Financing Your Purchase

A pre-approval represents your lender’s due diligence on your financial situation (credit, income & assets) to ensure that we can get the loan through underwriting once you are under contract. Your lender will collect basic information/financial documentation to review and run the numbers for your search.

You need a pre-approval to assure listing agents and sellers that you have been vetted & your offer is serious.

There will be two buckets to make up your closing costs:

1. Lender charges to get the deal through underwriting (origination, credit report, appraisal)

2. 3rd party costs that don’t change regardless of the lender (i.e., title costs, transfer taxes, attorney fee, recording fee, etc.).

A good rule of thumb is to budget for 2-3% of the purchase price for net closing costs.

Your particular financial situation determines your interest rate. The main factors are:

1. Credit score

2. Down payment amount

3. Property type

4. Time to close

5. Occupancy Type (primary, 2nd home, investment)

Your lender will give you an estimated interest rate and monthly payment when you get your pre-approval. The rate is not locked in until you have a signed purchase agreement with the sellers.

Your lender will help you determine the right amount for your situation. You’ll want to find the right balance between getting a lower monthly payment versus having more cash on hand.

Every $10,000 more you put down only moves your monthly payment by ~$60/month. So, it may be more beneficial to have extra reserves rather than saving a marginal amount on your monthly payment.

Negotiating a seller closing cost credit with your agent can be a helpful way to offset some or all of your third-party closing costs. At closing, the seller will give you money from their proceeds to keep you more liquid and have less out-of-pocket due. You’ll want to chat with your agent as it is dependent on how competitive the market is.

This varies per lender, but at Vybe Mortgage, pre-approvals have an expiration date of 90 days. During this time, you will want to keep your income, assets & credit the same — if something changes, it will affect the pre-approval.

As a rule of thumb, aim to get a pre-approval when you are looking at going under contract on a home in the next 90 days.

You can certainly shop around for lenders! Everyone is fishing from the same pond when it comes to rate, so prioritize working with a lender with knowledge, expertise, and excellent communication.

Check your lender’s reviews online & talk to your realtor about their experience with different lenders. You can also interview the lenders to gauge their knowledge, communication, and expertise.

You can technically get pre-approved by as many lenders as you like; however, this will result in multiple credit inquiries, & can also cause confusion about your situation.

The rates will be very similar across different lenders because Fannie Mae/Freddie Mac will not accept a lower rate from one lender versus another.

The biggest difference will be in your experience working with the lender. At a big bank, your loan goes into a general processing center after you go under contract. It can be challenging to contact someone during the process, which can unnecessarily slow down your transaction and even cause some clients to miss their closing date

At Vybe Mortgage, there is cutting-edge technology and a team of experts to guide the loan through the process & hit all the critical dates and milestones.

A renovation loan is where you finance the improvements to the property into the final loan amount. There are not 2 separate loans (one for the home & one for the renovation) — instead, everything is rolled into one loan, & is based on the future improved value of the home.

The challenge with a renovation loan on a purchase is that you have to get bids lined up before going into underwriting, & you may not know the full scope of renovations since you haven’t actually lived in the home yet! Additionally, you’ll have a higher interest rate & more closing costs with these products.

Most of the time, it is recommended to structure the loan with less money down so that you can do the renovations after closing. This lets you figure out what renovations you want to do & have a more manageable timeframe to complete the renovations after you’ve closed.

In the most updated Illinois purchase agreement, there is a 10 business day timeframe to apply for a mortgage. Otherwise, the seller can declare the contract terminated. However, once you go under contract, you will want to apply for the loan right away to stay ahead of financing and closing deadlines.

We strongly encourage clients to keep the same employment after getting pre-approved until closing. But life happens sometimes! If you get a new job as a salaried employee in the same line of work, you should be able to use that income for loan qualification. If you are changing line of work, or going to a position with variable pay, that can impact the loans approvability.

Let your loan officer know if there may be a change in employment and something does change they should be aware ASAP. The underwriter will check your employment during the loan approval process until closing, and it can cause serious issues if not brought up right away.

If you lose your job, you will want to let your lender know ASAP. Losing your job during the process will affect your ability to get a loan. If you cannot get a loan because of a lost job, we want to communicate that to your attorney and let them advise on the best next steps for the contract.