Mortgage 101

Purchasing a home is one of the most important investments you can make; and while the process may seem intimidating, Fairway Independent Mortgage of the Carolinas is dedicated to providing a positive and rewarding experience for our clients. When it comes to home mortgage loans, we offer a team of knowledgeable mortgage planners that excel in what they do and complete your application process in a timely manner. Our ‘in-house’ processing also supports our loan officers and our underwriting staff is the best in the business. Because of our local processing, our staff has increased control over the mortgage process, which results in superior customer service.

Helping people realize their dreams of homeownership is our passion, and we know that everyone’s story is different. Throughout the years, we have helped thousands of people accomplish the goal of homeownership. We hope that this guide alleviates some of your potential concerns and stress throughout the moving process. From deciding if you’re financially prepared, to selecting a Realtor, to how to negotiate an offer, Fairway is always on your side.

First Steps Consider these things first.
  • 1

    Rent or Buy?

  • 2

    First-Time Homebuyer

  • 3

    Ready to Purchase a Home?

  • 4

    Why Fairway?

Money Matters How to make it all happen.
  • 5

    Down Payment

  • 6

    Your Credit

  • 7

    Pre-Approve Your Loan

  • 8

    Income & Employment

Once You've Found Your Home Things to keep in mind once you've found the right place.
  • 9

    Loan Process

  • 10

    Select Your Home

  • 11

    Make an Offer & Negotiate

  • 12

    Sign the Contract & Enter Option Period

Once Your Offer Has Been Accepted Congratulations! What now?
  • 13

    Home Inspection

  • 14

    Loan Approval

  • 15

    Home Property Survey

  • 16

    The Final Walkthrough

  • 17

    Closing Day!

1. Rent or Buy?

Ask yourself the following questions:

  • Are you are tired of putting your money into your landlord’s pocket month after month?
  • Do you want something tangible to show for your hard-earned dollars?
  • Are you ready and able to take on the responsibilities of owning a home?
  • Do you feel it is time to begin investing in your future by building home equity?

There is no “right” answer for knowing if and when the time is right to buy a home – every situation is different and requires serious consideration. There are many factors to consider including your employment, family changes, and other personal reasons that can all come into play in any home buying decision. Only you will know when the time is right, but wait too long and you will just continue padding your landlord’s wallet instead of investing in your future.

If you are an apartment renter in Charlotte, North Carolina, right now is fantastic time to buy a house and Fairway is here to help. Our mortgage planners can analyze your financial situation to you understand how you can own your own home. At Fairway of the Carolinas, we understand the importance of making sure that our buyers can afford their homes. This is critical to avoid being strapped to your mortgage or facing foreclose in the future. Our goal is to partner with our buyers for life to create a healthy, sustainable plan for growing wealth over the years and that starts with owning a home that they can afford and budgeting for the rainy days.

Fairway can also help you secure a Certified Pre-Approval! Many renters are looking into purchasing right now so there is competition between buyers, and Fairway wants to give our buyers an advantage. Fairway’s Certified Pre-Approval allows sellers who are comparing offers know that our loans will close. Having this extra level of certainty provides a competitive advantage over another buyer who may only have a pre-qualification letter, which means very little.

Are you still not sure if buying instead of renting is right for you? Not only is home ownership an investment in a valuable asset and a symbol of financial integrity– it can improve your credit rating! Also, as a homeowner, you experience tax benefits that renters do not — a good portion of the mortgage interest and property tax paid is deductible. Along with the responsibilities of a house comes the sense of pride and satisfaction from buying a house and transforming it into your dream home. After all, nothing can replace coming home to your own home as well as building a life inside those four walls.

Make your home ownership dreams a reality with Fairway! Apply Today.
2. First-Time Homebuyer

Buying your first home is one the biggest decisions in your life. It is too important to trust to just anyone in Charlotte to help guide you in your financial decisions. At Fairway, we are mortgage planners. That means that we work tirelessly with first-time homebuyers to ensure they are aware of the entire loan process and any all questions along the way.

We want our buyers to feel that they:

  • Understand the entire loan process from start to finish
  • Are not wasting money
  • Are prepared to safely own a home

We have a variety of home loan programs available for first=time homebuyers that make it easy to buy a house, even if you don’t have a long credit history or a large down payment. Buying a home in Charlotte is a long-term decision because the last thing you want is to find yourself outgrowing your home too quickly.

When we meet with you in one of our offices in Charlotte, we will:

  • Give you a free copy of your credit report
  • Review your credit report with you
  • Look at your monthly payments
  • Ensure that you will not end up house rich/cash poor after you buy your home

There is no magic solution for first-time homebuyers. When we meet, we will help you decide if you are ready to buy, and if not, we will help you discover what steps you can take to be ready. The critical thing for first-time homebuyers is to find a trustworthy mortgage professional that will give you honest advice and guide you through the process from initial credit report to the day you receive the keys to your new home.

Call us today to set up an appointment to talk about your goals. When we meet, you will see that we are the mortgage lender in Charlotte to help you buy your first home.

Are you a teacher, firefighter, police officer or EMT? Click here!

 

Make your home ownership dreams a reality with Fairway! Apply Today.
3. Ready to Purchase a Home?

If you are currently renting in the Carolinas or moving here in the near future, you may be wondering, “Am I ready to buy a home?” Overall, home prices are great and interest rates remain low, so it is a great time to start saving to buy a home.

Here are the key things to consider:

1. Can you afford a down payment?

With most lenders requiring a 20% down payment, a house that costs $300,000 requires a $60,000 down payment. While we may be able to find a loan that helps you reduce the amount of money you will need to put down, having a down payment is going to be important to avoid PMI and to have some equity in your home from the moment you buy it.

2. How are your savings?

A good rule of thumb is to have three months of living expenses saved in case of emergency. This will also show your lender that you are serious about your financial future.

3. How is your credit report?

There are a number of free services you can now use to check your credit score. Be certain to check to see if there are any inaccuracies on your report and make sure you report these immediately. While you do not need a perfect score to qualify for a loan, taking the steps to ensure that your credit score is correct and that the past few years show you are responsible with your debt is key.

4. Are your credit cards under control?

The amount of debt that you have is a very important consideration to lenders. Think about paying these down before you buy and set realistic goals to chip away at any debt you may have. Try to lower your debt on each card to less than 30%.

5. Are you a good credit risk?

Do you have a stable job in a field you have been working in over time? If you are buying a house with your spouse, have you planned out a budget for how you will afford the mortgage as well as other household costs?

These are some of the difficult but important questions that go into making the choice about buying your first home. Our loan officers can help you answer any questions you may have about your short-term or long-term goals and the steps that are essential to take in applying for your mortgage.

Mortgage lenders are going to look at your income, savings, and credit history when deciding to approve your mortgage application. As someone who is considering buying a home in Charlotte, you should look at the same things. Yes, it is a great time to buy a home – but working with a skilled mortgage planner like those at Fairway ensures you are ready to do so.

Make your home ownership dreams a reality with Fairway! Apply Today.
4. Why Fairway?

It is cliché to say that we care about our customers, but at Fairway, we truly are interested in providing the best possible results for your mortgage that will set the stage for your financial future. Our mortgage lenders understand this industry and have a vested interest in helping you reach your goals. After all, we want you as a part of our company for life.

Our goal each day is simple – find the best loan at the best rate and take excellent care of our clients. This is more than just your typical mission statement because we put our money where our mouths are! If you are not happy with the outcome of your mortgage because of something Fairway did, we will return our fee. It’s that simple. You won’t find that guarantee anywhere else in the mortgage industry. We make promises like that because Fairway customers know that we are committed to finding the perfect loan for your home.

You will find our team of loan officers to be honest, respectful of your time, and willing to help in any way possible. When other mortgage companies turn you down, it’s likely because they haven’t taken the time to unearth all of the information. We prove to the banks that credit scores are more than numbers – they are the sum of the challenges we all face.

Fairway TeamLet Fairway Independent Mortgage Corporation guide you toward a healthy future by increasing your financial safety. We want you to retain more of the money you earn and spend less on interest and taxes while showing you how to protect what you do have. We are far more than just a mortgage company.

We have our underwriters and processors in the office and while only have of them are shown in this picture, we are grateful to have the very best team around! Our team promises to close your loan on time with complete accuracy and answer all of the questions that you may have. The best operations team in the business supports each loan officer locally. They ensure that all documents are complete and turn your paperwork in early so there is no last-minute stress or pressure on you. Our reputation in the mortgage industry for being reliable is unmatched and once you finance a loan through Fairway, we are confident you will be a customer for life.

 

Make your home ownership dreams a reality with Fairway! Apply Today.
5. Down Payment

Saving for the down payment is one of the 7 biggest obstacles that stop first-time homebuyers. Your down payment may be the most important decision you make when financing your house. For Carolina homebuyers, (especially first-time homebuyers) there are many alternatives. Some home loan programs require little to no down payment, which means that buying a home is much more manageable that you may think! There are only a few options for 0% down, so take the time to speak to a mortgage planner who can teach you how to improve your credit, handle your current debts, give you tips on saving for your down payment, and help you establish your needs and goals for your new home.

 


Make your home ownership dreams a reality with Fairway! Apply Today.
6. Your Credit

Your credit score is an important first step and important thing to know as you’re thinking about buying your first home. A lender uses this number to determine how likely you are to repay your mortgage loan. There are many factors that determine whether creditworthiness such as:

  • Credit report (the history of you credit)
  • Your current credit debt (how much is owed on your credit cards and loans)
  • Credit score (the average score from the 3 main credit bureaus)
  • The amount you have in savings or other assets (such as stocks, 401k, etc.)
  • Your total assets
  • Income

If you have less than a 640 credit score, there are some simple things you can do to improve your credit score. When a mortgage planner reviews your credit report with you, he or she will talk over some simple strategies you can use to increase your score.

Late payments are usually the biggest cause for lower credit scores

For credit scoring, a late payment is not considered late until after it is over 30 days late. Late payments will stay on your credit report for seven years, but after a while, they have little impact on your score.  Your most recent credit activity has the biggest impact on your credit scores, so avoid late payments at all costs if you are thinking about buying a new home.

High credit card balances

The second biggest problem is credit card balances that are near credit card limits. Keeping your credit balances low compared to the limit that you can borrow on a card is one good way to keep your credit scores high. For best credit scores, keep your credit card balance below 30% of the maximum limit. If the credit card balance gets about 50% of the maximum limit your score will start to drop as result.

Errors on your credit report

If you find a mistake on your credit report, you need to get something in writing from the company that reported the error so that you can send that information into the credit bureau and get your credit report corrected. We also help our customer get errors corrected quickly since we deal with the credit bureaus every day.  If it’s a more significant issue, we also work with companies that specialize in credit repair. We can also talk to you about when the right time to fix your credit is and advise you along the way.

Look at your credit report before you look at houses

One of the first thing you want to do if you are a first-time home buyer in Charlotte is to have a mortgage lender run your credit and give you a copy of your credit report.  Review this credit report with a loan officer so you can see if you are ready to buy now or, if there are things you need to do to improve your credit. Once your credit score is high enough to qualify for a mortgage, you should stop working on your credit. Continually pulling your credit can actually lower your scores. Your Fairway mortgage professional can help guide you as to the best practices when it comes to your credit!

Make your home ownership dreams a reality with Fairway! Apply Today.
7. Pre-Approve Your Loan

Knowing how much you can afford to borrow is a very important factor when buying a home. Mortgage lenders are chiefly concerned with your ability to repay your mortgage. To determine if you qualify for a loan, they will consider your credit history, your monthly gross income, and how much cash you will be able to accumulate for a down payment. Talk to a mortgage planner to receive a pre-approval letter before you begin seriously shopping for a home. Better yet, ask about our Certified Pre-Approval!

Buyers are sometimes dismayed by the amount of paperwork involved in the process, but here are some of the reasons behind this advice.

 


Make your home ownership dreams a reality with Fairway! Apply Today.
8. Income & Employment

Income and Employment Factors

When applying for a loan, lenders need to know that you have the best of intentions to pay back what you are borrowing. A huge factor in verifying that you are a good risk is whether or not you have been employed for a solid length of time and how steady and reliable your salary has been.

A good rule of thumb for employment history is two years at the same job. However, this is not a requirement in order to qualify for a mortgage loan. While more time in your field is better, this should not deter you from applying or speaking to a mortgage professional. Additionally, if you are a first-time homebuyer who may have just started in the job market, we can certainly help providing that your degree and your new job align.

Debt-to-Income Ratio

A debt-to-income (DTI) ratio is one way that lenders measure your ability to manage the payments you make every month to repay the money you have borrowed. To calculate your debt-to-income ratio, you add up all your monthly debt payments and divide them by your gross monthly income (gross monthly income is the amount of money you have earned before your taxes and other deductions are taken out). 

For example, if you pay $1500 a month for your mortgage and another $100 a month for an auto loan and $400 a month for the rest of your debts, your monthly debt payments are $2000. ($1500 + $100 + $400 = $2,000.) If your gross monthly income is $6000, then your debt-to-income ratio is 33 percent. ($2000 is 33% of $6000.)

Evidence suggests that borrowers with a higher debt-to-income ratio are more likely to run into trouble when making their monthly payments. The 43% debt-to-income ratio is important because that is the threshold the CFPB has set as a maximum DTI for mortgage loan approval. Once your debt ratio goes over 43%, it becomes more difficult to get a Qualified Mortgage, or QM. Since the CFPB has issued regulatory guidelines that restrict lenders’ ability to do “Non-QM” loans, it is very challenging to find a mortgage loan with a higher debt ratio.

There are a few mortgage products that might be available with a DTI higher than 43%, but those are the exception rather than the rule. After all, lenders are regulated by the CFPB, and they will then have to make a reasonable, good faith effort, following the CFPB’s rules, to determine that you have the ability to repay the loan.

To speak to a mortgage professional about your income, employment history and debt-to-income ratio, or to understand more about how lending works, please email us today!

Make your home ownership dreams a reality with Fairway! Apply Today.
9. Loan Process

Preparing for the Loan Process

No one enjoys paperwork or searching for last year’s tax return, but the reward far outweighs the few moments it will take to get us what we need. If you want to close your loan on time, with the least amount of stress, here are the documents the U.S. Government requires Fairway to have to process your mortgage.

Please provide the following for all borrowers:

 Personal:

  • Social Security numbers
  • Copy of drivers license or a photo ID with date of birth
  • If separated or divorced, please provide a copy of the separation agreement and divorce decree

Financial:

  • Copies of checking and savings accounts statements for the past two months (you will need to provide all pages, even if they are blank)
  • For any large deposits of $1000 or more
    • Provide a letter of explanation for the large deposit
    • Copy of the deposit slips
    • Image of the check
    • If the money transferred from another account, we will need the account statement showing the transfer (all pages)
  • Terms of withdrawal for any 401k statements
  • Evidence of any other assets such as bonds, stocks, or money saved in retirement programs
  • W-2 or 1099’s or income tax returns for the past two years
    • Include any K-1’s and business or partnership returns that you file (all pages)
    • Page 2 of the 1040’s must be signed
    • If self-employed include all pages of business return

Residential:

  • Name & phone number of your current landlord if applicable
  • Residence history for the past two years
  • Homeowner’s association information with contact information if property is a condo or part of a homeowner’s association

 Work History:

  • Employer name, address, phone or email address, position held, and monthly income – must show employer name, your name, and current year to date (YTD) income
  • Recent, computerized paycheck stubs covering the last 30 days

New Home:

  • Sales contract for the purchase of a new home
  • Homeowners insurance agent name & contact info to order or update your insurance
  • Copy of ALL current mortgage statement(s) – including rental or vacation homes

If refinancing, we also need:

  • Copy of title policy from previous closing or HUD-1 Settlement Statement
  • Copy of 2nd mortgage note/equity line agreement
  • Copy of your homeowner’s insurance declarations page
Make your home ownership dreams a reality with Fairway! Apply Today.
10. Select Your Home

Choosing a home is an exciting process, but there are many questions you will have. What type of home best suits your needs? What specific features will your ideal home have? Write out a list of wants that includes larger details like ideal neighborhood, square footage, and area of town . . . all the way down to smaller details such as bathroom layout and preferences in interior design.

Take the time to find the right house so you can make sure you don’t regret your home purchase!

Make your home ownership dreams a reality with Fairway! Apply Today.
11. Make An Offer & Negotiate

Some people believe that everything is negotiable and when it comes to buying or selling a home – this adage is true. From the price, to the terms, to the occupancy date, you can always ask for what you want. You likely won’t receive all the considerations you hope for, but it is always in your best interest to ask! As a buyer, your purchase offer can be considered a “blueprint for the final sale.” It contains all of the items that will serve as a guide to the final agreement.

When it comes to making an offer on a home and negotiating the best deal, take the time to do your research and consult professional like a real estate agent and a mortgage planner.

Make your home ownership dreams a reality with Fairway! Apply Today.
12. Sign the Contract & Enter Option Period

Once you reach an agreement, you will make a good-faith deposit and the process transitions into escrow. Escrow is the period of time the seller takes the house off the market with the contractual expectation that you will buy the house – provided you don’t find any serious problems with it during inspection.

An Option Period is a specific amount of time, agreed upon between the buyer and seller, that allows the buyer time to perform their due diligence and conduct further investigations into the property. This period is commonly 10 days but can be extended by mutual agreement between the buyer and seller. This time allows for the buyer to conduct a proper home inspection and get quoted for any repairs that may have been found. The option period is important for buyers as they should do their due diligence so that there are no surprises when they finally purchase the home.

Make your home ownership dreams a reality with Fairway! Apply Today.
13. Home Inspection

After the contact is agreed upon, it is time for the home inspection and property appraisal. Even though sellers should disclose all known defects of the property, a full, professional, home inspection should always be completed. An appraisal is a written document that shows an opinion of how much a property is worth. The appraisal is used to help lenders, buyers, and sellers come to an understanding of how much a home is worth, or its “market value.” Appraisers visually inspect the home and compare it to similar homes in the area. Throughout the appraisal, the inspector will research the neighbor crime rate, quality of schools, access to highways and take note of all features and issues throughout the home.

Talk to your agent, family, and friends to understand and discuss your concerns, types of defects, and what is most important to you.

Make your home ownership dreams a reality with Fairway! Apply Today.
14. Loan Approval

Whether you’re a first-time homebuyer or seasoned investor, the home mortgage loan approval process can be an overwhelming adventure without a proper road map and a good team in your corner. To some potential buyers, the prospect of meeting a mortgage lender may seem a bit daunting. Lenders ask a lot of questions because they want to help you get the best mortgage they can for you and your family.

Mortgage lenders approve borrowers for a loan, which is secured by real estate, based on a standard set of guidelines that are generally determined by the type of loan program. Your loan representative will instruct you to provide the required supporting documents. 

Make your home ownership dreams a reality with Fairway! Apply Today.
15. Home Property Survey

You have chosen your dream home; you’ve made an offer, made it through the option period and home inspection, and now it’s time to complete the property survey before you complete the final walkthrough. Land surveys are of utmost importance when purchasing new land; and if you are seeking a loan to buy a piece of property, your lender will almost certainly require that the land be surveyed. Additionally, if you are building anything new near the property line, such as a fence or a shed, getting a survey done can keep you out of expensive legal trouble. The reasoning is simple: you need to make sure that what you think you’re buying is actually what you’re buying. Most lenders will require a survey.

Make your home ownership dreams a reality with Fairway! Apply Today.
16. The Final Walkthrough

Before you sign the closing documents and roll into the driveway with your moving van and paint samples, there’s another important step to take – you must do a final walkthrough. This is the last chance before closing to make sure everything is in working condition. A final walkthrough cannot only help you feel more confident about your purchase and avoid buyer’s remorse; it can also pinpoint any last-minute problems that should be taken care of before settlement.

During this assessment, that should take place 24-48 hours before closing on a home, its primary purpose is to make certain that the property is in the condition you agreed to buy — that agreed-upon repairs, if any, were made and nothing has gone wrong with the home since you last looked at it.

Make your home ownership dreams a reality with Fairway! Apply Today.
17. Closing Day!

The big day is here. Closing day can be a whirlwind, everything moves pretty fast and there are a lot of papers to sign before that great moment of getting your keys. While this day can be thrilling, it’s a good idea to beat the anxiety and be confident by being as prepared as possible for what will happen ahead of time. At the closing there will be an attorney or title company representative (chosen by the buyers), all buyers, listing and selling brokers, and all owners.

You will already be well aware of any fees that need to be paid such as closing costs, but those are typically:

  • Underwriting and/or processing fees
  • Appraisal fees
  • Attorney fees
  • Title insurance
  • Title inspection and recording fees

Of course, there is going to be a lot of paperwork to sign! Take all the time that you need in reading these documents and we will answer any questions you any have.

  1. You will be receiving a HUD-1 Settlement statement which shows all the costs on the loan.
  2. If Fairway is establishing an Escrow Account for your mortgage, you will receive an Initial Escrow Statement that lists the estimated taxes, insurance and any other charges we will be paying from your escrow account during the first year of your loan.
  3. We will provide a final Truth-in-Lending disclosure that outlines costs of your mortgage.

Closing on your home – whether it is your first or your tenth – is very exciting! With the right amount of preparation and understanding, you will be able to enjoy the experience even more! Don’t forget to celebrate afterwards!

Make your home ownership dreams a reality with Fairway! Apply Today.
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