You’re ready to buy your first home… Congrats! But with such a large purchase, you’ll want to learn about mortgages and the homebuying process. (Psst… We have a free guide to help you). Of course, you’ll have (at least) two seasoned pros closeby — your real estate agent and your loan officer. Both will function as consultants throughout the process, so we suggest you prepare a bit for working with them.
At AAFMAA Mortgage Services, LLC (AMS), as we focus on serving the military community, our loan officers are called Military Mortgage Advisors, or MMAs for short. According to two of our MMAs, these are the questions they’re most likely to ask when you want to apply for a mortgage.
1. What are your goals and expectations in buying a home?
“This is a key question especially for purchases to get down to what Members should be spending for a house, not how much they think they can or want to spend,” says Damon Madlock, an MMA based in Morrisville, NC. “After all, there are other life expenses to consider, like buying furniture, retirement contributions, vacations, or saving for your children’s college tuition, for example.”
Once Madlock’s got the customer’s spending level agreed upon, he likes to have a conversation with the real estate agent. “It helps the real estate agent to have a clear understanding of how we look at qualifications. We look at the whole picture and are advocates for our client.“
Related: Use our home affordability calculator to see how much home you can afford based on your income, debt and down payment.
2. What’s your income and monthly debt?
This question isn’t as straightforward as it appears, notes MMA Bronwyn Schile, who’s based in Chandler, AZ. Since many buyers are unsure, Schile pulls their credit (with their consent) to have a frank discussion about liabilities.
This is especially important for people who say, “Oh, yeah, I have a business on the side,” she says. “They may say they earn $100,000/year with a side business but when I pull the documentation we find they write off most of that and the income is actually (on paper) low. So we get the tax returns, the bank statements, and other information to make sure we're calculating their debt-to-income ratio accurately.”
Borrowers should be ready to share all of their income and debt information, Schile says, especially if there are late payments or non-payments showing on their credit report. “You’ll need to be ready to explain each instance and, better yet, document what happened.” Which leads to…
3. What’s your credit score?
Many banks and credit card companies make a customer’s credit score available on monthly statements or online. Even so, many Members may not know their credit score or may think it’s higher than it actually is.
Credit scores are calculated based on the information in your credit reports. Your credit score is important because it’s what the lender will use to determine your interest rate. Although the VA doesn’t specify a minimum credit score, most lenders will want your score to be 680 or higher. Just a few points one way or another can affect the interest rate you’ll be offered. (Hint, you can request a free online copy of your credit report at AnnualCreditReport.com or by calling
877-322-8228 to start your own research.)
If you need to raise your score, AMS will work with you on a plan to help you pay bills on time, pay off old debt, lower your credit usage, or a combination of those, depending on your circumstances. “We typically check in with the Member every few months to be sure the plan is working for them or tweak it if we need to,” says Madlock.
4. Do you plan on making a down payment?
While VA Home Loans do not require a down payment, there are some financial benefits to making one if you’re purchasing your home, including the opportunity to pay a lower VA funding fee and more affordable monthly mortgage payments, points out Schile.
The VA funding fee will be based on the total amount of your loan, and is expressed as a percentage of your total loan amount. (See the VA’s funding fee charts for clarification.)
“With Veterans, especially, I ask if they have a service-related disability, because that’s going to change the equation for them in terms of having to pay the funding fee,” says Madlock.
5. Are you working with a real estate agent?
It’s important to find a buyer’s agent you trust and like. If you don’t have a professional like this already, you can ask friends and family for referrals. Or, contact us and we can probably connect you with one in your area. If you do have one, share that information with your lender. “I'll normally reach out right away to the agent to introduce myself and AMS,” says Madlock. This connection helps the agent and lender be “on the same page” in terms of what you’re looking for and what you can afford, he says.
Real estate agents appreciate knowing a lender has vetted their client as far as their credit score and documentation. The relationship is cooperative and cordial. “We like finding real estate agents who work well with military buyers and keep deals running smoothly. In fact, I closed one deal in just 23 days with an experienced knowledgeable agent’s help — and that was over a holiday,” he adds.
Related: 4 Tips for Working with a Real Estate Agent
We’re Here to Help
Whether you’re just thinking about buying, ready to start home-shopping in earnest, or considering a refinance, an AMS Military Mortgage Advisor will be happy to provide you with an honest and fair comparison of your mortgage options, including a wide range of affordable mortgages designed to meet your needs.
Ensuring AAFMAA Members obtain the best mortgage possible is our mission. Get your free mortgage assessment today or give us a call at 844-422-3622!