Envoy Mortgage
907 Ranch Road 620 S. Ste. 301
Austin, TX 78734

Office: 512-306-8502
Fax: 512-306-8503
envoy mortgage loan austin
"I have closed two home loans with Sean Hammond. Sean ensured that I received the most favorable rate possible. He thoroughly explained all of the options and provided the mortgage that was right for me. He and his Team were extremely helpful throughout the entire process. I would recommend him without reservation to any of my friends and family."

- Hiawatha Franks, Courtney Jones

Envoy Mortgage Frequently Asked Questions

  1. How do I know if I'm ready to buy a home?
  2. How do I begin the process of buying a home?
  3. How does purchasing a home compare with renting?
  4. How does the lender decide the maximum loan amount that can be afforded?
  5. What does a home inspector do, and how does an inspection figure in the purchase of a home?
  6. Do I really need homeowner's insurance?
  7. What is a Loan To Value (LTV)? How does it determine the size of my loan?
  8. What types of loans are available and what are the advantages of each?
  9. When do arms make sense?
  10. Are there special mortgages for first-time homebuyers?
  11. How large of a down payment do I need?
  12. What is included in a monthly mortgage payment?
  13. What factors affect mortgage payments?
  14. What happens if interest rates decrease and I have a fixed rate loan?
  15. What steps need to be taken to secure a loan?
  16. How are pre-qualifying and pre-approval different?
  17. How can I find out information about my credit history?
  18. What is a good faith estimate, and how does it help me?
  19. What responsibilities do I have during the lending process?
  20. What happens after I've applied for my loan?
  21. What makes up closing costs?
  22. What is mortgage insurance?

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

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

  • Do I have a steady source of income (usually a job)?
  • Have I been employed on a regular basis for the last 2-3 years?
  • Is my current income reliable?
  • Do I have a good 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?

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

Start by thinking about your situation. Are you ready to buy a home? How much can you afford in a monthly mortgage payment (see Question 4 for help)? 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 casual research. Talk to friends and family, drive through neighborhoods, and look in the "Homes" section of the newspaper.

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3. How does purchasing a home compare with renting?

The two don't really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing.

Owning a home has many benefits. When you make a mortgage payment, you are building equity. And that's an investment. Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities- like insurance, real estate taxes, and upkeep- which can be substantial. But given the freedom, stability, and security of owning your own home, they are worth it.

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4. How does the lender decide the maximum loan amount that can be afforded?

The lender considers your debt-to-income 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 or student loan payments, alimony, or child support. The lender also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum loan amount.

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5. What does a home inspector do, and how does an inspection figure in the purchase of a home?

An inspector checks the safety of your potential new home. Home Inspectors focus especially on the structure, construction, and mechanical systems of the house and will make you aware of only repairs,that are needed.

The Inspector does not evaluate whether or not you're getting good value for your money. Generally, an inspector checks (and gives prices for repairs on): the electrical system, plumbing and waste disposal, the water heater, insulation and Ventilation, the HVAC system, water source and quality, the potential presence of pests, the foundation, doors, windows, ceilings, walls, floors, and roof. Be sure to hire a home inspector that is qualified and experienced.

It's a good idea to have an inspection before you sign a written offer since, once the deal is closed, you've bought the house as is." Or, you may want to include an inspection clause in the offer when negotiating for a home. An inspection t clause gives you an 'out" on buying the house if serious problems are found,or gives you the ability to renegotiate the purchase price if repairs are needed. An inspection clause can also specify that the seller must fix the problem(s) before you purchase the house.

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6. Do I really need homeowner's insurance?

Yes. A paid homeowner's insurance policy (or a paid receipt for one) is required at closing, so arrangements will have to be made prior to that day. Plus, involving the insurance agent early in the home buying process can save you money. Insurance agents are a great resource for information on home safety and they can give tips on how to keep insurance premiums low.

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7. What is a Loan To Value (LTV)? How does it determine the size of my loan?

The loan to value ratio is the amount of money you borrow compared with the price or appraised value of the home you are purchasing. Each loan has a specific LTV limit. For example: With a 95% LTV loan on a home priced at $50,000, you could borrow up to $47,500 (95% of $50,000), and would have to pay,$2,500 as a down payment.

The LTV ratio reflects the amount of equity borrowers have in their homes. The higher the LTV the less cash homebuyers are required to pay out of their own funds. So, to protect lenders against potential loss in case of default, higher LTV loans (80% or more) usually require mortgage insurance policy.

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8. What types of loans are available and what are the advantages of each?

Fixed Rate Mortgages: Payments remain the same for the the life of the loan

Types:

  • 15-year
  • 30-year

Advantages

  • Predictable
  • Housing cost remains unaffected by interest rate changes and inflation.

Adjustable Rate Mortgages (ARMS): Payments increase or decrease on a regular schedule with changes in interest rates; increases subject to limits

Types:

  • Balloon Mortgage- Offers very low rates for an Initial period of time (usually 5, 7, or 10 years); when time has elapsed, the balance is clue or refinanced (though not automatically)
  • Two-Step Mortgage- Interest rate adjusts only once and remains the same for the life of the loan
  • ARMS linked to a specific index or margin.

Advantages

  • Generally offer lower initial interest rates
  • Monthly payments can be lower
  • May allow borrower to qualify for a larger loan amount

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9. When do arms make sense?

An ARM may make sense If you are confident that your income will increase steadily over the years or if you anticipate a move in the near future and aren't concerned about potential increases in interest rates.

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10. Are there special mortgages for first-time homebuyers?

Yes. Lenders now offer several affordable mortgage options which can help first-time homebuyers overcome obstacles that made purchasing a home difficult in the past. Lenders may now be able to help borrowers who don't have a lot of money saved for the down payment and closing costs, have no or a poor credit history, have quite a bit of long-term debt, or have experienced income irregularities.

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11. How large of a down payment do I need?

There are mortgage options now available that only require a down payment of 5% or less of the purchase price. Some mortgages don't require a down payment at all. But the larger the down payment, the less you have to borrow, and the more equity you'll have. Mortgages with less than a 20% down payment generally require a mortgage insurance policy to secure the loan. When considering the size of your down payment, consider that you'll also need money for closing costs, moving expenses, and - possibly -repairs and decorating.

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12. What is included in a monthly mortgage payment?

The monthly mortgage payment mainly pays off principal and interest. But most lenders also include local real estate taxes, homeowner's insurance, and mortgage insurance (if applicable).

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13. What factors affect mortgage payments?

The amount of the down payment, the size of the mortgage loan, the interest rate, the length of the repayment term and payment schedule will all affect the size of your mortgage payment.

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14. What happens if interest rates decrease and I have a fixed rate loan?

If interest rates drop significantly, you may want to investigate refinancing. Most experts agree that if you plan to be in your house for at least 18 months and you can get a rate less than your current one, refinancing is smart, if you don't pay more in fees than you'll save in the time you'll live in the house.

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15. What steps need to be taken to secure a loan?

The first step in securing a loan is to complete a loan application. To do so, you'll need the following information.

  • Pay stubs for the past 2-3 months
  • W-2 forms for the past 2 years
  • Information on long-term debts
  • Recent bank statements
  • Tax returns for the past 2 years (in some cases)
  • Proof of any other income
  • Address and description of the property you wish to buy
  • Sales contract

During the application process, the lender will order a report on your credit history and a professional appraisal of the property you want to purchase. The application process typically takes between 1-6 weeks.

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16. How are pre-qualifiying and pre-approval different?

Pre-qualification is an informal way to see how much you maybe able to borrow. You can be 'pre-qualified' over the phone with no paperwork by telling a lender your income, your long-term debts, and how large a down payment you can afford. Without any obligation, this helps you arrive at a ballpark figure of the amount you may have available to spend on a house.

Pre-approval is a lender's actual commitment to lend to you. It involves assembling the financial records mentioned in Question 47 (Without the property description and sales contract) and going through a preliminary approval process. Pre-approval gives you a definite idea of what you can afford and shows sellers that you are serious about buying.

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17. How can I find out information about my credit history?

There are three major credit reporting companies: Equifax, Experian, and Trans Union. Obtaining your credit report is as easy as calling and requesting one. Once you receive the report, it's important to verify its accuracy. Double check the "high credit limit,"'total loan," and 'past due" columns. It's a good idea to get copies from all three companies to assure there are no mistakes since any of the three could be providing a report to your lender. Fees, ranging from $5-$20, are usually charged to issue credit reports but some states permit citizens to acquire a free one. Contact the reporting companies at the numbers listed for more information.

CREDIT REPORTING COMPANIES:

  • Experian - 1-888-524-3666
  • Equifax - 1-800-685-1111
  • Trans Union - 1-800-916-8800

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18. What is a good faith estimate, and how does it help me?

It's an estimate that lists all fees paid before closing, all closing costs, and any escrow costs you will encounter when purchasing a home. The lender must supply it within three days of your application so that you can make accurate judgments when shopping for a loan.

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

To ensure you won't fall victim to loan fraud, be sure to follow all of these steps as you apply for a loan:

  • Be sure to read and understand everything before you sign.
  • Refuse to sign any blank documents.
  • Do not buy property for someone else.
  • Do not overstate your income.
  • Do not overstate how long you have been employed.
  • Do not overstate your assets.
  • Accurately report your debts.
  • Do not change your income tax returns for any reason. Tell the whole truth about gifts. Do not list fake co-borrowers on your loan application.
  • Be truthful about your credit problems, past and present.
  • Be honest about your intention to occupy the house
  • Do not provide false supporting documents

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20. What happens after I've applied for my loan?

It usually takes a lender between 1-4 weeks to complete the evaluation of your application. Its not unusual for the lender to ask for more information once the application has been submitted. The sooner you can provide the information, the faster your application will be processed. Once all the information has been verified the lender will call you to let you know the outcome of your application. If the loan is approved, a closing date is set up and the lender will review the closing with you. And after closing, you'll be able to move into your new home.

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21. What makes up closing costs?

There may be closing costs customary or unique to a certain locality, but closing costs are usually made up of the following:

  • Attorney's or escrow fees (Yours and your lender's if applicable)
  • Property taxes (to cover tax period to date)
  • Interest (paid from date of closing to 30 days before first monthly payment)
  • Loan Origination fee (covers lenders administrative cost)
  • Recording fees
  • Survey fee
  • First premium of mortgage insurance (if applicable)
  • Title Insurance (yours and lender's)
  • Loan discount points
  • First payment to escrow account for future real estate taxes and insurance
  • Paid receipt for homeowner's insurance policy (and fire and flood insurance if applicable)
  • Any documentation preparation fee

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22. What is mortgage insurance?

Mortgage insurance is a policy that protects lenders against some or most of the losses that result from defaults on home mortgages. It's required primarily for borrowers making a down payment of less than 20%.

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