If you’re considering applying for a mortgage to buy a home, we know it can seem like a daunting task – but it doesn’t have to be. Here are some answers to common questions about mortgages as you start your home ownership journey.
How much can I afford?
This is the No. 1 most-asked question that I get when starting a mortgage application, and the answer? It varies on your current debt-to-income ratio and previous credit history. We want to make sure that we wouldn’t be giving you too large of a loan that would make your current financial position tight.
How do I calculate my DTI?
Your debt-to-income ratio (DTI) is calculated by taking your gross monthly income divided by your monthly liabilities (mortgage payments, auto payments, credit card payments, rent, etc). This ratio does not typically include items that are not reported to the credit bureaus, such as cell phone or insurance payments or utilities. When we look at DTI ratios before processing a mortgage, we’re generally looking for under 50 percent DTI.
What will my monthly payments be?
Monthly payments will depend on the purchase price, down payment, loan term, interest rate, property taxes, homeowner’s insurance and PMI (private mortgage insurance). Check out Zillow’s mortgage calculator for a rough estimate, if you’re curious before speaking with a TS Bank universal banker.
What’s the typical turnaround times between applying for a mortgage and closing on a new house?
Here at TS Bank, we strive to make closing happen within one month (30 calendar days), but the average time frame is 30-45 calendar days.
I don’t have a 20 percent down payment, what do I do?
When you initially apply for a loan at TS Bank, we review the information you’ve provided us and suggest a mortgage product that would best suit your needs. There are options that do not require a down payment, such as USDA (United States Department of Agriculture, otherwise known as a Rural Re-development mortgage), while other options, FHA (Federal Housing Administration) or conventional mortgages, may require as little as 3-3.5 percent down.
Conventional mortgages are unique because they are not guaranteed through the government. Conventional, otherwise known as conforming mortgages, adhere to specific guidelines put in place by Fannie Mae or Freddie Mac.
What if I don’t have great credit?
Give us a call or stop by any branch. We will take a look at your whole picture before denying any mortgage application. At the end of the day, we are here to help you!
What documents should I bring with me to my initial appointment?
In order to start the pre-approval process, we will ask for the following documents: current unexpired driver’s license or legal ID, most recent 30 days of paystubs, 2 most recent years of complete tax returns including W2 documents and the most recent month’s bank statements showing balances and account numbers.
What’s the difference between a pre-qualification and a pre-approval?
A pre-qualification is a basic first step to take. It will give you an idea of how much you can afford based off of the information you provided in your application. A pre-approval, on the other hand, is taking into consideration the paystubs, tax returns, W2 documents and bank statements that you have provided your mortgage lender.
I hear rates are really good right now, and I want to shop around for a property, what can I do?
Our Lock and Shop product would be a great fit for you! This tool allows you to lock in your interest rate for 100 days while shopping around for your dream home. The mortgage would then need to be closed on within that 100-day time frame. Simply contact us to submit an application, get pre-qualified, lock in your interest rate and shop without any added stress!
How do I get the process started?
Give us a call at 712-487-3030 and we can set up an appointment to get the process moving! This initial appointment will be filling out a mortgage application, along with getting the documentation mentioned above.
About TS Bank: TS Bank’s mission is to Ignite Prosperity® in the communities it serves. Leading the resurgence of community banking, TS Bank reinvests 10% of their net income locally; hosting educational events and partners with local organizations and non-profits. Treynor State Bank was chartered in 1923 and branded to TS Bank in 2005. TS Bank has $375 million in assets, along with the largest Iowa state-chartered C-Corp trust department west of Des Moines at nearly $245 million in assets named TS Prosperity Group. Branch locations include Treynor, Macedonia, Atlantic, Corning and Council Bluffs, Iowa. For more information visit tsbank.com.