Answered by Our Mortgage Lending Team
At HomeSight, our mortgage team loves making clients’ homeownership dreams come true. Buying a home is the biggest investment most people will make, and you’ll have questions. We asked Mortgage Loan Originator Sonda Swanberg to name the 10 questions she gets asked most frequently. We’ve listed them below, along with Sonda’s answers, to familiarize you with the mortgage lending process.
Q: Is there a minimum credit score limit?
A: Yes, HomeSight’s minimum credit score is 620. We use the median of all three scores from the three credit bureaus: Equifax, Experian, and TransUnion. When looking at all three credit bureau scores, we use the median score. For example, if your credit scores are 705, 680, and 715, HomeSight would use 705 as your qualifying credit score.
Q: I have some 30-day lates and collections on my credit report. Am I disqualified?
A: If you have 30-day lates reported on your credit report in the last 12 months, you must wait until there is at least 12 months since your last reported late/missed payment. Lates more than a year old require a Letter of Explanation (LOE) explaining the late or missed payment. All items in collections, including disputed items, must be paid in full or removed from your credit report before moving forward with the loan process.
Q: I haven’t filed taxes for one or more years. Do I need to file before I can apply for a home loan?
A: If you worked in that year and did not file, yes, you must file your return before applying for a mortgage loan. If you did not work or are “tax-exempt,” a short LOE stating the reason you did not file is sufficient.
Q: I filed for bankruptcy and/or my house was foreclosed upon in the last seven years. Must I wait until seven years pass before I can apply for a home loan?
A: No. At HomeSight, the seasoning period for bankruptcy or foreclosure is four years. You can apply after the four-year anniversary of your bankruptcy/foreclosure. Be prepared to write a LOE on the circumstances you had to file for bankruptcy, or your home was foreclosed upon.
Q: Are the Down Payment Assistance (DPA) funds “free” money?
A: No, you must repay the funds you borrow. All our DPA programs are 30 years deferred. This means you do not have to pay back the funds until one of three events occur:
- You stay in your home for 30 years and make the last mortgage payment, then you will be responsible for the DPA funds. These go against the house as a second (or subsequent) lien.
- You sell your house and the DPA will be paid for through the sale funds. Your first lien will be paid first, then the DPA funds will be paid. Then, if any funds are remaining, you will be issued a check or direct deposit.
- You refinance your house. In this case, the equity in the home will pay off the DPA funds. If there is not enough equity to pay off the liens, you might be able to roll them into the new mortgage loan.
Q: Is there a balloon payment associated with these loans?
A: Yes, a balloon payment is a large payment due at the end of the loan period. The DPA funds/liens come due when one of three events occur (see the question above). If you do not have the funds saved to pay off the DPA loans, you can refinance your home, using the equity you’ve earned to pay off the liens, resulting in a new mortgage.
Q: If I am using Down Payment Assistance Program funds, do I need to use any of my own money for the purchase of the home?
A: Yes, we require all our borrowers to come in with a minimum of 1% of the purchase price of the house, or $2500, whichever is greater.
Q: How do I apply for a home loan through HomeSight?
A: You will want to visit www.HomeSightWa.Org/Portal and create an account. Once you complete your profile, you will be able to schedule a counseling appointment – this is a required step – and a lending consultation with a mortgage loan originator. Your lending staff will assist you with your loan application once we receive your required documents.
Q: What documents are required to begin my loan application?
A: Everyone must submit the following:
- The front and back of your government-issued ID AND your Social Security Card or ITIN letter.
- Your most recent bank statements going back two months – all pages –including checking, savings, money market, investment and retirement accounts.
- Your three most recent paystubs, if applicable.
- Your 2021, 2022, 2023 W2’s and tax returns.
Q: Are there other documents I should have ready?
A: If these documents apply to your situation, please have these handy as well.
- If you’ve been through a bankruptcy: Bankruptcy paperwork, including discharge papers.
- If you pay child support: your parenting plan, plus six months of payment statements if collected through DSHS Support Enforcement. If not collected through Support Enforcement, six months of bank statements showing payments.
- If you are divorced: your divorce decree.
We know you’ll probably have more questions than these during the homebuying journey, and we welcome them. Sign up today for homebuyer education classes or contact HomeSight directly. We look forward to helping you navigate your financial future!