Question 1

Why Update A Pre-Approval Letter?

Accepted Answer

Updating your pre-approval letter can make your offer to purchase property more appealing. These are the updates we suggest when you are actively home shopping;

Ensure the purchase price and loan amount on the letter match up to your purchase price and loan amount on your offer to purchase. If it shows differently, the seller may conclude that the purchase price is negotiable.
List the exact subject property address on the pre-approval letter. It will show due diligence on your part in putting together a thoughtful and well considered offer. Everything should match and your lender has acknowledged the subject property being considered for purchase.
Show your scores! If you have credit scores at 700 or higher, we suggest listing them on the pre-letter. Sellers will feel more reassured and comfortable of buyers who can keep their credit obligations current and demonstrate good to excellent credit scores.

How do you get your pre-approval letter updated? Simply email the details, purchase price, down payment and new subject property address, to consultants@empireofamerica.com and your pre-approval letter will be updated in minutes!

Question 2

How do I update an expired pre-approval letter?

Accepted Answer

If your pre-approval has expired, it’s easy to get it updated. Just provide the documentation listed below, and within an hour or two we will send you a brand new pre-approval letter! If you have any new financing terms you’d like us to consider such as higher purchase price, smaller down payment, just simply email consultants@empireofamerica.com your request and one of Empire’s bankers will get back to you straight away.
 
Documentation list for updating a pre-approval letter: Upload Documents Securely Here

Assets for down payment; most recent two months bank statements, all pages
Income:

W2 Wage Earner: Recent 30 days paystubs
Self-Employed: your most recently filed 1040 federal tax return, including all pages and schedules (unless we have the most recent return).

Question 3

I have student loans that aren’t in repayment yet. Will those be counted in my debt to income ratio?

Accepted Answer

Yes, they will be. If there is no payment showing off your credit report and it is not yet in repayment, we would use 0.5% of the balance as a monthly payment to qualify you.

Question 4

What is prepaid interest?

Accepted Answer

Prepaid interest is paid at the time of closing of your loan to cover the interest that will accrue on your new loan for the remaining days of the month in which it is funded. You will make no payments in the month immediately following the month in which your loan funds. You will then begin making payments on the first of each month for the prior month’s interest.

Question 5

What is the difference between an Interest Rate and an APR?

Accepted Answer

In the U.S., the calculation and disclosure of APR is governed by the Truth in Lending Act (which is implemented by the Consumer Financial Protection Bureau (CFPB) in Regulation Z of the Act). In general, APR in the United States is expressed as the periodic (monthly) interest rate times the number of compounding periods in a year. Since the APR must include certain non-interest charges and fees, it requires a more detailed calculation. The APR must be disclosed to the borrower within 3 days of applying for a mortgage and this information is typically emailed to the borrower. The APR is found on the truth in lending disclosure statement. 
Annual percentage rate, or APR, is an attempt to accurately reflect the true cost of borrowing. Mortgage APR includes the interest rate, points and fees charged by the lender, as well as a few escrow and title fees, but not all. APR is higher than the interest rate because it encompasses all these loan costs, including the interest expense.
Most important in regard to this disclosure of APR, is the fact that not all charges to a transaction are labelled as APR fees (the appraisal fee, for instance, is not an APR charge) &#8211; which are the only fees used in calculating APR. Further, make sure that if you are comparing mortgage pricing, that you compare mortgages of the same type and term, as well as the same day to ensure it&#8217;s an apples-to-apples comparison (pricing changes daily &#8211; and multiple times per day).
Therefore, when shopping, ask a mortgage lender for total closing costs (including all APR and non-APR charges), in order to understand true lending cost.

Question 6

What should I do if I’m not sure about the annual real estate taxes?

Accepted Answer

If you’re not sure about the annual real estate taxes for a property you are purchasing, estimate them at 1.25% of the purchase price for CA and 1.5% for FL or TX.

Question 7

What steps should I take if I become a victim of identity theft?

Accepted Answer

If you have been a victim of identity theft, you have certain rights under the law. You should provide a copy of a valid police report to the credit reporting agencies and request that they block the reporting of the information that appears on your credit report as a result of identity theft. The law provides guidance to the credit reporting agencies on when to block and unblock such information.

Question 8

How can I obtain a free credit report?

Accepted Answer

The Fair and Accurate Credit Transaction Act of 2003 (FACTA) provides that every consumer is entitled to a free credit report every 12 months from each of the three national repositories: Equifax, TransUnion and Experian. Customers may obtain their personal credit report through the following website: www.annualcreditreport.com.

Question 9

What happens after I apply?

Accepted Answer

Once you apply, one of Empire’s mortgage consultants will email you a complete documentation list of what will be needed for us to determine if the transaction requested is pre-approved. Once you send all items to us, your pre-approval request will be completed in just a couple hours at most. At a pre-approval status, you are able to rate lock, should you wish to.
The next step would be the electronic signing of your initial disclosures, and once you have, we will submit your loan to underwriting for formal loan approval, and order your appraisal, if you have one required on your file.
After your formal approval comes in a few business days later, we will send you any needed conditions to finish up the transaction.

Question 10

When will I hear from someone after my inquiry/application?

Accepted Answer

If you make an inquiry with us during business hours, we will usually respond right away. If not, someone will get respond by the next four business hours at most.
Our business hours are:

Monday to Friday, 9 am – 5 pm PST
Saturday, 11 am to 5 pm PST

Question 11

If my loan application isn’t pre-approved, does that mean you can’t provide me with financing?

Accepted Answer

About 90% of applications submitted are pre-approved. Those that aren’t pre-approved are assigned to a Loan Consultant who performs a complete review of the information you submitted. Often times, the problem has to do with how your information was input into our website and the Loan Consultant is able to obtain an approval for the loan program you applied for. If the Loan Consultant is unable to obtain an approval for the program applied for, he or she will research what other options may be available.

Question 12

What are some tips for completing the online application?

Accepted Answer

Our online application is very user friendly. The application is broken down into sections and you can track your progress through each section at the top of each screen. It should take less than 10 minutes to complete the application. You will not be asked for any exact figures.
Move through the application by using the back and next arrows at the bottom of each screen. Don’t use the back and next button on your browser while you’re completing the application.
If you need additional help answering a question, click on the chat button available on the page and we will assist you.

Question 13

What do I do if I can’t retrieve or print out the electronic disclosures, or have some other problem with them?

Accepted Answer

If you have any problem whatsoever with our electronic disclosures, just call, email or chat us online. We will assist you in viewing the disclosures online or mail them to you at no cost to you.
Toll Free: (866) 411-3621
Email: processing@empireofamerica.com

Question 14

What if I’m not sure about the property value, sales price or amount I want to borrow?

Accepted Answer

If you’re not sure about exact amounts, please make an educated best guess. Websites such as Zillow may be helpful on value for property you own. The appraisal (and sales contract, if purchase) will ultimately be used to determine the value of the property whether it be a purchase or refinance.

If you are looking to get pre-approved for a purchase transaction and are unsure of the purchase price, just put the highest price you would be comfortable with and we can qualify you based off that to start. Then, if it ends up being a lower amount, you will qualify for anything under the maximum amount we pre-approved you for.

Question 15

What will be required if I withdraw money from a 401(K) account for my down payment?

Accepted Answer

If you’ll be withdrawing funds from a 401(K) or retirement account to fund your down payment, we’ll ask you to provide evidence that you have the funds available by providing a recent statement. If this would result in a loan against your 401(K), we will not count that debt against you in your debt-to-income ratio.

Question 16

Is a gift from someone else an acceptable source of my down payment?

Accepted Answer

Gifts are an acceptable source of down payment, if the gift giver is related to you or your co-borrower, fiancé or a friend treated as family. We’ll ask you for the name, address, and phone number of the gift giver, as well as the donor’s relationship to you. Finally, we will need to source the wire/check from the donor’s account arriving in your account or escrow, whichever is applicable. Gift funds are not acceptable in an investment property transaction, only owner occupied.

Question 17

Why do you need information about other properties I own?

Accepted Answer

We need information about all the real estate & land you own to ensure we have an accurate application and debt-to-income ratio on your loan file. We will ask for any mortgage statements, insurance policies and HOA statements on these properties, as applicable.

Question 18

What debt do you include in my debt to income ratio?

Accepted Answer

We include all items that show up on your credit report (Credit Cards, Installment Loans, Student Loans, all Mortgages, etc.). Additionally, we will include any alimony or child support you pay, as well as any other liens you are obligated on that do not show up in your credit report (co-signing a lease, etc.).

Question 19

How quickly can you close my loan?

Accepted Answer

Our standard lock period is 30 days, although we often close loans much sooner. We are confident we will close your loan in this time frame as long as you send in all requested documentation in a timely manner and schedule your appraisal inspection at your earliest (if your transaction requires one).  Because we are a direct lender, we have control over the approval process, drawing loan documents and funding the loan. Should you need to close your loan in a shorter time period, just let your Empire mortgage consultant know, we can likely make that happen.

Question 20

Will my overtime, commission, or bonus income be considered when evaluating my application?

Accepted Answer

In order for bonus, overtime, or commission income to be considered for qualifying purposes, you must have a two-year history of receiving it and also must be likely to continue. The best way to calculate these types of earnings is to provide W2 statements for the previous two years, and the last, year-end paystubs for those same years. We will then remove the regular pay earnings to determine the amount of overtime and/or bonus earnings for the period. Once the overtime/bonus earning have been identified for the two-year period, the amount of earnings is divided by 24 months to determine the monthly average over the past two years. As an alternative, we can verify these additional earnings amounts directly from your employer.
If you have been receiving bonus, overtime, or commission income for two years, but from two different employers, we can, in most cases, use the income if the earnings are made in the same field of work.
Also note that if your year-to-date income from overtime/bonuses/commissions is decreasing over time, or if it is deemed unlikely to continue, they would have to be removed from consideration as viable borrower income.
We will always attempt to approve you for mortgage financing without using these sources of additional income to reduce the amount of documentation in the transaction and streamline the process.
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Question 21

Will my second job income be considered?

Accepted Answer

Secondary employment or also known as multiple-job income is generally considered stable income for qualifying use when received and documented for the last two-years. There is some flexibility of accepting less than a two-year history, but no less than a 12-month history for a borrower if there is a strong likelihood that the borrower will continue to receive that income and there are positive factors to offset the shorter income history
It should be determined if there has been any recent change in the borrower’s overall employment status that might jeopardize the continuance the second job income. For example, a review of borrower’s historic ability to handle multiple jobs on a continuing basis.
As a general rule there can be no gap in employment beyond one-month in the most recent 12-month period, and the stability of this income; length of time and consistency of  income earned monthly will be verified.
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Question 22

How will you verify income on a self-employed applicant?

Accepted Answer

The following factors are reviewed by EOAC underwriters before approving a mortgage for a self-employed borrower:
• Stability of the borrower’s income
• Location and nature of the borrower’s business
• Demand for the product or service offered by the business
• Financial strength of the business
• Ability of the business to continue generating and distributing sufficient income to enable the borrower to make the payments on the requested mortgage.
The documentation that the borrower will be asked to provide includes; the most recent two years of signed individual federal income tax returns IRS Form 1040; (or in some cases where self-employment is greater than 5 years, the most recent one year of signed individual federal income tax returns), and, the most recent two years of business federal income tax returns (IRS Form 1065 or IRS Form 1120S), unless the requirements to waive business tax returns have been met; (or the most recent one year of business federal income tax returns, if permitted)
The borrower will be requested to provide tax return information for any business enterprise where there is >25% ownership. For borrowers who have less than 25% ownership of a partnership, S corporation, or limited liability
company (LLC), ordinary income, net rental real estate income, and other net rental income
reported on IRS Form 1065 or IRS Form 1120S, Schedule K-1 may be used in qualifying the borrower provided:
• The borrower can document ownership share (may use Schedule K-1),
• The borrower can document access to the income, and
• The business has adequate liquidity (e.g. working capital) to support the withdrawal of earnings. A written evaluation of the business income must be retained in the mortgage file.
As a point of quality assurance, all self-employed borrowers will be verified by 3rd party resources, including obtaining IRS transcripts directly. Debts to income ratios for self-employed are typically 45%.
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Question 23

I am retired and my income is from pension or social security. What will I need to provide?

Accepted Answer

We will ask for copies of your recent pension or social security award letters and bank statement showing the income is being deposited directly into your bank account. Sometimes it will also be necessary to verify that this income will continue for at least three years since some pension or retirement plans do not provide income for life.
If you’re receiving tax-free income, such as social security earnings, in some cases we can gross-up the income by 25% to help those with social security qualify for their mortgage.

Question 24

Do I have to provide information about my child support, alimony or separate maintenance income?

Accepted Answer

Information about child support, alimony, or separate maintenance income to you as a borrower does not need to be provided unless you wish to have it considered for repaying the mortgage loan. However, a copy of your divorce decree may be asked for to confirm your marital status.

Question 25

I have income from dividends and/or interest. What documents will I need to provide?

Accepted Answer

Generally, two years personal tax returns are required to verify the amount of your dividend and/or interest income so that an average of the amounts you receive can be calculated. In addition, we will need to verify your ownership of the assets that generate the income using copies of statements from your financial institution, brokerage statements, stock certificates or Promissory Notes.
Typically, income from dividends and/or interest must be expected to continue for at least three years to be considered.
We will always attempt to approve you for the loan without using these sources of additional income to reduce the amount of documentation you need to provide.

Question 26

How will rental income be verified?

Accepted Answer

If you own rental properties, we’ll generally ask for the most recent year’s federal tax return to verify your rental income. We’ll review the Schedule E of the tax return to calculate your rental income, this is how we determine the monthly rent income:
(Net Income + Depreciation + Mortgage Interest + Taxes + Insurance + HOA Dues) / 12
If you haven’t owned the rental property for a complete tax year, we’ll ask for a copy of any leases you’ve executed and we’ll use 75% of that lease as income on the new property.

Question 27

Can I use my new job to qualify for a loan if I haven&#8217;t started it yet?

Accepted Answer

Yes, you can use future salary from new employment to qualify for a mortgage. As long as you start the job within 60 days of the closing date, you can use this future salary to qualify. There are some conditions to using future income:

The transaction must be a primary residence, one-unit (single family or condo) purchase.
The employer cannot be a family member.
You must be able to provide a non-contingent and fully executed employment contract.

One final note, you must have an additional 6 months of reserves of monthly principle, interest, taxes & insurance on the new property, in addition to down payment. If you do, then you can use your new salary to qualify for the mortgage!

Question 28

How do I complete the application if I was in school before obtaining my current job?

Accepted Answer

In completing the application place your employer in the current employment space provided and indicate how long you have been employed there in years and months.  For prior employment (remember lenders need a minimum 2-year history) enter the school or university you attended and for how long in terms of years and months. A Letter of Explanation (LOX) should be provided indicating the specialist or professional education you were taking at school that assisted with your placement at your new employment.

Question 29

What if my homeowner’s insurance is up for renewal?

Accepted Answer

Anything due in the next 30 days, will need to be paid in full at the close of your transaction. If you don’t have the funds for this, we can usually increase your loan amount to cover this expense, should you want to.

Question 30

What is a credit score and how does it affect my application?

Accepted Answer

Credit scores (FICO scores) are based on information collected by credit bureaus and information reported each month by your creditors about the balances you owe and the timing of your payments. A credit score is a compilation of all this information converted into a number that helps a lender to determine the likelihood that you will repay the loan on schedule. The credit score is calculated by the credit bureau, not by the lender. Credit scores are calculated by comparing your credit history with millions of other consumers. They have proven to be a very effective way of determining credit worthiness.
Some of the things that affect your credit score include your payment history, your outstanding obligations, the length of time you have had outstanding credit, the types of credit you use, and the number of inquiries that have been made about your credit history in the recent past.
Credit scores used for mortgage loan decisions range from approximately 300 to 900. Generally, the higher your credit score, the lower the risk that your payments won’t be paid as agreed.

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