Frequently Asked Questions

ANSWER: A lease option loan program is a type of mortgage financing that combines elements of a lease and a mortgage. It allows a borrower to "rent to own" a home by making monthly payments that include both rent and an option to purchase the home at a later date.

Here's how a lease option loan program works:

The borrower pays a down payment and enters into a lease agreement with the option to purchase the home at a later date.

The borrower makes monthly payments that include both rent and a portion of the purchase price.

At the end of the lease term, the borrower has the option to purchase the home at a predetermined price. If the borrower decides not to exercise the option to purchase the home, they may be required to forfeit their down payment.

Lease option loan programs can be a good option for borrowers who are not yet ready to purchase a home but want to build equity and improve their credit while they are renting. However, they can also be risky, as the borrower may not be able to exercise the option to purchase the home if their financial situation changes or if the value of the home decreases. It's important to carefully consider the terms of a lease option loan program before entering into one.

ANSWER: The minimum FICO score to get a conventional loan is typically around 620, although it can vary depending on the lender and the specific terms of the loan. A FICO score is a measure of an individual's creditworthiness, and it is based on information from the individual's credit report.

Conventional loans are mortgage loans that are not insured by the government and are available through private lenders. They are typically available to borrowers with good or excellent credit and are often more competitive than government-insured loans, such as FHA loans, in terms of interest rates and other terms.

Lenders use a variety of factors to determine whether to approve a borrower for a conventional loan, including the borrower's credit score, debt-to-income ratio, employment history, and income. In general, borrowers with higher credit scores and lower debt-to-income ratios are more likely to qualify for a conventional loan.

It's important to note that the minimum FICO score requirements for a conventional loan can vary depending on the lender and the specific terms of the loan, so it's a good idea to shop around and compare offers from multiple lenders. It's also a good idea to work on improving your credit score before applying for a loan, as this can help you get a better interest rate and more favorable terms.

ANSWER: VA loans are mortgage loans available to active duty military personnel, veterans, and their families. They are backed by the Department of Veterans Affairs (VA) and are designed to help veterans and their families obtain affordable homeownership.

There are several benefits of VA loans:

No down payment required: VA loans do not require a down payment, which can be a significant advantage for those who may not have the funds for a down payment.

No private mortgage insurance (PMI) required: VA loans do not require PMI, which can save borrowers hundreds of dollars each month.

Lower interest rates: VA loans often have lower interest rates than conventional loans, which can result in significant savings over the life of the loan.

Flexible credit requirements: VA loans have more flexible credit requirements than conventional loans, which can make it easier for veterans and active duty military personnel to qualify for a mortgage.

No prepayment penalties: VA loans do not have prepayment penalties, which means that borrowers can pay off their loans early without incurring additional fees.

Available to active duty military personnel and veterans: VA loans are available to active duty military personnel and veterans, making it easier for them to obtain affordable homeownership.

Eligible properties: VA loans can be used to purchase single-family homes, condos, manufactured homes, and more.

Overall, VA loans can be a great option for active duty military personnel and veterans who are looking to buy a home and may have difficulty qualifying for a conventional mortgage due to their credit history or lack of a down payment.

ANSWER: Don't change bank accounts
Don't apply for new credit accounts
Don't close any credit accounts
Don't deposit any cash into your bank account before speaking to your loan advisor
Don't make any large purchases
Don't co-sign on any loans for anyone

ANSWER: The Federal Trade Commission (FTC) defines closing costs as: “The upfront fees charged in connection with a mortgage loan transaction. . . . generally including, but not limited to a loan origination fee, title examination and insurance, survey, attorney’s fee, and prepaid items, such as escrow deposits for taxes and insurance.” Basically, your closing costs cover the fees for various people and services involved in your transaction. NAR says to budget for roughly 2-5% of the home’s purchase price. Freddie Mac sums up why this matters to you and your homebuying journey like this: “If you’re in the market to buy a home, your down payment is probably top of mind. And rightly so – it’s likely the biggest cost of homebuying. However, it is not the only cost and it’s critical you understand all your expenses before diving in. The more prepared you are for your down payment, closing and other costs, the smoother your homebuying journey will be.”

ANSWER: While it isn’t required, an earnest money deposit is common in today’s highly competitive market. It’s money you pay as a show of good faith when you make an offer on a house. First American explains how it works: This deposit is typically held in trust by a third party and is intended to show the seller you are serious about purchasing their home.Upon closing the money will generally be applied to your down payment or closing costs. In other words, an earnest money deposit could be the very first check you’ll write toward your purchase. The amount varies by state and situation, but realtor.com says you can typically plan for 1-2% of the home’s purchase price. Work with a real estate advisor to understand any requirements in your local area and determine if it’s something that could be an option for you.

ANSWER: A Notice of default is a public notice filed with a court which states that a mortgage borrower is in default on a loan. This is one of the initial steps toward foreclosure. A notice of default and subsequent foreclosure actions will be documented and disclosed to all credit bureaus. Hence, all foreclosure proceedings and actions can have severe repercussions on a borrower’s credit score. This will also negatively impact the borrower’s ability to obtain a mortgage or any type of debt in the future.

ANSWER: The following states allow non-judicial foreclosures: Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Georgia, Idaho, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Carolina, Oregon, Rhode Island, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wyoming.

ANSWER: A foreclosure is the legal practice where your mortgage company secures ownership of your home. Basically, they repossess the property. A foreclosure occurs when the homeowner has failed to make payments and has defaulted or violated the terms of their mortgage loan agreement. A foreclosure can typically be avoided, even if you already received the foreclosure notice. A foreclosure can wreak havoc on your credit score. You must talk with your lender and take action as soon as possible.