If you seek a mortgage, you’ll have to go through the pre-approval process. Which questions should you ask your lender during this process? To help me discuss this topic, I’m joined by Eric, my preferred lender from Peak Mortgage here in Portland.

Typically, Eric says, he’ll get a referral from a real estate agent and he ends up having a phone conversation with the client. In about a 10-minute phone conversation, he can get general finance information like income and assets. That will give him enough to get started and let them know what they can do for a loan. Once that conversation is done, he will go through a full loan application over the phone to get all financial information, social security numbers, dates of birth, employment history, and all of that kind of information. That takes another five or 10 minutes.

At that point, Eric will pull their credit and let them know what sort of loan programs would be available to them.

“There are plenty of loan options that don’t require a 20% down payment.”

When it comes to down payments, many people think you need the standard 20%, but as Eric points out, there are different requirements for different loan programs. The FHA has the broadest guidelines and is the simplest to qualify for, requiring a 3.5% down payment. Many conventional loans have down payment requirements as low as 3% to 5% and, of course, 20%. It all depends on the client’s financial situation as to what they’ll qualify for.

The 20% down payment threshold has implications for mortgage insurance, however. Mortgage insurance is required on any loan in which the borrower puts down less than 20%, and the cost of the insurance is directly tied to your credit score and the amount to put down. The more money you put down and the higher your credit score is, the lower the cost of the mortgage insurance will be.

If you have any questions about home loans, you can reach Eric at (503)-546-0460 or email him at edunlap@peakmtg.com.

As always, if you have any questions about the [area] market or you’re thinking about buying or selling a home, give me a call or send me an email. I’d love to help you out!