Ready to buy?
We look forward to working with you! Contact us via e-mail at dentondahc@aol.com .
Are You Ready to be a Homebuyer?Important factors a lender will look at:
Please print this form and return it to us by mail to begin the application process.
Qualifying for a Mortgage Loan
A Mortgage is the document that pledges your home as security for the loan you obtained to purchase the home. In Texas and some other states, this document is called a dead of trust but it is basically the same as a mortgage.
A Mortgage note, also called a promissory note, is the document that contains the promise to repay the mortgage loan. It spells out the terms and conditions of the loan such as the interest rate being charged, the length of time it will take to pay off the loan, what the monthly payment will be and when it is due
A lender will consider the following criteria when determining whether an applicant qualifies for the mortgage loan, and if so, how much they are willing to lend:
Gross Income - your total household income (before taxes and other deductions are taken out) from all sources. Are these sources consistent and reliable and how long do you expect to receive them? For example, if you receive child support, is it paid consistently and how long will you receive it.Debts - this indicates all of the "fixed", payments you make each month, including car payments, credit balances, installment loans, alimony or child support payments, and other types of debt, especially those that will take longer than six to ten months to pay off. The lender will look at your debt to income ratio which is a comparison of your total debts to your total income. If you've got too much debt for your income, the lender will decrease the amount they are willing to lend or deny the loan altogether.
Credit Worthiness - All lenders require a credit report of some type and most will require that you pay for the report up front. The cost is generally about $60.00 and the report will describe in detail, your history of making payments. If you have missed payments or have been late in making them, there may be a problem in qualifying for a loan. However, it is often worthwhile to discuss the report with the lender to explain the reason for the payment problem. For example, if you had a serious illness in the family or were unexpectedly laid off from your job, but resumed payments as soon as you could, they make exceptions for you. Work history - Lenders like to see some stability in your work history and generally prefer that you have been at the same job for at least a year, sometimes two. If you have been at the job less than a year but have previously worked in the same field or have recently finished college, they make exceptions. Sometimes it is helpful to get a letter from your current employer stating that they expect to keep you employed for the foreseeable future. If you are self employed, two or more years tax returns may be substituted. Positive Net Worth - The lender will want to be sure that the family's total assets exceeds their total liabilities. In other words, the total value of everything you own should be more than the total amount of your total debts. Cash on Hand - In general, the lender likes to see that you have savings or other readily available funds that will cover the cost of the down payment and the closing costs. Some lenders will accepts a "gift letter," from a realitive stating that they will give you a portion of the necessary funds as a gift. It cannot be in the form of a "loan," because that increases the debt you are carrying. If you qualify for the City's Homebuyer's Assistance Program(HAP), the required cash on hand is greatly reduced because the HAP will pay half of the downpayment and most of the reasonable closing costs.
Earnest Money Agreement or Contract - The agreement that is signed when the buyer makes an offer to buy a house is called the earnest money agreement or contract. It describes the conditions under which you agree to purchase the house and what price you are willing to pay. It is accomplished by a deposit, called earnest money. If the seller accepts the earnest money and signs the contract, they are stating that they will hold the home for the buyer for the term of the contract. Generally this is fifteen to thirty day while the borrower confirms that they can get a mortgage loan for the purchase. Down Payment - The amount the lender will require you to contribute as a down payment varies, depending on the type of mortgage loan they will be using. Most of out participants are required to put down three and five percent of the sales price of the house. For example, if the sales price of the house is $60,000, a three percent down payment will equal $3,600. Since HAP will pay for half of the down payment, the buyer will only have to provide $1,800. This is paid at closing. The total amount of you mortgage will then be $56,400.Closing Costs - There are a number od additional charges and fees that need to be paid at closing , the day when the sales transaction actually takes place, when the funds are paid, and the buyer signs all of the loan documents. The type of charges and amount of fees will vary depending upon the type of loan, etc. but in general, the total closing costs equal at least four percent of the loan amount (sometimes as high as ten percent). Some of the charges include the cost of a survey of the property, attorney's fees, loan origination and processing fees, "reserves," which may include the pre-payment of hazard insurance, property taxes, etc. Again, the City's HAP program will cover many of these costs foe eligible first-time homebuyer's. Things to bring when meeting with your lender: Lenders usually require the following information with your loan application:
*Copy of accepted Earnest Money Contract
*W2's or income tax returns for the past two years
*Pay stubs showing gross monthly income for the past two years
*Bank statements (checking and savings) for the last two months
*If you have been divorced or owe or receive child support, a copy of the decree
The loan application itself will require the following information for both the applicant and co-applicant
*The address(es) of your residence for the past two years and the name and phone number of landlords
*Name and address of employers for the last two years.
*Names, addresses account number, balances and monthly payments on all open charge accounts and loans
*Information on any other real estate you own
*Estimated value of all the personal property you own including furniture, appliances, clothing, jewelry, vehicles, etc.
The lender will generally request that you pay for the credit report and an appraisal when you submit your loan application. The cost of the credit report is generally about $60 and the appraisal between $300 and $350. The appraisal is a report prepared by a professional who determines the market value of the home based on its location, its size, its characteristics and any special features, and the condition it is in. The appraiser also compares it to other similar homesin the area that have sold recently. The appraisal is important in that it helps the lender decide how much they will loan on that property. They will never allow the loan amount to exceed the fair market value of the house.
Although these fees are required up front, the HAP program will reimburse participants if the loan is approved.
Homebuyers Training Schedule In Partnership with Consumer Credit Counseling and local sponsors, the Community Development Division offers workshops for first-time homebuyers every six to eight weeks throughout the year. The workshops offer homebuyer skills needed to be successful homebuyer and homeowner. The following is the schedule for 2004:
We have yet to receive the schedule for this year.
To find out more you can contact the City of Denton at 940-349-7726 or visit www.cityofdenton.com/pages/commdev.cfm.
*DAHC*
604 N. Bell Ave. Denton, TX 76209 940-484-7048 E-mail: dentondahc@aol.com or