card is negative. The computer adds the positive and negative points, and the resulting number is your credit score.

Sometimes people think they have good credit. Then, they apply for a loan and are surprised to learn that there are some problems with their credit. That’s why it’s critical that you get a copy of your credit report and credit score a few months before making such a major purchase. You can easily obtain your credit report through www.annualcreditreport.com. In addition to providing you with your credit report, they also offer a variety of credit management tools and educational resources.

Once you have obtained your credit report, check it thoroughly to make sure the information is accurate. It’s possible for incorrect, incomplete or outdated information to appear on your credit report. Keep in mind that you are the only one who’ll notice if anything is out of the ordinary and it is up to you to find any inaccuracies. Mistakes on your credit report can drastically lower your chances of qualifying for the mortgage and interest rate you deserve.

If you find an error, take the following steps to fix it as soon as possible. If you see evidence of fraud, contact the credit reporting agencies immediately. Explain the situation and ask that a fraud alert be placed in your file.

It’s more important than ever to stay on top of your credit history and know what’s in your credit report.

For more information about how to understand and improve your credit score, visit the Federal Reserve’s Consumer’s Guide to Credit Reports and Credit Scores.

There are “4 C’s” of a loan approval.

Capacity – Can you repay the debt? We will ask for employment information including your previous occupations, how long you have worked and how much you earn. Essentially, we’re verifying that your current job situation and income levels are stable.

Credit History – Will you repay the debt? We’ll look at your past credit history to see how much you owe, how often you borrow, whether you pay bills on time and whether you have a history of living within your means.

Capital – Do you have enough cash to meet the down payment requirements associated with your pending mortgage, closing costs, taxes, and insurance? Do you need a gift from a relative? Will you have a cushion left after your home purchase or will you use your last penny on purchasing your home?

Collateral – Will we be fully protected if you fail to repay the loan? We must be sure the property you are buying is sufficient to back up the loan.

In addition to your down payment, you will need funds to cover the associated costs of getting a mortgage. Total costs include the charges for your appraisal, tax service, survey (if necessary), deposit, closing fee, flood certificate, title commitment, and recording fees. Additional costs can also be involved in a purchase depending on the particular situation, including; points, inspection fees, prepaid interest, taxes, insurance, and private mortgage insurance (PMI).

A home loan often involves many fees, such as the appraisal fee, title charges, closing fees, and state or local taxes. To assist you in evaluating our fees, we’ve grouped them as follows:

Fees that we consider third party fees include the appraisal fee, the credit report fee, the settlement or closing fee, the survey fee, tax service fees, title insurance fees, flood certification fees, and courier/mailing fees.

Third-party fees are fees that we’ll collect and pass on to the person who actually performed the service. For example, an appraiser is paid the appraisal fee, a credit bureau is paid the credit report fee, and a title company or an attorney is paid the title insurance fees.

Fees that we consider to be taxes and other unavoidable include: State/Local Taxes and recording fees.

These fees will most likely have to be paid regardless of the lender you choose. If some lenders don’t quote you fees that include taxes and other unavoidable fees, don’t assume that you won’t have to pay it. It probably means that the lender who doesn’t tell you about the fee hasn’t done the research necessary to provide accurate closing costs.

Fees such as points, administration and escrow waiver fee (if an escrow waiver is requested and approved) are retained by the lender and are used to provide you with the lowest rates possible. This is the category of fees that you should compare very closely from lender to lender before making a decision.

You may be asked to prepay some items at closing that will actually be due in the future. These fees are sometimes referred to as prepaid items.

One of the more common required advances is called “per diem interest” or “interest due at closing.” All of our mortgages have payment due dates of the 1st of the month. If your loan is closed on any day other than the first of the month, you’ll pay interest, from the date of closing through the end of the month, at closing.

For example, if the loan is closed on June 15, we’ll collect interest from June 15 to July 1 at closing. This also means that you won’t make your first mortgage payment until August 1. This type of charge should not vary from lender to lender and does not need to be considered when comparing lenders. All lenders will charge you interest beginning on the day the loan funds are disbursed. It is simply a matter of when it will be collected.

If an escrow or impound account is established, you will make an initial deposit into the escrow account at closing so that sufficient funds are available to pay the bills when they become due. This type of charge should not vary from lender to lender.

Whether or not you must purchase mortgage insurance depends on the size of the down payment you make. And as a credit union member, you are eligible to receive reduced mortgage insurance rates.

If your loan is a purchase, you’ll also need to pay for your first year’s homeowner’s insurance premium prior to closing. We consider this to be a required advance.

The first step in deciding which program is right for you is to take a realistic look at your individual situation. How much do you have for a down payment? How long do you plan on staying in the home before selling? Are you willing to pay points up front for a lower interest rate? Do you expect your annual income to increase in the near future or will it stay the same throughout your career? Does your income vary from month to month? How is your credit history? Are you purchasing an existing home from a seller?

We offer a great variety of mortgage programs so you can be sure to find the program that best suits your needs.

You can choose between our fixed rate mortgages with the option of a 10, 15, 20, or 30-year term in which the interest rate holds throughout the life of the mortgage. As always, our friendly loan experts are available to assess your current situation and guide you toward the product that’s right for you at 305-774-1117.

You can expect great service! You can get started online by completing our online application. Or you can call one of our Loan Originators today at 305-774-1117 to get your application started over the phone.

Call one of our friendly loan experts at 305-774-1117. Loan Originators are available to take your application over the phone.

The Loan Originator will ask you several questions to try to assess your home financing needs and goals. During this counseling session, feel free to ask any questions you may have and put their years of experience to work for you!

Once you have submitted your application, one of our Loan Originators will contact you to review your submission and ask you a few additional questions. If you have any questions regarding your application at any time, please call 305-774-1117.

If you are not initially approved, your Loan Originator may ask for further documentation. We understand that some situations are complicated and further documentation may be required to fully understand them. Once your Loan Originator has received this additional documentation, your file will be reviewed and the application will be resubmitted for approval. Your Originator will contact you regarding your application status and next steps.

Your loan will be processed.

We’ll order the appraisal from a licensed appraiser who is familiar with home values in your area. Depending on your finances and the loan amount requested, different types of appraisals are used. The appraiser will need to go into the home.

Title insurance will be necessary.

If you’re purchasing a home, we’ll work with the real estate broker or seller to ensure the title work is ordered as soon as possible. If you are refinancing we’ll take care of ordering the title work for you. We’ll use the title insurance to confirm the legal status of your property and to prepare the closing documents.

Once everything is completed and passed through Underwriting, your application paperwork will be submitted to our Quality Assurance (QA) Department for final review. Your closing will be scheduled once QA has determined that the file is completely compliant with today’s tough guidelines and all documents are up-to-date, including a re-verification of employment and credit.

We’ll contact you to coordinate your closing date.

After we receive final approval from QA, our Closing Department will contact you, the selling agent, the title company and the seller to coordinate your closing. If you are purchasing a For Sale By Owner property, we can assist with coordinating the closing through our very own title company, Sunshine Financial Title LLC. The professionals at Sunshine Financial Title have guided members through smooth closings for years. Feel free to contact them with any questions you may have.

The closing will take place at the office of a title company or attorney in your area who will act as our agent, or at your credit union. The day before closing, a Closing Agent will contact you to walk through the final information so that there won’t be any surprises at closing. In most cases, the final closing figures will be available 24 hours prior to closing.

That’s all there is to it! You’re on your way to the most convenient home loan ever!

Sunshine Financial will set up an escrow account to collect funds for the payment of your real estate taxes, homeowner’s insurance, and private mortgage insurance, if necessary. Each month a portion of your payment will be held in your escrow account to make sure the funds are available when these payments are due. At that time, funds are drawn from the escrow account. You may pay your own real estate taxes and insurance if you meet Sunshine Financial’s Escrow Waiver Requirements.

Unless you have signed Sunshine Financial’s Escrow Waiver Agreement, real estate tax payments will be made by our servicing department on your behalf with funds drawn from your escrow account.
Please be aware that property taxes may go up considerably on purchase transactions from what the previous owner had paid. In the state of Florida, the municipality where the property is located reassesses the taxable value of the property when it transfers ownership. As the property’s taxable value is no longer governed by the rate caps used when the property remains under the same owner, the required property taxes may increase considerably.
This Department of Treasury Property Tax Estimator can help you determine how your property taxes may adjust.

On new home purchases and construction properties, it is the responsibility of the borrower to submit the paperwork to the applicable municipality for Homestead Exemption.

To determine the value of the property you are purchasing or refinancing, an appraisal will be required. An appraisal report is a written description and estimate of the value of the property. National standards govern not only the format for the appraisal; they also specify the appraiser’s qualifications and credentials. In addition, most states now have licensing requirements for appraisers evaluating properties located within their states.

The appraiser will create a written report for us and you’ll be given a copy at your loan closing. If you’d like to review it earlier, your Loan Facilitator would be happy to provide it to you.
Usually, the appraiser will inspect both the interior and exterior of the home. However, in some cases, only an exterior inspection will be necessary based on your financial strength and the location of the home. Exterior-only inspections usually save time.

After the appraiser inspects the property, they will compare the qualities of your home with other homes that have sold recently in the same neighborhood. These homes are called “comparables” and play a significant role in the appraisal process. Using industry guidelines, the appraiser will try to weigh the major components of these properties (i.e., design, square footage, number of rooms, lot size, age, etc.) to the components of your home to come up with an estimated value of your home. The appraiser adjusts the price of each comparable sale (up or down) depending on how it compares (better or worse) with your property.

As an additional check on the value of the property, the appraiser also estimates the replacement cost for the property. Replacement cost is determined by valuing an empty lot and estimating the cost to build a house of similar size and construction. Finally, the appraiser reduces this cost by an age factor to compensate for depreciation and deterioration.

Using these three different methods, an appraiser will frequently come up with slightly different values for the property. The appraiser uses judgment and experience to reconcile these differences and then assigns a final appraised value. The comparable sales approach is the most important valuation method in the appraisal because a property is worth only what a buyer is willing to pay and a seller is willing to accept.

It is not uncommon for the appraised value of a property to be exactly the same as the amount stated on your sales contract. This is not a coincidence, nor does it question the competence of the appraiser. Your purchase contract is the most valid sales transaction there is. It represents what a buyer is willing to offer for the property and what the seller is willing to accept. Only when the comparable sales differ greatly from your sales contract will the appraised value be very different.

Both a home inspection and an appraisal are designed to protect you against potential issues with your new home. Although they have totally different purposes, it makes the most sense to rely on each to help confirm that you’ve found the perfect home.

The appraiser will make note of obvious construction problems such as termite damage, dry rot, or leaking roofs or basements. Other obvious interior or exterior damage that could affect the salability of the property will also be reported.
Keep in mind, appraisers are not construction experts and won’t find or report items that are not obvious.

They won’t turn on every light switch, run every faucet or inspect the attic or mechanicals. That’s where the home inspector comes in. They generally perform a detailed inspection and can educate you about possible concerns or defects with the home.

Accompany the inspector during the home inspection. This is your opportunity to gain knowledge of major systems, appliances, and fixtures, learn maintenance schedules and tips, and to ask questions about the condition of the home.

Our goal is to have your loan ready for closing as soon as possible! Generally, the items that take the longest to receive are things such as the appraisal and the title work and the conditions that you need to provide us with. We’ll want to get the appraisal and title work ordered as soon as possible to avoid any delays. If you are purchasing a new home, we’ll do our best to meet the date you and the seller have agreed upon.

Even if you have a fixed-rate mortgage the monthly payment amount may fluctuate during the life of the loan. A fixed-rate loan offers a fixed term (for example, 15 or 30 years) as well as a fixed interest rate, so the monthly amount for the payment of principal and interest will not change during the term of the mortgage. However, your monthly mortgage payment may also include interest, taxes, and insurance.

While your principal and interest amounts will not change, the amount needed for taxes and insurance may.

Once a year, on the anniversary date of the mortgage, Sunshine Financial will perform an escrow analysis to determine if current monthly deposits balances will provide sufficient funds to pay property taxes, hazard insurance, and other bills when they come due. Please be aware that property taxes may go up considerably on purchase transactions from what the previous owner paid. The municipality where the property is located reassesses the taxable value of the property when it transfers ownership. As the property’s taxable value is no longer governed by the rate caps used when the property remains under the same owner, the required property taxes may increase considerably. If your payment amounts have fluctuated, Sunshine Financial will have to adjust the amount needed in your escrow accounts to compensate for these changes.

No homeowner wants to be unpleasantly surprised to discover that their newly-purchased dream home has major problems. An objective property inspection is a “must” in the home buying process. This is especially true when non-owner occupied homes are being considered. In these cases where there has been a foreclosure, potential buyers don’t have the benefit of a seller’s disclosure. Even newly constructed buildings should be inspected to uncover any potential builder oversights.

Home warranties or protection plans are not a substitution for an inspection. Buyers should beware of sellers who try to pass them off as such.

A qualified home inspector will educate the buyer about the condition of the dwelling—whether a single-family home, condo, or townhouse. The inspector may expose defects that will allow the potential buyer to make a more informed, and confident, decision.

The money spent on an inspection really pays for peace-of-mind. Buyers who skip the inspection process to save money could later discover that the home needs repairs costing a great deal more than the inspection would have.

The cost of an inspection will vary, depending on the size of the property. It should include the roof; attic and visible insulation; plumbing; electrical; heating and cooling systems; kitchen and bathrooms; walls, ceilings, floors, windows and doors; basement and foundation; and all structural components. If the inspector finds a particular defect or an infestation, he may suggest a secondary inspection by a specialist.

All buyers who plan to invest in an inspection; and everyone should; need to make their offer contingent on the results of the inspection. A contingency provides an opportunity for price negotiations if defects are discovered.

What you don’t know can hurt you when it comes to your home but with the help of a qualified home inspector, it doesn’t have to. Look into the National Association of Home Inspectors www.nahi.org or the American Society of Home Inspectors www.ashi.org for a professional in your area.

PMI or Private Mortgage Insurance is provided by a private company to protect the mortgage lender against losses that might be incurred if a loan defaults. It can make a big difference in how quickly your mortgage loan is approved and how much money you spend on a down payment. It is required if the loan amount is more than 80% of the home’s value.

This insurance benefits lenders and investor, but it also helps homebuyers too. Because Sunshine Financial is protected by mortgage insurance, we can offer loans with low down payments. Without mortgage insurance, we would need to require a down payment of at least 20% of the loan amount. We understand that even if you have enough money for a large down payment, you may prefer to use it for other purposes. And if you don’t have a 20% down payment, it can take a long time to save it. While you’re saving, the price of your dream home is likely to rise – perhaps faster than you can save!
Private Mortgage Insurance can be a big help if you’re like most borrowers in this type of situation. Contact a loan expert for more information at 305-774-1117.

If your home or property has sustained any damages and you have decided to submit a claim to your Insurance Company, your loss draft payments will be made payable to you and the servicer.

When you receive a loss draft claim check, please contact the servicer so that we may discuss the loss draft claims process with you. Please review the list of documentation that will be required in order to process your check:

• The Estimate of Damages or Adjusters Report provided by your Insurance Company
• Contractor’s statement of repair: [estimate, bid, invoices, and/or detailed draw schedule] this would be provided by your Contractor and must be signed
• Contractor’s license/W-9 from licensed contractor
• Copies of paid receipts and description of work for repairs already completed
• Statement or certificate of completion of work

According to your mortgage, the loss draft claim funds must be used to either restore or repair the property. Please be advised that Sunshine Financial holds the right to conduct progress inspections of the repairs to your property to ensure that the funds are being used for that purpose.

Pre Qualification is an early step in your home buying journey. When you prequalify for a home loan, you’re getting an estimate of what you might be able to borrow, based on the information you provide about your finances, as well as a credit check.

A real estate broker who exclusively represents the buyer’s best interests in a transaction and whose commission is paid either by the buyer or through the seller or listing broker at closing.

Know local sales prices – Ask your agent to check comparable home sales or do your own research to measure your offer against current price tags. The listing agent may have already put together a comparative market analysis (CMA) on the property. This written report reviews prices of comparable homes that are currently on the market, that are currently under contract, and that have sold in the past several months.

Know local sales prices – Ask your agent to check comparable home sales or do your own research to measure your offer against current price tags. The listing agent may have already put together a comparative market analysis (CMA) on the property. This written report reviews prices of comparable homes that are currently on the market, that are currently under contract, and that have sold in the past several months.

Know the condition of the house and neighborhood – Before making an offer, you should be fairly confident that you are aware of any major problem areas in the house. You should have inspected the house to the best of your ability, questioned the sales agent and the owner about the structural soundness and condition of the basic systems, and reviewed the seller’s disclosures. (Both sellers and real estate sales professionals can be held liable if they fail to tell the buyer of any defects they know of in the house.) You should also have a clear idea of what it will cost to fix any major problems of which you are aware.

Circumstances surrounding the sale – In deciding how much to offer, try to determine how anxious the owners are to sell. For example, if the sellers already have a contract on another house that is dependent on the sale of this house, you may be in a good negotiating position. It will be to your advantage to know how long the house has been on the market, whether the asking price has already been reduced, and what the fair market value of the home is based on its condition. Also, how much did the seller pay for the house, and, how long ago? And how much equity does the seller have in the property?

Know what you can afford – You should have obtained a Pre-qualification before you began house hunting and your Pre-qualification letter will indicate the maximum purchase price you are approved for. You should also take the time to estimate what your monthly housing costs would be should you get the house at the price you plan to offer. This requires knowing the annual cost of utilities, homeowner’s insurance, condominium fee (if applicable), and any special assessments. Make sure that the amount of your down payment is adequate and that you’ll have enough to cover the closing costs as well. Don’t be tempted to offer more than you are sure you can afford.

Financing terms – Remember that there are two aspects to an offer – the price and the financing terms. The terms may actually be more important to you than the price. For example, if the seller is willing to offer attractive financing terms, including paying for the title search, and other settlement costs, you may be more willing to accept the price.

The real estate sales professional will be glad to advise you as to how much you should offer. However, the decision is yours alone. (Remember, the agent typically acts on behalf of the seller.) Most prospective buyers do not offer the full asking price, at least initially. For example, you may want to offer less than the asking price if you feel that the condition of the house warrants a lower price.
Don’t get carried away in a multiple-offer situation – Stick to your market research and negotiate with a clear head. You may win the bid if you offer better terms and still may get a lower price.

Control your emotions – No matter how much you want the house, you’ll probably feel worse knowing you overpaid.

Don’t be afraid to walk away – Unless it’s a unique property, you’ll probably find another house you like just as much.

When determining whether or not to buy a home, you’ll want to consider many factors: price, interest rates, location, and your personal financial situation. In terms of price and location, now is definitely a good time to buy a home. Home prices are extremely affordable right now, and in Florida, the trend is crossing over into all zip codes. So buyers may be able to afford a home in an area they once thought to be out-of-reach. In addition, interest rates continue to stay at record lows and are unlikely to go lower.

Waiting for them to drop further is risky.
Finally, you must ask yourself if YOU are ready to buy. You should have a stable job situation; plan on staying in a home for at least three to five years; and have enough money saved for a down payment, closing costs, and any unexpected improvements. If those things aren’t in place, you may be better off waiting a bit longer.

Our professional Loan Originators can help you determine if now IS the right time for you, by helping you calculate just how much home you can afford and how much your closing costs will be, and get you started with a pre-qualification. Contact them at 305-774-1117.

No! Getting started before you find a home may be the best thing you could do!

If you get started before you have a property to purchase, we can issue a pre-qualification subject to you finding the perfect home, which you can use to assure real estate brokers and sellers that you are a qualified buyer. Getting pre-qualified for a mortgage will even give more weight to any purchase offer you make.

When you find the perfect home, you’ll need to call your Loan Originator and provide your signed purchase agreement to complete your application. You’ll then have an opportunity to lock in our great rates and fees and we’ll complete the processing of your loan.

As a first time homebuyer you may be wondering if you need a real estate agent to help you find and purchase a home or if you can do it on your own. There is no law that prevents you, as an individual, from buying property without professional Real Estate assistance. You can search for homes, arrange showings, and even negotiate on your own (although, in some localities, the actual contract for purchase will need to be drawn up by an Attorney). The real question may be “do you want to do it on your own?”

There is a misconception among many first time homebuyers that by using a Real Estate Agent they will be subject to paying a commission. In virtually all situations this is not the case. The commission for the sale of a home is paid for by the seller, not the buyer.

Sellers, too, sometimes decide not to use an Agent in the sale of their house. Maybe they think they can get more return by not paying a commission, or maybe they cannot find an Agent to list their home for the price they demanded. In fact, many real estate analysts have found that the selling prices of For Sale By Owner (FSBO) homes are equal to —or higher than— those listed by Agents.

In that case a problem arises when, as a “do-it-yourself” homebuyer and without the benefit of a Comparative Market Analysis, you need to determine whether or not the house is worth the asking price. How do you decide? There is too much money potentially involved to make a “seat of the pants” decision. If you’re determined to go it alone, Sunshine Financial can help you obtain an appraisal through one of our approved appraisers who we’ve trusted for years to give accurate determinations of property values. Our title company, Title on the Mile,, also offers the For Sale By Owner Fact Sheet, which offers a wealth of information for both buyers and sellers involved in an FSBO transaction.

When dealing with a FSBO home, you may find your choices are limited. If you are tempted to jump into the “listed” market by checking advertisements, calling Listing Agents directly or visiting Open Houses, keep in mind that there is not a dime to be saved by doing this. The seller is still going to pay a commission and you run the risk of ending up with no representation, since the Listing Agent is duty bound to represent the seller. If there aren’t enough choices for you in the FSBO market, it is in your best interest to secure a real estate agent as soon as possible to assist you in your search.

If you decide to use an agent, you should know the difference between a real estate agent or broker and a Realtor®. A real estate agent or broker is a person licensed to negotiate the purchase and sale of real estate on behalf of buyers and sellers. A Realtor is a real estate broker or associate who is an active member of a local real estate board that is affiliated with the National Association of Realtors. In both cases, the Agent, unless specifically disclosed otherwise, represents the seller in any transaction for the sale of a home. It is that Agent’s fiduciary duty to protect the seller’s position at all times.

There are many advantages to homeownership:
A sound investment – When you carefully choose a home you can afford, the payoff can be great. As a homeowner, instead of paying rent to a landlord, each month when you make your mortgage payment, you are building equity in a place of your own. The more mortgage payments you make, the more equity you’ll have. And unlike most things you buy, a home can actually appreciate in value as time passes, building more equity.

• Tax advantages – The mortgage interest and real estate taxes you pay are tax-deductible which can reduce your tax bill.
• Real estate is marketable.
• You can make your own decisions about design and décor.
• You can invest in upgrades that will not only bring you pleasure but can also add to the value of the property over time.
• You have control over the piece of property. You are not answering to a landlord.

Yes! Sunshine Financial offers programs with lower down payment options. These products are designed to help borrowers overcome the two primary barriers to homeownership – lack of down payment funds and qualifying income. These programs have a lower down payment, cash reserve, and income requirements than traditional conventional mortgages. Call one of our expert loan experts to see which program is best suited to your needs. Monday – Wednesday 9:30 a.m. to 5:30 p.m. or Thursday – Friday 8:00 a.m. to 6:00 p.m. EST at 305-774-1117.

Certainly! Put their years of experience to work for you! Our loan experts are here to answer any questions that you may have Monday – Wednesday 9:30 a.m. to 5:30 p.m. and Thursday – Friday 8:00 a.m. to 6:00 p.m. EST. Simply call 305-774-1117 and enjoy the benefits of Sunshine Financial.

You wouldn’t go shopping for a new car without knowing how much you can afford. Why would buying a home be any different?

Pre-Qualification Today = Less Stress House Shopping Tomorrow

One of the most stressful things about buying a home is adjusting to your new mortgage payment. Knowing your family’s financial boundaries before shopping for your new home can make the process go much more smoothly.

Your pre-qualification is an essential tool when house shopping, because it…

• Determines what homes are in your price range
• Assures real estate brokers and sellers that you are a qualified buyer
• Can be used to your advantage in future negotiations

Your pre-qualification letter is good for a limited time. One of our experienced loan experts can complete your pre-qualification for you over the phone. Call 305-774-1117 today.

It’s probably a good idea to get pre-approved for a mortgage before you start the house-hunting process.

It will help you identify any obstacles to approval, such as having too much debt or a low credit score. It will also help you determine your house-hunting price range.

Last but not least, it will make you more competitive in the market, when compared to buyers who haven’t been pre-approved. All of these things will help your cause when it comes time to shop for a home.

You can think of pre-approval as a preliminary review of your financial situation to determine (A) your buying capacity and (B) the level of risk you bring. It is conducted by the lender at the time you apply for a loan, or even before you submit a formal application.

The purpose of the pre-approval process is twofold:

1. First, the lender wants to know whether or not you are qualified to borrow money from them. So they will review your credit score, your debt level, your current employment and income situation, and other aspects of your financial picture. That’s the first reason for getting pre-approved by a lender.
2. The second purpose is that it helps you understand what your price range is, in terms of the mortgage amount.

You can probably already see why it makes sense to do this before you start looking at houses. But let’s dig further into it all the same…

• Mortgage application information
• Income verification
• Assets and debts
• Credit verification
• Other records

Mortgage application information

• Details about the type of mortgage you’re applying for
• Information about the home you plan to purchase
• Basic identification information about each borrower
• Employment information for the past two years
• Monthly income and household expenses
• A list of your assets (what you own) and liabilities (what you owe)
• Details about the home transaction
• A declaration of any legal issues that may impact your financial situation
• Your signature, which confirms the information you provided is true and accurate
• Optional information for government monitoring purposes
• Purchase contract signed by all parties
• Government-issued identification

• Two years’ worth of W-2 forms
• 30 days’ worth of pay stubs
• Two to three years’ worth of income tax returns
• IRS Form 4506-T (signed and dated)
• If self-employed: income tax returns, current profit, and loss statement

• Two to three months’ worth of statements for all accounts listed on the application (such as bank accounts, investment accounts, credit card accounts, and student loans)
• Documentation for any large deposits on asset or bank statements
• Judicial decree or court order for each obligation due to legal action

• Credit explanation letter for late payments, collections, judgments or other derogatory items
• Bankruptcy/discharge papers for any bankruptcies in credit history
• Thin credit file: payment history for utilities, cellphone, cable TV, car insurance and other expenses

The actual list of documents that your lender requests may be different, depending on your financial situation, the mortgage you’re applying for, and the lender’s requirements. Ask the lender for a list of paperwork you might need to provide and start collecting these items before you begin the application process. Having everything ready from the get-go will help you close on the home with minimal stress.

You’re entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies.

Order online from annualcreditreport.com, the only authorized website for free credit reports, or call 305-774-1117.

Your credit score represents your overall credit history. It’s based on information in your credit report, which includes whether you pay your bills on time and the total debt you carry. Lenders consider your score an indicator of how likely you are to repay your mortgage.

Credit scores generally range from 300 (the lowest) to 850 (the highest). This number can make a big difference in determining whether you qualify for a mortgage and the terms you are offered.

A higher score increases a lender’s confidence that you will make payments on time and may help you qualify for lower mortgage interest rates and fees. Also, some lenders may reduce their down payment requirements if you have a high credit score.

On the other hand, a credit score under 620 could make it harder to get a loan, and your interest rates may be higher. Lenders differ, but they generally consider 670 or above to be a good credit score.

FHA stands for Federal Housing Administration. VA is short for Veterans Affairs in the US Department of Veterans Affairs. They are both US government organizations that insure home loans. This article will walk you through the difference between FHA and VA mortgages.

In short, FHA mortgages are federally insured mortgages designed to help qualified borrowers buy a home with less money down and lower credit. VA mortgages are government-insured mortgages for active or veteran military service members and their spouses.

Divide your interest rate by the number of payments you’ll make in the year (interest rates are expressed annually).

So, for example, if you’re making monthly payments, divide by 12. 2. Multiply it by the balance of your loan, which for the first payment, will be your whole principal amount

ARMs have some appeal, especially for homeowners who want lower initial payments or relocation flexibility. You’ll want to do the math to make sure that if rates rise after the introductory period, your income can handle the higher monthly payments. But if interest rates stay low or even fall, adjustable-rate mortgages can potentially save you a lot of money. Fixed-rate mortgages may be a better choice for those who plan to stay put or need reliable mortgage payments that never change.

Principal, interest, taxes, insurance (PITI) are the sum components of a mortgage payment. Specifically, they consist of the principal amount, loan interest, property tax, and the homeowners insurance and private mortgage insurance premiums.

PITI is typically quoted on a monthly basis and is compared to a borrower’s monthly gross income for computing the individual’s front-end and back-end ratios, which are used to approve mortgage loans. Generally, mortgage lenders prefer the PITI to be equal to or less than 28% of a borrower’s gross monthly income.

KEY TAKEAWAYS

• PITI is an acronym for principal, interest, taxes and insurance—the sum components of a mortgage payment.
• Because PITI represents the total monthly mortgage payment, it helps both the buyer and the lender determine the affordability of an individual mortgage.
• Generally, mortgage lenders prefer the PITI to be equal to or less than 28% of a borrower’s gross monthly income.
• PITI is also included in calculating a borrower’s back-end ratio, the sum total of his monthly obligations against his gross income.

Escrow accounts are set up for the life of the mortgage, usually from 15 to 30 years, and the fees are added to the lender’s monthly bill for principal and interest. Escrow funds may be held by the lender in a specified account or transferred to a third party to hold for payment when taxes and insurance are due.
Waiving escrow requires the buyer to provide the lender with proof of payment of taxes and insurance each year. Buyers also must pay any special insurance, like earthquake or flood coverage.

If you’re purchasing a home, you, the buyer, get to say what inspections you want to be done. Inspection contingencies are very common in those transactions, and in that case, the mortgage lender will want to make sure that the inspections were completed and accepted by the buyer/borrower.

Normally, the only thing a conventional mortgage lender requires is a home appraisal by a licensed appraiser, and that’s mainly to determine the property value. But there are exceptions, and I’ll explain here. Sometimes an appraiser will note something that prompts a lender to require an additional inspection.

Refinancing your mortgage basically means that you are trading in your old mortgage for a new one, and possibly a new balance [1].

When you refinance your mortgage, your bank or lender pays off your old mortgage with the new one; this is the reason for the term refinancing.

Most borrowers choose to refinance so they can lower their interest and shorten their payment term, or take advantage of turning some of the equity they have earned on their home into cash.
There are two main types of refinancing: rate and term refinance and cash-out refinance.

Rate and Term Refinance
In a rate and term refinance, you would typically be getting a new mortgage with a smaller interest rate, as well as possibly a shorter payment term (30 year changed to 15 year term).
With the recent record-low interest rates, refinancing your 30 year mortgage into a 15 year mortgage may end up getting you similar monthly payments as your original loan. This is because of the lower amount of interest you would be paying on your new mortgage, even though 15 year mortgage payments are usually higher than the 30 year loans.

Cash-Out Refinance
In a cash-out refinance, you can refinance up to 80 percent of your current value of your home for cash. Thus, why it is called cash-out refinance. So, say your home is valued at $100,000 and you owe $60,000 on your loan. Your bank or lender can give you, as a qualified borrower, $20,000 in cash-out, making your new mortgage be $80,000.

In a cash-out refinance you are not always saving money by refinancing, but instead getting a form of a lower-interest loan on some needed cash. Reasons for taking a cash-out refinance could be that you may want to dig a new pool for your backyard retreat or go on your dream vacation.

Be aware, with taking a cash-out mortgage there is an increase in the amount of your lien [2]. This could mean larger and/or longer term payments. Remember that this is not free money and that you must pay it back to your lender.

Deciding to refinance your mortgage is not something to be taken lightly. Consider the cost of the refinance versus the savings in return. Talk to a financial planner if you are worried about whether or not to refinance, along with other options available to you.

[1] How Does Refinancing Work?, The Truth about Mortgage[2] What is a Mortgage Refinance, In Plain English, The Mortgage Reports

In addition to your credit score, your debt-to-income (DTI) ratio is an important part of your overall financial health. Calculating your DTI may help you determine how comfortable you are with your current debt, and also decide whether applying for credit is the right choice for you.

When you apply for credit, lenders evaluate your DTI to help determine whether you can afford to take on another payment. Use the information below to calculate your own debt-to-income ratio and understand what it means to lenders.

Your debt-to-income ratio (DTI) compares how much you owe each month to how much you earn. Specifically, it’s the percentage of your gross monthly income (before taxes) that goes towards payments for rent, mortgage, credit cards, or other debt. To calculate your debt-to-income ratio:

Step 1:
Add up your monthly bills which may include:

• Monthly rent or house payment
• Monthly alimony or child support payments
• Student, auto, and other monthly loan payments
• Credit card monthly payments (use the minimum payment)
• Other debts

Step 2:
Divide the total by your gross monthly income, which is your income before taxes.

Step 3:
The result is your DTI, which will be in the form of a percentage. The lower the DTI; the less risky you are to lenders. For more information, see Understand what your ratio means.

Could your debt be affecting your credit? Here’s how to tell if your debt is out of proportion to your income.

Keeping your debt at a manageable level is one of the foundations of good financial health. But how can you tell when your debt is starting to get out of control? Fortunately, there’s a way to estimate if you have too much debt without waiting until you realize you can’t afford your monthly payments or your credit score starts slipping.

Your debt-to-income (DTI) is a ratio that compares your monthly debt expenses to your monthly gross income. To calculate your debt-to-income ratio, add up all the payments you make toward your debt during an average month. That includes your monthly credit card payments, car loans, other debts (for example, payday loans or investment loans) and housing expenses—either rent or the costs for your mortgage principal, plus interest, property taxes and insurance (PITI) and any homeowner association fees.

Next, divide your monthly debt payments by your monthly gross income—your income before taxes are deducted—to get your ratio. (Your ratio is often multiplied by 100 to show it as a percentage.)
For example, if you pay $400 on credit cards, $200 on car loans and $1,400 in rent, your total monthly debt commitment is $2,000. If you make $60,000 a year, your monthly gross income is $60,000 divided by 12 months, or $5,000. Your debt-to-income ratio is $2,000 divided by $5,000, which works out to 0.4, or 40 percent.

Banks and other lenders study how much debt their customers can take on before those customers are likely to start having financial difficulties, and they use this knowledge to set lending amounts. While the preferred maximum DTI varies from lender to lender, it’s often around 36 percent.

If your debt-to-income ratio is close to or higher than 36 percent, you may want to take steps to reduce it. To do so, you could:

• Increase the amount you pay monthly toward your debt. Extra payments can help lower your overall debt more quickly.
• Avoid taking on more debt. Consider reducing the amount you charge on your credit cards and try to postpone applying for additional loans.
• Postpone large purchases so you’re using less credit. More time to save means you can make a larger down payment. You’ll have to fund less of the purchase with credit, which can help keep your debt-to-income ratio low.
• Recalculate your debt-to-income ratio monthly to see if you’re making progress. Watching your DTI fall can help you stay motivated to keep your debt manageable.
• Keeping your debt-to-income ratio low will help ensure that you can afford your debt repayments and give you the peace of mind that comes from handling your finances responsibly. It can also help you be more likely to qualify for credit for the things you really want in the future.
• If your debt-to-income ratio is close to or higher than 36 percent, you may want to take steps to reduce it. To do so, you could:
  1. Increase the amount you pay monthly toward your debt. Extra payments can help lower your overall debt more quickly.
  2. Avoid taking on more debt. Consider reducing the amount you charge on your credit cards, and try to postpone applying for additional loans.
  3. Postpone large purchases so you’re using less credit. More time to save means you can make a larger down payment. You’ll have to fund less of the purchase with credit, which can help keep your debt-to-income ratio low.
  4. Recalculate your debt-to-income ratio monthly to see if you’re making progress. Watching your DTI fall can help you stay motivated to keep your debt manageable.

Keeping your debt-to-income ratio low will help ensure that you can afford your debt repayments and give you the peace of mind that comes from handling your finances responsibly. It can also help you be more likely to qualify for credit for the things you really want in the future.