Frequently Asked Questions About the Mortgage Process
Still Have Questions, We’ve Got the Answers.
How do I begin the mortgage application process?
BCU offers our members several convenient ways to begin your home loan application process. You can apply in one of our many service center locations. You can apply over the phone by calling us at 800-388-7000 ext. 8167. You can even apply online.
I am interested in purchasing a home. Can I apply for a home loan before I find a property to buy?
Yes! Applying for a home loan in the early stages of your search is a very smart move. By obtaining a BCU home loan pre-approval, prospective sellers and agents will know you are a qualified buyer. A pre-approval may help to set you apart from the rest in your search for your dream home!
Is there a fee charged to begin the application process or to review my credit?
You can apply for a home loan at no charge. With your permission, we will review your credit report and your application information. You will not be charged a fee until you have a conditional loan approval AND decide to put your application into process.
If the property I am buying appraises for more than the purchase price, am I able to use the difference towards my down payment?
Unfortunately conventional real estate guidelines do not allow us to consider this as equity towards your purchase. If you are purchasing a home, we are required to use the lower of your appraised value or your purchase price to determine your down payment requirement. However, this is still a great financial benefit to you when you are able to purchase a home for less than what it is worth!
I am getting a gift towards the down payment of purchasing a new home. Is this an acceptable source of down payment?
Guidelines vary on this based on your financial profile and Loan-to-Value. Generally, gifts are an acceptable source for a portion of your down payment if it comes from a family member. The gift donor will be asked to sign a gift letter and you will be required to verify the deposit of the gift funds into your account.
How do you decide what documentation you will need from me to process my loan?
Each loan is put through an automated underwriting system which evaluates your credit history and the information entered on your application. Based on this data, we are provided an initial underwriting decision and a list of conditions required to validate your information. However, there are many other factors in making a final loan decision and every loan has its own unique qualities and needs. Because of this, each application is reviewed by a BCU Home Loan Underwriter for approval and a list of required loan conditions.
I plan to sell my current property to purchase a new one. What documentation do I need to provide?
To prove your current home is sold and the mortgage is paid in full and to verify any funds needed to close on your new home, we will ask that you provide us with a copy of the HUD-1 Settlement Statement from the closing. Often, the closing for the sale of your current home is on the same day as the closing for the purchase of your new one. We will simply require you to provide a copy of the HUD from the sale of your home at the time you go to close your purchase.
How will you verify my income if I am self-employed or earn commissions?
We will ask you to provide us with copies of your federal tax returns or even assist you by ordering transcripts directly from the IRS. Depending on the source of income, we may need to see your business tax returns as well. We can only use income reported on your tax returns to qualify. We will need to see 1 or 2 years of income to obtain a sufficient long term average for calculating qualifying earnings.
I receive rental income from an investment property. What documentation do you need to verify this income?
We will ask you to provide us with copies of your federal tax returns to verify rental income. We review your Schedule E to verify rental income after expenses (other than depreciation). If you have owned your rental property for less than the full tax year, we will require a copy of your lease agreement and we will factor in an expense ratio for qualifying purposes.
I am retired and my income comes from social security and pension. What do you need to verify this?
We will require copies of your recent paystubs or bank statements if your retirement earnings are deposited directly into your checking account. Sometimes, we may need to verify your income will continue for a minimum of 3 years if you are not receiving lifetime benefits. Generally, an award letter will suffice to prove continuance of retirement earnings. Some sources of retirement earnings, such as social security, are not taxed. This may be considered in your favor while evaluating your income.
Will my overtime or bonus income be considered when evaluating my application?
We may consider overtime or bonus earnings if they have been consistent over the past 2 years and are likely to continue. Your Home Loan Processor will work with you to obtain the necessary documentation required if we need to factor in this income for qualifying purposes.
I've co-signed a loan for another person. Will that payment be included in my monthly debt calculation?
We generally include any co-signed debts when determining your qualifications for a mortgage. Often, this may not impact your ability to qualify for a home loan. However, if it does, we may consider eliminating it from your liabilities if you can provide documentation that the other person responsible for paying the debt has made the required payments for the last 12 month period. This can be verified by obtaining cancelled check copies or bank statements from the other party.
Do I have to provide information about my child support or spousal maintenance?
If you are receiving payments for child support or maintenance and would like this to be included in your monthly income calculation, we need a copy of your final divorce decree or legal separation agreement along with verification that this income has been received by you for the past 6 months. If this source of income is not needed for your loan qualification, we would simply need a copy of your divorce decree.
If you are required to pay child support or spousal maintenance, this should be documented on your loan application (1003) and we will need a copy of your final divorce decree or legal separation agreement to verify your payment.
I have student loans that aren't in repayment yet. Should I show them as installment debts?
Yes. We are required to count deferred student loans or student loans not yet in repayment in your monthly debt calculation. We factor in a payment that is 2% of your outstanding balance. If you can provide account statements reflecting a different payment or if your credit report reflects a different payment, we will use that amount in your debt calculation.