Your Mortgage Application

UNDER CONSTRUCTION

Below are some common questions that many members have when they are considering purchasing a home and then applying for, or are considering applying for a mortgage loan. We've compiled them here to help give you better insight into the mortgage process. Remember, you can contact a Mortgage Loan Representative at anytime by calling (800) 866-8199 or (507) 288-0330.

Getting Started:

1. How do I know if I'm ready to buy a home?

• Do I have steady source of income (usually a job)? Have I been employed on a regular basis for the last 2-3 years? Is my currect income reliable?
• Do I have a record of paying my bills?
• Do I have few outstanding long term debts, like car payments?
• Do I have money saved for a down payment?
• do I have the ability to pay a mortgage every month, plus additional costs?

If you answer "yes" to these questions, you are probably ready to buy your own home.

2. How do I begin the process of buying a home?

Start by thinking about your situation. Are you ready to buy a home? Home much can you afford in a monthly mortgage payment? How much space do you need? What areas of town do you like? After you answer these questions, make a "To Do" list and start doing reasearch. Talk to friends and family, drive through neighborhoods and look through the newspaper.

3. How does the mortgage lender decide the maximum loan amount that I can afford?

The mortgage lender considers your debt-to0income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Non-housing expenses include such long-term debts as car payments, student loan payments, alimony, etc. According to the FHA, monthly mortage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, should total no more than 41% of income. The mortgage lender also considers cash available for down payment and closing costs, credit history and more when determining your maximum loan amount.  At First Alliance, we take into consideration your entire financial picture when determining your loan amount.

Finding Your Home

4. What should I look for when walking through a home?

In addition to comparing the home to your minimum requirements and wish lists, you may want to consider the following:

• Is there enough room for now and in the future?
• Are there enough bedrooms and bathrooms?
• Is the property structurally sound?
• Do the mechanical systems and applications work?
• Is the yard big enough?
• Do you like the floor plan?
• Does anything need to be repaired or replaced? Will the seller repair or replace these items?
• Will you be happy year round?

5. What questions should I ask when looking for a home?

Many of your questions should focus on potential problems and/or maintenance issues. Does anything need to be replaced? What things require ongoing maintenance? Also ask about the house and neighborhood, focusing on quality of life issue. Be sure the seller's or real estate agent's answers are clear and complete. Ask questions until you understand all of the information they've given.

 6. Can I apply for a mortgage loan before I find a property?

Yes, applying for a mortgage loan before you find a property is a great idea! If you apply for a mortgage loan now, we'll issue you a pre-approval certificate or letter that you can use to assure real estate agents and sellers that you are a qualified buyer. Having a pre-approval lets agents and sellers know that you are a serious buyer.  You can apply for a mortgage online or visit us in person at any of our branch locations.

7. How do I choose the best loan program for me?

Your personal situation will determine the best kind of loan for you. By asking yourself a few questions, you can narrow your search among the many options available and discover which loan suits you best.

• Do you expect your finances to change over the next few years?
• Are you planning to live in this home for a long period of time?
• Are you comfortable with the idea for a changing mortgage payment amount?

Our mortage lenders can help you use your answers to these questions to help you decide which loan best firts your needs.

8. What responsibilities do I have during the lending process?

• Be sure to read and understand everything before you sign.
• Do not over state personal information, such as income and employment.
• Accurately report your debts.
• Be truthful about any credit problems, past or present.