FAQs

Whenever you decide to buy a house, we've got the answers to all your questions.

Intro

Hey, Ben Chenault here with MortgageBanc. Thanks for stopping in.

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So no matter where you are in the process, whether you are under contract, you need to close in a couple of weeks, or maybe you're just poking around trying to get some information and educating yourself. Either way, we're glad that you're here. I know there's a lot of misconceptions out there, a lot of articles that are maybe expired or out of date and one article seems like it contradicts another. So we're trying to update our site as much as we can with frequently asked questions so that we can get you some real answers. I know the home buying process can be rather large and our goal is to guide you along the way and help educate you, so that you know exactly what you're doing.

So who are we? We're a branch of Fairway Independent Mortgage. We are a national lender. That's one of the top 10 lenders in the country. My team and myself are consistently ranked in the top one percent in the country. I don't tell you that to impress you. I tell you that because that means we have experience. I've been doing this over 20 years. I've seen almost every scenario. I've probably dealt with whatever it is that your concerns are. Our goal, once again is educating you. I would encourage you to stop in frequently on our webpage. We're going to try to update our videos and update our blog posts. So subscribe to those. You can sign up for our free newsletter. You can connect with us on all kinds of social media. So whatever you're most comfortable with, please feel free to connect with us. The goal is just to be here. Whenever you're ready, feel free to also to reach out. Some of our videos may be a little generic and everybody does have a specific need. So feel free to call us, talk to myself or anybody on my team at 205-598-6420. Thanks a lot. Have a good day.

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How Much Cash Do I Need?

How much cash do I need to purchase a home? And the answer is, it really depends on you and your situation,

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We're gonna give you three things that cost money on closing day. The first is your down payment. Now every loan program is different. Everybody qualifies for different types of loan programs. But there is a rumor that you have to put down 20 percent. You don't. You can even put down as little as zero if you qualify for them. Either way you're probably not going to be looking at a 20 percent down payment. However, for purposes of this video, that the first thing that costs money is your down payment. The second thing that costs money is going to be closing costs. You know, whenever you buy a house, it seems like everybody's got their hand in your back pocket.

And that's going to be everybody from title companies and real estate appraisers and lawyers and surveyors and pest inspections. I know the list can be long. But remember, these can be negotiated. Oftentimes I have found it's better to offer a little more on the home that you're looking at and ask them to pay a certain amount of your closing costs. Especially when rates are as low as they have been for the last several years. That is a very good trade-off. When you think that for every thousand dollars you borrow, it's probably gonna cost you $5 a month, let's say. So in that scenario, would you rather have an extra $3,000, or would you rather save $15 a month? I think most people would rather have the $3,000. That was the second thing that costs money. The third thing is often forgot about.

It's called prepaid items. These are things that, as the name says, you've got to pay up front. These are items such as your first year of homeowner's insurance to whatever carrier you choose. They're also going to establish an escrow account and put a couple of months of taxes and insurance into that account. And you're going to pay interest until the end of the month. So depending on the loan size, depending on where you're buying, that's going to dictate how much prepaid you're looking at it. But at the end of the day there's three things that are going to cost some money: your down payment, closing costs, and your prepaid items. Feel free to connect with us whenever you're ready. You can find us online or you can feel free to reach out and talk to myself or anybody on my team at 205-986-4220. Thanks a lot. Have a good day.

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When Should I Lock In My Interest Rate

Hey, Ben Chenault here with MortgageBanc. Thanks for checking in. The question we've got today is:

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When should I lock in my interest rate? It's a great question. There are all kinds of programs out there. Some will claim that we can lock and shop. You can lock it in for a year or 10 years. It's crazy. Remember we are dealing with Wall Street. That's where the money comes from. And Wall Street's not going to do me a favor. I'm going to do you a favor. I hate saying it, but that's the honest truth. Whenever we lock in a rate during the processing of your loan so that we assure you that rate at closing day, that is money that's being reserved in your name. And it protects the ups and downs of the market so that we can get your loan processed.

The typical lock-in period is 30 days. However, there are other options to lock it out for, lock it in farther than that. The next available point is 45 days. Then 60 days, the 90 days got to a 180 and even 360 days if you're building. But keep in mind, the longer that you lock in your rate, the more volatile the market could be in between. Wall Street knows that and that is going to be a more expensive rate lock either in the rate or to the upfront fees that you could pay. So when you see online lenders, a lot of people will quote really low and say, hey, that was for a 10-day lock and you can't process a loan in 10 days. The average lock-in period is 30 days. We can always request an extension if needed, although the market is usually going to charge it. And just remember it's not always the lender's decision.

This is the market that we're dealing with. If I were building a home, I would weigh when do I think this home is going to be ready and what do we think the market volatility is going to be in between that time? I will oftentimes see that if somebody has stumbled on a house that's partially complete, it's going to take 60 days, 90 days, oftentimes they will float the rate, which means not locked until we get within that 30 or 45 day timeframe that is a much cheaper rate lock. As long as rates haven't significantly increased, it's not really going to cost them anything to do it that way. So let us know what your options are. How soon do you plan on closing? You do need a contract? We do need to know what a closing date is and then we can best advise you on when we think it would be best for you to lock.

However, keep in mind a lender does not have a crystal ball and if they truly knew if rates were going to go up or down, they sure wouldn't be any longer. They would be making big money on Wall Street. So anybody given you hard, fast and steady advice on that, it's just that its advice they don't truly know. So keep that in mind. Once again, our job's to educate you and we're ready whenever you are. So reach out to either myself or anybody on our team at (205) 986-4220. Thanks a lot. Have a great day.

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What is Mortgage Insurance

What is a mortgage insurance? Do we have to pay it? My answer is maybe, maybe not.

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So for starters, mortgage insurance is insurance that someone pays to a lender in case you default. So in the olden days, a person would usually have to put down 20 percent in order for the lender to feel comfortable enough lending money on that property. Remember, lenders are in the business of lending money. They're not in the business of taking a house back. It's expensive to foreclose on somebody and no one wants to do that anyway. So this insurance covers those costs for the lender if they ever need to take the house back if the borrower defaults. Okay? So keep in mind, it's a couple of ways we can handle this mortgage insurance thing.

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How Does A Side Business Effect The Loan Process?

One common question we get about mortgages is, “How does a side business or a hobby business affect the loan process?”

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With the new tax changes, we’re seeing more and more people with side businesses. Now, I look for tax advantages everywhere. But on loan day, if those businesses are operating at losses, it can affect how much you qualify for.

We don’t look at the amount of revenue generated. We look at the after-expense profit of that business. If you’re loading up a lot of expenses into a hobby, job, or a side business, know that can reduce the amount that you qualify for. It doesn’t always have to, but it certainly can—especially if that number ends up being large.

The best way to figure this out is to call us. Let us go ahead and take a look at it. We would much rather handle this on the front end than while you’re in the middle of buying your home. So call us early on at (205) 986-4220. Let us look at it for you and see if it’s going to have any effect on you at all. Connect with us online or on social media—you can connect with us in about every way in the world. Whenever you’re ready, we’re here to help.

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How Complicated Is The Process For The Self Employed?

Helping out self-employed borrowers is kind of a niche of ours. We have a lot of clients that are self employed and the first thing they say is, “How much of a pain is this going to be?”

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What kind of business do you have?
Well, it doesn’t have to be a pain at all. It really depends on what type of business you have. Do you have multiple filings? Do you have multiple business ownership entities? Even if you do, if everything is in order, if you’ll just give your CPA permission, we can reach out directly to them and get it handled so that you don’t have to have to gather any extra paperwork.

With a lot of the rules that have changed over the last several years, just keep in mind if you said on tax day that you made $1, you can’t show up on loan day and say you made $10.

Loopholes
Now there are some loopholes. There are some paper write offs that we can take into account, like depreciation. Perhaps we can even account previous years of write-offs and net carryover losses. But just because your net worth might be zero, it doesn’t mean that you have zero qualifiable income. Conversely, if we show that the business is generating $1 million in revenue but it has $2 million in losses, then we could have a problem.

Start early
My suggestion is get us your information early on. If there are going to be any hurdles to get over, let’s get over them before you get under contract and you’re in the emergency state. We want to make sure that this is a very simple and easy process.

It can be fun! ...Yes, I said it. A mortgage process can be fun, and just because you’re self-employed doesn’t mean it has to be a total nightmare.
Be assured that a lot of our clients are self employed. We are seen as the go-to lender for people with higher net worth and people with a complicated business tax return.
Connect with us on social media, drop in to benchenault.com, or pick up the phone and give us a call at (205) 986-4220. Ask for me or anybody on my team and we can get you the answers you need real quick. Thanks a lot and have a great day.

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Owning v.s. Renting

These days there is an increasing number of people, especially millennials, that are in the mindset of, “I’m just going to rent for as long as I want to because I don’t have any maintenance to worry about.”

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It’s true, you don’t have to worry about certain things as a renter. But take a look at the long term effect renting has on your net worth. A very interesting number came out from the KCM blog showing the average net worth of a homeowner versus a renter: The average net worth of a renter is $5,200. The average net worth of a homeowner is $231,000.

That is a big difference.

Now, I’m not saying that if you buy a house you get $231,000. I’m just saying if you look at the numbers, they don’t lie.

Maybe that is because of the equity you gain in your house over time. Maybe it’s a difference in the mentality of homeowners versus the mentality of renters—maybe homeowners save more and tend to be more stable. I don’t know.

But regardless of the cause, $231,000 versus $5,200 should give you a little bit of a start. It’s important to be aware of this effect on your net worth, and I wanted to share it with anybody who’s trying to decide, “Should I stay here and rent for a while longer, or should I step on out and buy a house?”

It doesn’t have to be that difficult. In a 5 to 10 minute conversation with us, we can point you in the right direction so that you can do all the research you want to do. Connect with us on social media, drop in to benchenault.com, or pick up the phone and give us a call at (205) 986-4220.

We hope to hear from you soon.

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How Long Do I Need To Be On A Job To Qualify?

One of the questions that we get a lot here at MortgageBanc is “How long do I need to be at my job before I can qualify for a loan?”

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This is usually from young people who don’t yet have a full-time job. There’s no cookie cutter answer, because it really depends on what you were doing before your first job, and also how they are going to pay you.

The First Job
I will tell you this—oftentimes we’ll talk with people recently out of college and starting their first job, and we can usually get them approved for a mortgage on day one. There’s no waiting period because the time in school counts the same as employment history.

Changing Jobs
Someone may change jobs and it changes their rate of pay. As a general rule of thumb, we can only count salary and hourly pay—the guaranteed types of incomes. If you’re paid bonuses, commissions, and things of that nature, it’s hard to include them unless you’ve received them for two years. It doesn’t mean we can’t get you a mortgage. It might just mean we can only count your base salary. So job changes don’t have to be a big deal.

Changing Careers
If you’re changing careers completely, it still may not be a big deal. It really depends on what your function is. And are you guaranteed money? If you have salary or hourly wages, w-2 earnings, perhaps we don’t have to wait at all.

The best thing to do is to call us. We can talk it out. Visit our website and apply online. You can also connect with us through social media. Then again, nothing ever replaces a phone call. So feel free to call myself or anybody on my team here at (205) 986-4220.

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First Time Home Buyer Programs

We're gonna talk about the hot topic first-time homebuyer programs.

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What is included in a monthly mortgage payment.

Today we're going to talk about payments mortgage payments and we're also gonna talk about why a lot of those online calculations are not correct.

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Why is getting a mortgage such a pain?

I wanted to answer a tough question that I have heard time and time again and the question is "why is getting a mortgage such a pain?"

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Getting pre-qualified and when should you do it

Today we're gonna talk about just simply getting pre-qualified and when should you do it.

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