REQUESTED DOCUMENTS

The list below are the documents we will request from each person applying for the loan to get started on your purchase or refinance.

Basic paperwork requested from every borrower:

  • Copies of your driver’s license and social security
  • One month current paystubs
  • Last two years W2s
  • Last two years Federal Tax Returns
  • Two months current bank statements (all pages)
  • Retirement or investment statements to cover the most recent two months (all pages)

If you are a veteran:

  • Certificate of Eligibility
  • DD214 (Discharge Papers)

If you own a property:

  • Current mortgage information
  • Current homeowner’s insurance
  • Property tax statement
  • HOA statement (if applicable)

If You Rent

Landlord’s Name, address, and phone number

If you have been divorced:

  • Divorce Decree
  • Alimony documentation
  • Child Support documentation

If you have filed bankruptcy:

  • Bankruptcy Filing and Discharge
  • Letter of Explanation

If you have large deposits into your bank accounts:

  • Documentation (copies of checks)
  • Letter of Explanation

If you own a business:

  • Profit and Loss statement
  • Business License, if applicable
  • Last two years of Corporate Tax Returns

CREDIT SCORES

Credit is an important factor when it comes to buying a home.  Mortgage companies run a tri-merge report pulling information from Experian, Equifax, and TransUnion.  A mortgage credit report uses a different algorithm than say, a car loan credit report.  So what is a good credit score?  Let’s see first what makes up your credit score.

Credit history: Make your payments on time, even if you are making the minimum payments.  A missed or late payment can lower your score by 80 to 120 points.

Credit utilization: Keep your balances low, generally between 20-25% of the high credit.  Lenders calculate your debt to income ratio by comparing your spending habits (monthly obligations) to your earnings.

Length of credit history: Keep those credit cards you have had the longest open, whether you are using them or not.  Once the account is closed, the history is lost.

Credit mix:  Have multiple types of credit such a revolving accounts (credit cards), mortgages, installment loans (vehicles), etc.

Applying for new credit:  A lot of new credit in a short period of time looks like you are desperate for credit and potentially a higher risk.

To ensure the best terms for your loan, a credit score of 740 or better is ideal; however, the minimum score for all loan programs is lower.  So, what steps can you take to improve your score?

  • Shop for rates for a specific loan within a short period of time
  • Pay your bills on time, even if it is just the minimum payment
  • Pay off debt rather than moving it around
  • Review your credit annually with the three bureaus
  • Do not close accounts as a strategy to raise your score; it often does not help
  • Monitor joint and co-signed accounts
  • Apply and open new accounts only as needed
  • Keep balances low on revolving accounts and credit cards

*Note: American Pacific Mortgage Corporation is not a credit repair company; this information is for information purposes only. We are not licensed credit repair specialists or counselors. 

WAIT TIMES BEFORE YOU CAN FINANCE A PROPERTY

Foreclosure

*       With evidence that the loan was current at the time of short sale, less than 3 years may be accepted

**     Written permission from the bankruptcy court/trustee is required

***   For loan amounts < $417,000, 12 months of payments and bankruptcy court approval may be required

INTEREST RATES VS APR

Often times consumers see the APR and think, “That was not the rate they gave me.”  And they are correct.  The APR is actually the cost of the loan over the life of the loan.  What that means is that it takes into account the interest rate, closing costs, and mortgage insurance (if applicable), then expresses it as a percentage over the term of the loan.

CLOSING COSTS

Closing costs are fees incurred during a real estate transaction and paid at the time of closing.  Closing costs include, but are not limited to, escrow and title fees, loan origination charges, points, appraisals and inspections, pre-paid and pro-rated items, etc.

MORTGAGE INSURANCE AND FUNDING FEE

Mortgage insurance is required on FHA and Conventional loans with less than 20% down payment.  Mortgage insurance is designed to protect the lender in the event of default.

FHA loans are insured by the Government and require an upfront mortgage insurance premium (UFMIP) as well as monthly mortgage insurance (MMI).  Depending on how much you put down and your credit, the MMI rate may change.

Private mortgage insurance (PMI) is required on conventional loans and there are a few options that will affect your monthly payment in different ways.  Two of the more popular options are lender paid mortgage insurance (LPMI) and borrower paid mortgage insurance (BPMI).  With lender paid mortgage insurance, the lender buys out the mortgage insurance at the beginning of the loan, resulting in no monthly fees.  Borrower paid mortgage insurance can be bought out at the beginning of the loan or paid monthly.

VA loans are guaranteed by the Department of Veteran Affairs and require a funding fee at the beginning of the loan.  Some veterans may be exempt from paying the funding fee, which would be reflected on their Certificate of Eligibility.