FAQs

Whenever you decide to buy a house, we've got the answers to all your questions.

Intro

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Hey Guys, Trey Fava with MortgageBanc. Thanks for stopping in. Look, no matter where you are in the process, whether you're under contract and you're looking to close in a few weeks. Or if you're just kicking the tires, poking around and looking to educate yourself, we're glad you're here. Our goal with this part of our site, our frequently asked questions, is to educate you, talking about mortgage terms, different information on loan products and down payments, and things like that. We'll try to update this site frequently. So come back and visit it. Our goal is to make the mortgage process fun. I know when people think about getting a mortgage it's sometimes daunting. It can be overwhelming. Our goal here is to educate you, talk through certain scenarios, in your specific situation. So come back, feel free to pick up the phone and call us. Let's talk about your situation together.

So who are we? Like I said, Tray Fava with MortgageBanc. We are a branch of Fairway Independent Mortgage Corporation. Fairway independent Mortgage Corporation is one of the top five lenders in the country by volume. We've got offices in every state. My team and I are consistently ranked in the top 1% in the country. And I tell you this not to brag, but to tell you this because we do a lot of loans. We see a lot of scenarios. So if you think that you've got a situation that's unique, we've probably seen it. I've been doing this for right at 15 years here in Birmingham. 100 percent of our business is generated by referrals from past clients or referral partners. We focus on doing a good job in making the buying experience fun for our clients. We're here to answer any questions. Some of these videos will be a little bit generic. We'll have terms and things like that, so if you've got something specific that you want to talk to us about please reach out and call, and talk to me, or somebody on my team.

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How much money do I need to buy a house?

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(Video Transcript)
Hey there, Trey Fava with MortgageBanc, a branch of Fairway Independent Mortgage Corporation. One question that we get asked a lot is "how much money do I need to buy a house?" The simple answer is, it depends. It depends on the loan program and the down payment and things like that. There is a misconception out in the market that you do need 20% to put down. That is absolutely not true. Rarely do we have clients that put 20% down. There are loan programs out there with 5% down, 3% down, heck there's some with 0% down. If you qualify and a lot of it has to do with how much money you make, your credit score, the area in which you're purchasing the home. So for for purposes of this illustration, let's just say you do need a down payment. Well down payment is one thing that determines how much money you need to buy a house. The second thing is closing cost. Closing costs can add up. You know everybody's got their hands in your pocket when you're buying a house. Lots of third parties. Let's just say the real estate appraiser, the closing attorney, you've got recording fees. You've got a survey fee. You've got pest inspection. So these things do add up. But remember closing costs can be negotiated. You can actually negotiate the seller to pay some of your closing costs or sometimes it's possible to roll some of your closing cost into your loan. In this interest rate environment if you chose to move it into your loan, let's just say for every thousand dollars, you bumped up your loan amount it would increase your payment by $5 a month. So a lot of people choose to rather have you know $3,000 in closing costs. If they put it into their loan amount they're just bumping their payment up $15 a month and then putting an extra three thousand dollars in their pocket. So the second thing that determines how much cash you need is closing costs. The third is prepaid items. And prepaid items are items that you pay in advance. So you're your homeowners insurance agent is going to require that you pay one year up front of your homeowners insurance premium. Also we're going to be required to set up an escrow account for you. So it's going to be a couple of months in reserves for taxes and for insurance. And this is so the mortgage company can pay these items for you down the road when they come to you. So just there at this and in order to determine how much you need to come out of pocket. When you purchase a housem first you got to determine your down payment and then we've got to do your closing cost and then also we've got to set up an escrow account with your prepaid items. So give us a call guys. Everybody is unique. Everybody's situation is unique. There are their loan structure. We're happy to walk through it with you but I just want to kind of give you some some general guidelines here. Thanks guys.

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Whats Included in Monthly Payment?

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(Video Transcript)
Hey Guys. Trey Fava with MortgageBanc, a branch of Fairway Independent Mortgage Corporation.One question we get asked a lot by first-time homebuyers is what's included in my mortgage payment? So there's several different items that are included in your mortgage payment. First off, you've always got principal and interest on the loan. It doesn't matter if it's 15 year, 20 year, 30 year fixed product. You can be paying back principal and some type of interest on the loan each month. The next thing that's typically included are property taxes. So property taxes can range a wide gamut depending on where you're purchasing. So I'm here in Birmingham Alabama. Of course if you're buying a house in Mountain Brook and you're comparing the property tax amount of Mountain Brook compared to Moody or somewhere in unincorporated Jefferson County, The property taxes of Mountain Brook are going to be significantly higher. So property taxes are gonna be a big factor of your monthly payment. And then homeowners insurance. Whatever carrier you decide to use you're gonna be putting money aside each month for your homeowners insurance premium. A couple of things that could or could not be included in your payment are private mortgage insurance. Sometimes if you're putting less than 20% down you've got a private mortgage insurance payment that's associated depending on what your death income is and loan-to-value. And things like that are included in your monthly payment. And then also homeowner association dues. So if you're buying in an area or a development that has HOA dues, especially if it's a condo, you will have HOA dues that may or may not be a part of your payment. So you've got principal and interest, property taxes, homeowners insurance premium, maybe private mortgage insurance, and then maybe homeowner association. So those are the components that make up your typical monthly payment. I also want to talk briefly about online mortgage payment calculators and why they're not really effective for you guys to use. Online, most general mortgage payment calculators don't know where you're buying a house. They don't know what the property taxes are. Just like my example earlier, a house in Moody's got significantly lower property taxes. Also homers insurance is not included most of the time. Private mortgage insurance is a huge component of your mortgage calculation of your payment and your PMI premium really depends on a lot of factors. It depends on your credit score. It depends on your debt to income ratio. It depends on how much you put down. Your loan to value so you can basically have two people side by side that have two different PMI payments depending on what their application looks like, what their credit score looks like, how much reserves they have and things like that. So a PMI is a big piece of the equation on general mortgage payment calculator. So with a lot of these mortgage payment calculators people get in trouble. They're doing the calculation online and then they get a house under contract and they call us and they say hey you know I've been doing this online. The rates are about the same. I figure my payment is about, you kno, eleven hundred a month and when we get to walking through what's included in that payment and looking up property taxes and estimates, or homeowners insurance, and if they have PMI what that looks like and they may be around thirteen hundred a month now. They've already got a house under contract and this is something that they should have known prior to that. So guys, I just tell you that there's a lot of things that go into these calculations. Call us upfront. We're here to help you out. You know how to reach us online. Trey Fava, and then you can also reach us here at the office and ask for me or anybody or my team. Thanks guys!

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How long do I need to have been on my job?

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(Video Transcription)
Hey there. Trey Fava with MortgageBanc, a branch of Fairway Independent Mortgage Corporation. So one thing I want to talk about today is a question we get asked a lot. And that is how long do I have to be on my job" There is no cookie cutter answer for that. The real answer is, it depends. It really depends on what you did prior to that job. And then also how do they pay you currently? Are you getting paid salary are you hourly? Are you straight commission? One thing that we get asked a lot from people that are just now getting out of college or out of school is how long do I have to be working? Well it depends. Typically we can count your schooling prior to getting in the "real world" and getting a job as being is same thing as employment. We do this a whole lot actually. A client will be getting out of college and have a contract to to work somewhere and we can close them sometimes up to 90 days prior to them even starting the job.

So it's something that we need to look at a particular situation. But we do that a lot. So again all of it depends. If you are changing jobs it also depends on on how you're paid. If you're getting paid hourly and salary. Typically, as a general rule of thumb, we can always count hourly and salary income. If you get paid commission or bonus income and you have not been receiving that previously for two years, sometimes it's a little tough to count that. So that I mean we can't qualify for a mortgage or a preview for a mortgage. Just depends on what we can include in your qualifying income. So the quick answer is, it depends. All situations are unique. Please pick up the phone and call us. It'll take us no time to ask a few questions over the phone to let you know exactly what we can count as income. So call us. Thanks guys!

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When should I get pre-qualified?

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(Video Transcript)
Hey guys. Trey Fava with MortgageBanc. We are a branch of Fairway Independent Mortgage Corporation and today I want to talk to you about getting pre-qualified, when you should do it and then also answer a few questions that that come up about the pre-qualification process. There's a lot of confusion out there when people start talking about getting pre-qualified because there's so many different loan programs. And depending on how someone's income is structure and how long they've been on the job their credit score and things like that matter. So it's very hard to kind of just pinpoint a particular pre-qualification online, and on these online forms. When should you get pre-qualified? Honestly I would tell you if you have any inkling of buying a house tomorrow or within the next 365 days or a year you should go ahead and get pre-qualified now. Reason I say that is because if you get pre-qualified now we can go ahead and address any speed bumps that may come up. For instance you may have great income. You may have great assets. You may have a super credit score and you may think that there's zero problems with you being pre-qualified or pre-approved for a loan. And we see this every day. I promise you people get a contract to sell their house. They'll get another house under contract now they're under a deadline of say closing in 20 days and they call us. And again these are people that are not destined to. These are people that have 800 credit score, putting 20% down, and great income, but maybe they just swapped to be in a constraint commission employee or maybe over 25 percent of their income is commission and it's non-recordable as far as increasing or maybe it's decreasing. There's so many moving parts. We see it every day guys where people are backed into a corner and kind of maybe looking at being homeless in 20 days because they didn't allow us to address these issues you know 60, 90 days prior to that. So one question that we get asked a lot is how long does a pre-approval last or a pre-qualification lasts. Typically it lasts 90 days. However if we have that conversation with you and you're looking to buy a house a year down the future, we make sure that everything's alright as long as nothing has changed. Your income, your assets, you haven't gone out and gotten a lot more debt, then when it gets down the road and you really look at buying a house all we've got to do is refresh that information in our system. There's no questions about whether you qualify or not so it's better to address these speed bumps now and make the process fun. You know if you go ahead and get a house on the contract and you call us and we're trying to fix something overnight it really needs about 60 to 90 days to fix. It's not going to be fun for you guys buying a house. It should be fun so let's go ahead and address those issues up front. Another question is how much does getting pre-qualified cost? Nothing, absolutely nothing. We'll do this upfront for you and again your probably saying why won't you charge me for this? Again guys, we want this process to be fun we would rather address any issues upfront make some tweaks to where you need to pay some debts off, or how your income structure, or just anything. We really need to know that in advance and then help you along the way as you get ready to buy a house. So no cost of doing this. Another question we have a lot is, hey can I do all this online? I saw some little things where I can plug in my income. You can, but again, like I said at the beginning of this video, everything is so unique to an individual. You could put in there that hey I make a hundred thousand dollars a year, but it doesn't ask you about your income structure.  It doesn't ask you how long you been getting commission, if you get bonuses, or what does that income comprised of. Are you hourly or your salary? Things like that. These are questions that need to be asked and you can't do that in an online form. I've been doing this for 14 years I promise you, if there's a scenario that's come up, I've seen it. So don't think that you're unique and the fact that maybe maybe these guys don't know how to address some issues because we do. Anyway, we'd love to help you out. I just wanted to kind of talk about the process, answer some questions for us, you can get some answers to other questions. You can also download our mobile app, which you can do the application on or go online at treyfava.com, download the mobile app or do the online application. But guys we're here to answer any questions. Call us here at the office. You can speak to me or any member of my team, and I look forward to working with you. Thank you.

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How Does Side Business Effect Loan Process?

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(Video Transcript)
Hey there, Trey Fava with Mortgage Bank. A branch of Fairway Independent Mortgage Corporation. One question we get asked a lot since the new tax law was enacted is "What if I have a side business or a hobby business that I'm now reporting on my tax returns? How would that affect my ability to qualify for a mortgage?" So we're seeing this more and more with people having LLC's or side businesses and having businesses just just to help them out on the tax liability side at the end of the year. I understand that none of us want to pay more taxes right. However those side businesses or hobby businesses could have a negative impact on your ability to qualify for a mortgage. Remember on a side business, we're not concerned from an underwriting standpoint or a guideline standpoint of the the gross revenue that that business is throwing off. We're really looking at the net profit or the net loss of that business. So if you've got a lot of write-offs on the business for tax purposes, of course it could have a significant negative impact on what you qualify for. So be cognizant of this. We see people all the time that they make significant or good income on their their primary employment. However they've got a couple of side businesses that are operating in losses which is really hindering them on what they can qualify for. So remember the home buying process should be fun. This is something we need to kind of tackle and get our arms around prior to you getting a house under contract. And maybe we can restructure some stuff. Not all net losses are bad there's some things that we can add back to that loss to bump that income up and it may not have any negative impact. But again this is something we need to look at upfront and get our arms around. So give us a call at the office. We're happy to walk through it to make sure that everybody is on the same page about what guidelines will and will not allow us to do. So call us at the office. You can speak to anybody on my team or myself. We look forward to working with you guys.

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What is mortgage insurance and do I need it?

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(Video Transcript)
Hey there, Tray Fava with MortgageBanc a branch of Fairway Independent Mortgage Corporation today. We're going to talk about mortgage insurance. What the heck is it right? So kind of give a little backstory here, back in the old days you had to put down 20% down on a house - in order for the lender to feel comfortable purchasing it. And you asked why is that? You know lenders are in the business of lending money and not owning property or taking property back and foreclosing on someone. Foreclosing on a property and taking it back from the borrower is expensive. So back in the old days you had to put down 20% in order for the lender to feel comfortable enough that he could get his money back if he did have to foreclose on that property if the borrower defaults on his loan. These days you don't have to put down 20%. However it's Still expensive to foreclose on a property, so mortgage insurance is insurance that someone pays if they don't have 20% down on the property. That helps cover those costs that are associated with foreclosing a property if a borrower defaults. So that's kind of the gist of what mortgage insurance is. If you don't have 20% down you have to have it. There's really no way around it. However, there's several ways to structure mortgage insurance. You can pay it monthly. You can finance it into your loan, roll your loan amount up, or you can have the lender pay it for you upfront and take a slightly higher interest rate. So all of this depends on your down payment, your credit score and the size of the loan. It's going to determine the cost of it and which way is best to structure it. So everybody will be unique. We have these conversations with every client. Everyone will be different. Give us a call. I'm happy to walk you through it. We'll put options together to see which is the best way for you to handle it personally. I just wanted to kind of lay out what is mortgage insurance, how can we structure it, and give you some basics. Thanks guys. Give us a call if you need us.

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When Should I Lock My Interest Rate?

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(Video Transcript)
Hey guys, Tray Fava with MortgageBanc. The question we've got today is, when should I lock in my interest rate? It's a great question. We hear it all the time. First off, talking about interest rates, what happens when a lender locks in your rate? Remember the money's coming from Wall Street, and Wall Street's not going to do me a favor. And not going to do you a favor. I hate to say it, but they're just not in the business of doing me or you favor.

When we lock in your interest rate as a lender, that rate is locked in from the time it takes us to process your file to the expected closing date. That protects you against the ups and downs of the market.

Let's talk about rate lock options. The typical lock-in period is a 30 day rate lock period. You can go as little as 10 or 15 days, but typical is is a 30 day rate lock. You can go to a 45 day rate lock then to a 60, and out to a 90, 180 or 365 days if you're looking at new construction. So there are lots of different lock-in options. Keep in mind, like I said before, that rate lock is protecting you against the ups and downs of the market. So the further out you go the more chance there is going to be volatility in the market. And again, Wall Street's going to charge you for having that security of locking that rate in. So just keep that in mind. We can talk through your options.

There are a couple of things that we need in order to lock your rate in. You need to have a house under contract because that rate lock goes with a few things. It's going to go with a property address. It's going to go with your social security number and a sell price. So we do need to have all of that in hand before we start talking about locking in an interest rate. Also keep in mind when you're looking at online lenders and somebody's throwing out a crazy interest rate. Read the fine print. A lot of times people are quoting like a 10 day rate lock and you can't really process alone and get it closed from start to finish in 10 days so look at the fine print. And then we'll also look at the cost associated with it. Sometimes people are quoting low interest rates but the cost associated with that rate lock is significantly high. So keep keep all that in mind. Call us. We're here and can answer your questions quickly. You can reach us at our website or call us here at the office. Talk to me or anybody on my team. The number is 205 986 4220. Thanks guys.

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Are you a Broker or Banker? What's the Difference?

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(Video Transcript)
Hey guys, Tray Fava with MortgageBanc. One thing I want to cover today is a question that gets asked very often.  A lot of clients you'll get on the phone. You'll kind of start talking about your business and what you do and how you're set up and one of the first questions they ask is, are you a broker or a banker, and I usually say hey, I'm actually neither. Let me kind of explain to you what you can be as a loan originator.

Typically you can be one of three things. You can either be a banker. You can be a broker. Or you can be what's called a correspondent lender, and we are the the latter of the three - the correspondent lender. But I'll walk through what all three are and some pros and cons of each one of them. So of course a banker, you all know who that is, people that work at big banks. There's definitely some advantages of being a banker. You're obviously loaning your own money. You are making the lending decision. You are deciding whether or not to approve or not approve the loan. The disadvantage of being a banker sometimes is that typically you just have one product in one rate. So here's your thirty-year fixed-rate, go sell it buddy, so that's one disadvantage. Sometimes being a banker a broker is exact opposite of that. Think of it as like an insurance broker. They can shop your insurance around with certain carriers or providers. A loan broker can do the same thing. They can shop your your loan product around depending on your credit score.  So they've got a lot of different options on rates and products. However a broker is just the middle guy between the consumer and the end investor. So a broker typically does not approve your loan. They definitely do not fund the loan with their own money so they don't have any decision-making ability in the whole process. So you got two ends of the spectrum there. We are a correspondent lender. I've been doing this for right at 14 years. I've always been a correspondent lender and I do think it's the best of both worlds, and I'll kind of tell you why. Just like a bank we control the whole process. We underwrite. We process. We approve your loan. We fund your loan with our money, with our own money. Also just like a broker we can shop your loan around. We've got numerous investors that we lock your loan with. Probably right now up to about 26 different investors, two of them being directly with Fannie and Freddie. So most of the time if you're just doing a vanilla 20 or 15 year 30 year fixed loan and it's not a jumbo loan, we'll lock your loan directly with Fannie Mae or Freddie Mac and get the best pricing, because we will kind of bypass the third parties like the Chase and the Wells and and the other entities that I can lock your loan with.

So again, just to kind of recap, we're a correspondent lender. We're just like a banker and we control the whole process. We approve the loan. We fund, it really never leaves our office and then we're just like a broker, and the fact that we have the ability to shop your loan around. So hope that clears that question up. We get asked that question a lot. It's a great question. There's a lot of confusion out there. You can either be a broker or a banker and that's really not the case. Like I said, I've always been a correspondent lender. I love being a correspondent lender. I think it gives our clients a lot of options and it gives us the ability to control the file. So give us a call here at the office. We're happy to help any way we can. Thanks guys.

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