FAQs - GETTING STARTED WITH THE FINANCING PROCESS

How is pre-qualification different from conditional approval? 

A prequalification is a preliminary assessment of your credit without verification of your information or review by an underwriter.  A conditional approval means you applied for a loan and are approved subject to the conditions documented the conditional commitment from the lender.  

Why does my credit need to be checked prior to purchasing a home?

It is always a great idea to have your credit checked before purchasing a house to make sure there are no surprises on your credit report. Even if you monitor your credit, your Inspire Home Loan’s loan officer might observe something on your report that needs attention prior to loan approval. When you pre-qualify with Inspire Home Loans, your Loan Officer will review your credit to see if you could benefit from a free credit analysis from The Ascent Club. For more information on the program, click here

How does my credit impact the prequalification process?

Your credit scores are very important and there could be additional items on your credit report that need to be addressed. Such items may include disputes, erroneous information and delinquent accounts. There is also a lot of bad information out there about credit. For the latest and greatest information on credit, check out our section “Ask A Credit Expert” 

What are the top factors that determine if I qualify?

Qualifying for a home loan is a balancing act. The five main areas an underwriter will want to review are your Credit, Housing Payment, Assets, Income and Ratios.

 

ONLINE PRE-QUALIFICATION

To begin this process go to the link on the community page you are interested in and fill out the Prequalification form.

Do I have the ability to apply with a co-borrower?

Yes, it’s very user friendly! If you need assistance, please contact your Loan Officer directly and they’ll happily guide you through the process

How time consuming is the online pre-qualification?

It should take no more than 10-15 minutes. 

Do I have to use the online pre-qualification?

The online portal is the quickest and easiest way to prequalify for your new home, however, feel free to contact your Loan Officer to walk you through alternative routes to prequalification.

 

DOCUMENTATION REQUIREMENTS FOR YOUR LOAN

What financial documentation will I need to provide?  

You can find a list of documents you'll need here.

Is it possible to reduce the amount of documentation needed for loan approval?

Your Loan Officer will be able to advise you on the documentation required based on your personal situation. 

Why do I continue to provide the same documentation throughout the construction of my home?

 Due to the length of time in which it takes to build your new home, loan documents could expire and your Loan Officer may request updated information. As your trusted financing partner, we at Inspire Home Loans want to make sure you maintain the ability to qualify for a loan throughout the homebuilding process. Please visit our Do’s and Don’ts section for more information on how to avoid common mis-steps along your path to homeownership. 

 

SECURING YOUR INTEREST RATE

What determines my interest rate?

Your unique personal financial situation will have a direct impact on your interest rate. Market conditions (which can impact rates daily) in conjunction with your down payment, credit profile and overall financial health, will help you and your Loan Officer determine your interest rate. 

When can I lock my rate?  

Stay in touch with your Loan Officer to determine the optimal time to look in your interest rate. Inspire Home Loans does offer extended lock and float-down options. 

What is the difference between Interest Rate and APR?  

Your mortgage payment is based on your interest rate. The APR (annual percentage rate) is a measure of the cost of credit, expressed as a yearly rate. It includes interest as well as other charges. Because all lenders, by federal law, follow the same rules to ensure the accuracy of the APR, it provides consumers with a good basis for comparing the cost of loans. The APR is typically higher than your interest rate. 


APPRAISAL AND FINAL INSPECTION OF YOUR HOME

Why do I need an appraisal on a brand new home?

The lender will want to order an appraisal to determine the real value of the home to compare against what you’ve agreed to pay.  

Why does the Appraiser need to go out to my new home twice?

When building a new home, the appraisal process starts before the completion of your new home.  The Appraiser will visit your home during construction process to begin the appraisal process. The Appraiser will then shift their focus to other properties which have recently sold and closed in your area.  Once the construction of your home is complete, the Appraiser will return to your home, verify construction is complete, and that the options and upgrades you have chosen have been accounted for. The Appraiser will take pictures of your new completed home and deliver the final appraisal to your lender. 

 

 

Ask a Credit Expert

Stefanie DelMar the Director of The Ascent Club and Certified FICO Expert answers some of the most commonly asked questions about credit.

 

How come the scores that I pull on my own are different that what my Loan Officer pulled?

As a consumer you actually have over 60 FICO scores. The reason is that FICO is a scoring model used to interpret the information on your credit report and generate scores. There are different versions for when you pull on your own (even if you’re pulling from the 3 credit bureaus directly), opening a credit card, buying a car or a house. Typically, the scores you pull on your own are anywhere from 5-100 points HIGHER than what a mortgage lender pulls. Credit monitoring is excellent for monitoring the raw data on your credit report, however the scores have no relevance on your ability to qualify for a home loan.

Where can I access my mortgage FICO scores?

The only way you can access your mortgage FICO scores is by having a mortgage company or a bank run your credit for the purpose of applying for a home loan.

What is the difference between a “hard” and “soft” credit pull?

Any time you are inquiring about obtaining credit, it is considered a “hard” pull. A soft pull is when you run your own credit or a creditor runs your credit without you requesting. You might notice that your cable or electric company runs your credit annually. Although it may show up on your credit monitoring, it will not impact your scores.

How much will a credit inquiry impact my credit scores?

Typically a credit inquiry impacts your credit scores 3-5 points. You also have a 45 day window to shop for a mortgage where you can have up to 3 lenders run your credit and it will count as the same inquiry. Keep in mind however that credit is constantly in motion. Unless you have two mortgage lenders run your credit on the exact same day, the scores will be different based on when various accounts update monthly.

Would paying off my car help my credit scores?

Contrary to popular belief, any time you pay off an installment loan (be it a house, student loan or a car), your scores can actually take a dip because that account is no longer factoring into your active accounts. If you are looking to pay off an account, please consult your Loan Officer prior to doing so to make sure there is not a negative impact on your ability to be approved for a home loan.

I have a lot of collections on my credit report, will paying them off help my scores?

Paying off collections if they are not delete generally does not help your credit scores, but it prevents the accounts from rereporting as new. Please note that settling on an account for less than the full amount owed could cause a drastic drop in the credit scores. If you need guidance on collections, please ask your Loan Officer to refer you to The Ascent Club so one of our credit experts can guide you appropriately.

Should I get added to my family member’s credit card to help build my credit scores?

The best way to build your credit scores is to obtain your own credit. You are better off opening a secured credit card of your own than getting added to a family member’s credit card to inherit their credit.

I have some bad information on my credit report. Should I dispute it?

Unless you have concrete documentation backing your case, you should not dispute accounts with the credit bureaus. You are better working directly with the creditors. Our Ascent Club advisors can guide you on the appropriate steps to take when dealing with erroneous information on your credit report.

Should I pay for credit repair?

We do not recommend paying for credit repair. The Ascent Club is a free program where our credit experts will guide you on the steps to improving your financing potential.

Why can’t I make any large purchases or open any new accounts during my homebuying process?

When buying a home your credit is continuously monitored. Opening a new account can both negatively impact your credit scores and your debt-to-income ratios. Please check with your Loan Officer if you need to make a large purchase prior to closing.

 

Don’t see your question answered above?

Please contact your Loan Officer for the answers you seek.