A mortgage is a loan from a bank used to help you finance the purchase of a home. When you take out a mortgage, you make a promise to repay the money you’ve borrowed, plus an agreed-upon interest rate.

The home is used as collateral which helps to protect the lender in case the loan is not repaid according to the terms listed in the Note signed at Loan Closing.

Here are the components that make up your monthly mortgage payment:

• Principal – The amount borrowed.

• Interest – Finance charges.

• Escrow – Property Taxes and Insurance are typically escrowed, which means they are divided by 12 and added to each month’s mortgage payment. When taxes and insurance are due, your mortgage company will make the payments. This amount can and will change annually. When it does, it can affect your monthly payment.

• PMI – When a borrower cannot put a 20% down payment on the purchase of a home, the lender is required to obtain Private Mortgage Insurance. PMI terms vary depending on your loan type.

• Access to cash/equity in your home
  • – Equity is the difference between the market value and the amount you owe on the mortgage.
  • – Many homeowners take out home equity loans or lines of credit to pay for home improvements, medical bills, or college tuition.

• Improved credit score
  • – Having a mortgage loan in good standing on your credit report improves your credit score.
  • – The credit score determines the interest rate you are offered on other credit products, such as car loans and credit cards.

• Tax benefits
  • – Currently, there are potential tax benefits for homeownership.
  • – Depending on your tax bracket, you may be eligible for a deduction for the interest paid on your mortgage, private mortgage insurance premiums, points or loan origination fees, and real estate taxes.  Be sure to speak with your qualified accountant for information.

• Increase in value
  • – If the real estate market improves, your home could appreciate in value, meaning that it is worth more than when you purchased it.

• Fixed-rate mortgage
  • – Interest rate is set for the life of the mortgage.
  • – Offers stability in your mortgage payments.

• Adjustable-rate mortgage (ARM) 
  • – As interest rates change, your monthly mortgage payment may go up or down. 
  • – Interest rate is tied to an index that may adjust after the initial fixed rate period ends. These indexes make up the variable component of the mortgage rate and can increase or decrease depending on factors such as how the economy is doing, and whether the Federal Reserve is increasing or decreasing rates. ARM loans can be a good option for borrowers who plan on keeping the house/loan for a shorter period of time like 3-7 years.

It is important to meet with your lender at the very beginning of the of the home buying process to determine your ability to qualify for a mortgage loan. Getting pre-qualified will allow you to know how much of a loan you may qualify for which will help as you look at different home options. Getting pe-qualified also allows any potential issues with credit, assets, or income to be uncovered and addressed early in the process. Lastly, once you have found the right home and makes an offer, sellers are more likely to accept your offer if you have met with a lender and have been pre-qualified.

Yes, you can absolutely buy a home or build without making a downpayment of 20%. The 20% rule is a common myth and not a requirement of most loan programs used today.

It typically takes around 30 days but can be shorter when all requested documentation is submitted early in the process.

Here is an example of typical credit scores for consumers nationwide: Conventional (~620), FHA (~580), VA/USDA flexible.

Yes, you can use gift funds depending on the type of loan you are using. Generally, there are rules that must be followed when using gift funds such as the funds must come from a family member or domestic partner. Many programs also require specific documentation of the gift funds from the gift giver to the borrower.

The most common closing costs are third party fees such as appraisal fees, credit report fees, and attorney and title fees. Other closing costs include property taxes, and homeowners insurance as well as setting up escrow accounts for these items. Lender fees are also part of closings costs and could include origination, application, processing, or underwriting fees. Generally, all closing costs are negotiable as to whom is responsible for paying them.

Yes- a hard inquiry impacts your credit score, but the impact is minimal and can be further minimized by rate shopping and having your credit pulled within a short period of time of 7-14 days.

In most instances you can lock in an interest rate for 30-60 days at no cost to protect from interest rate increases while your loan is being processed and closed. Interest rate locks for longer periods of time such as ones for new home construction typically require an up-front lock fee to be paid.

The debt-to-income ratio is a key measurement a lender uses to analyze your ability to manage monthly payments and repay a mortgage loan. To calculate your total DTI a lender takes your totally month debt payments (car loans, credit card payments, any revolving and/or installment debt payments) and divides that total by your gross monthly income.

Yes – we offer refinance loans to lower your interest rate and/or term as well as a cash-out refinance to access cash from your home’s equity. The cash received back at closing can be used for most any purpose including debt consolidation, home improvements, education expenses, etc.

There are many factors involved in qualifying for a mortgage loan. Below are a few of the major areas looked at in qualifying and approving someone for a mortgage:

Credit Score . . . . .

Debt-to-income ratios . . . .

Income . . . . .

Downpayment . . . . .

Appraisal – an appraisal of the property is generally required to help the lender determine the true value of the home.

• Long-term loans
  • – 30-year loans are most popular.
  • – Provides a lower monthly payment.
  • – Range is 10 years to even 30 years.

• Shorter term loans
  • – 15-year loans are common. Also available in 10-year.
  • – Pay substantially less interest over the life of the loan.

The mortgage process normally runs between 25 to 35 days, depending on the property and loan type and timelines for inspection and appraisal.

• Mortgage Loan Officer (MLO)
  • – Helps you complete the mortgage loan application and requests any information needed to complete the application. Sets terms of the loan such as rates, debt-to-income ratio, and credit scores.

• Mortgage Loan Assistant (MLA)
  • – Gathers required documentation.
  • – Completes Flood checks, Insurance requests, verification of employment.
  • – Reviews and works with the MLO to make sure all required information has been collected.

• Processor
  • – Reviews the paperwork and documentation to ensure everything is in order and there is no fraud.

• Underwriter
  • – Person who approves or denies the loan based on the application and the required documentation. 
  • – The Underwriter is the person who signs their name to the loan.

• Closer
  • – The closer works with an attorney on getting the closing documents prepared and handles getting the documents where they need to go after they have been signed, or the loan has been closed.

All that is required to apply is a fully completed loan application. To make the process move more quickly you may also want to provide the lender with the below documents. However, these documents are not required until you have fully decided you want to move forward with the mortgage loan application, and you sign what is called an Intent to Proceed form.

• • You driver’s license or ID
  • Most recent two months’ paystubs
  • Most recent two years’ W2s
  • Most recent two months bank/asset statements

This is an initial list of documents that will need to be provided to the lender. Additional documents may need to be provided during loan processing or during the final loan approval process.

As a general rule of thumb, the 28/36 debt-to-income guide is a great place to get started. That is, your total mortgage payment should not exceed more than 28% of your gross income. And your total debt (including your new mortgage) shouldn’t exceed more than 36% of your gross income. This is a very general guideline and loans with higher debt-to-income ratios are regularly approved. Many factors go into the approval decision and DTI is just one of those.

• Credit Score – Good credit history may help customers qualify for better interest rates
  • Canvas uses a Tri–Merge Credit report, which is a combination of Experian, Equifax, and Transunion credit reporting agencies.

• Debt-to-income ratio – A customer’s debt-to-income ratio (DTI) is the total of the monthly debt payments divided by their gross monthly income. DTI helps lenders assess a customer’s ability to manage their monthly payments and repay the money they’ve borrowed.

• Income – To qualify for a conventional loan, lenders will consider whether a customer has stable and reliable income.

• Down payment – Depending on your lender’s guidelines and loan type, you may qualify for down payments between 0% and 20%.

• Pre-qualification means a mortgage loan officer has looked at the information submitted and qualifies borrowers based on the information provided. It also lets the borrower know how much house they can afford. It does not mean that they are approved for the loan.

• We have a number of different mortgage products with different requirements.  Our experienced mortgage staff can help you to find the best product for you and your credit score. If your credit score is too low, our experienced mortgage staff has helped many customers to improve their credit score so they can achieve the dream of home ownership. 

Not necessarily. We have a number of different mortgage products with different down payment requirements. There are standard loan programs that only require 3% – 3.5% down payment. Also, some specialty loan programs like VA loans for Veterans or USDA Rural Development loans allow up to 100% financing with no down payment. Also, some special loan programs of lower- to moderate income borrowers allow for 100% financing. Discuss the many loan options we offer with your Canvas Mortgage Professional to determine the best loan for your needs.

You can apply 100% online, make application over the phone, or by an in-person meeting with one of our Mortgage Loan Professionals. We make it easy to apply by letting you decide. Contact Canvas Mortgage and our team will help guide the way.

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Yes—Canvas offers construction or build-to-suit loans.