Financing Your Home with Gehan

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Financing

It's never been easier to build - and finance - your dream home than with Gehan Homes. Working with select preferred providers, we are excited to offer mortgage options that make your dream of home ownership a reality.

Select the city where your new Gehan home is to be built and get connected with a preferred mortgage provider in your area.

Frequently Asked Questions

How do I know if I'm ready to buy a home?

Buying a home can be an intimidating process. To find out if you are ready to buy a home, ask yourself the following questions:

1. Do I have a steady source of dependable income? Have I been employed on a regular basis for the last several years?

2. Do I have a good record of paying my bills?

3. Am I carrying very little debt, like car payments or installment loans?

4. Do I have money saved for a down payment?

5. Do I have the ability to pay a mortgage every month, plus additional costs?

If you can answer "yes" to these questions, you are probably ready to buy your own home.

How do I know if I can get a loan?

Using a simple mortgage calculator to see how much mortgage you can afford is a good start. The best way to know if you can get a loan, however, is to obtain a pre-approval from a lender. Note that there is usually a loan application fee involved, but once you are pre-approved, you can begin your new home search with peace of mind.

What loan term should I choose?

If you can afford higher payments, a shorter loan term (10-15 years) will build equity more quickly and may be the right choice for you. If you wish to qualify for a larger loan, it may be better to choose a longer term (20-30 years). Longer- term loans are a good choice if you don't plan on moving for a long period of time and the interest rates are good when you sign your loan. Long-term loans are also easier to qualify for. You can always add additional principal to your monthly mortgage payments to build equity faster. Your broker or lender will work with you to find the appropriate loan type for your needs.

In addition to the mortgage payment, what other costs do I need to consider?

This is a great question. Too many times, new homeowners run into problems because of lack of foresight. To be a responsible homeowner, you will also need to consider:

Monthly utilities

Homeowner association fees

Property taxes

Maintenance costs

General living expenses

A great rule of thumb is that your monthly mortgage expense should not be more than 35% of your gross household income.

Why should I buy instead of rent?

Simply put, buying a home builds wealth. When you purchase a home, at the end of the mortgage you are going to own that home and property. When you rent, you are only creating wealth for the landlord.

What should I look for when deciding on a community?

More than anything else, you want a neighborhood where you feel comfortable. Select a community that will allow you to best live your daily life. Many people choose communities based on schools, but you will also need to think about access to shopping, cultural districts, medical facilities and places of worship. If public transportation is important, that can be another factor. When you find a place you like, talk to people who live there. They know the most about the area and will be your future neighbors.

Gehan Homes communities were designed with you and your family in mind. Each community features exclusive amenities and access to great schools, employment centers, entertainment venues and more. We encourage you to visit any of our communities in the Austin, Dallas/Fort Worth, Houston or San Antonio areas to find your new home.

Do I need a real estate agent to purchase a new Gehan Home?

No, you do not need a real estate agent to purchase a new Gehan Home. Our New Home Consultants are here to assist you before, during and after your new home purchase. The choice to use a Realtor is personal and solely yours to make, but please know that your New Home Consultant will be available to answer any questions you have during your entire home buying experience.

If I have a real estate agent, does he/she need to visit the Community with me?

Yes, if you choose to use a real estate agent, your agent is required to accompany and register you during your first visit to the model home center.

How do I determine the taxes for a new home?

Tax rates are based on a per $100 valuation of a home. Your New Home Consultant will have information for you regarding the estimated taxes that will be assessed on your new home. Contact a New Home Consultant in your Community of interest.

How is the value of a home calculated?

A home's value is based on several things, including the size, square-footage, construction quality, certain amenities and location. Also taken into consideration are relevant historical facts about the property and the prices of recently sold comparable properties in and around the area.

Five Steps To Getting A Mortgage

1. Know Your Finances

The amount of home you can afford depends on many factors including your debt, income and credit score as well as the cash that you have available for down payment, closing costs and reserves. Figure out how much you can comfortably afford to spend each month on a mortgage payment. Don't forget to factor in the additional costs of taxes, insurance and HOA fees.

2. Get Organized

You will be required to provide documentation to your lender, so start collecting these items early. Commonly requested documents are: paystubs, bank statements, tax returns, investment statements (401(k), IRA, stocks), rental statements and divorce decrees.

3. Shop for a Lender

Once you have a clear idea of your financial picture, you can begin shopping for a loan. For tips and advice on how to select the best lender and loan for you, see our "Ask Your Lender" tab.

4. Get Pre-Approved for a Loan

Now that you have selected a qualified mortgage lender and have provided them with your financial information, they can pre-approve you for a mortgage loan and provide you with a Good Faith Estimate. This estimate will give you a clear idea as to the costs associated with your home purchase, including your required down payment, closing costs and monthly payment.

5. Closure

The final step in your loan process will be your closing. During this time, you will sign all of your mortgage paperwork as well as the documents that legally transfer the home to you.

Ten Questions to Ask Your Lender

1. What type of loan is best for me?

A wide variety of loan options are available to consumers that include fixed rate, adjustable rate, interest only and negative amortization loans. Your lender can customize a solution that works best for you. Factors such as how much you plan to use for a down payment, your credit score and how long you plan to stay in the home are just some of the many factors a qualified mortgage professional will use to determine the option that best suits you.

2. What is my interest rate and APR?

Interest rates change quickly and the interest rate you will receive is based on many factors, including credit, amount of down payment, your debt-to-income ratio and more.

The APR is a calculation that factors in your interest rate as all other fees and costs over the life of your loan. Comparing the APR of loans is the ideal method in determining which loan is the best deal. However, many mortgage lenders do not include all fees in determining their APR and if your mortgage rate is adjustable, there is no way to accurately calculate the APR. Therefore, the most practical way to compare quotes is to request an itemized breakdown of your rate, discount and origination points and fees.

3. What are the discount and origination points?

Discount Points: One point is equal to 1% of your loan amount. Discount points represent additional money charged by the lender to lower or "buy down" your interest rate. The more points you pay up front, the lower your rate. Usually for each point you pay on a 30-year fixed loan, your interest rate will be lowered by .125%.

Loan Origination Points: Lenders frequently charge a loan origination fee for evaluating, preparing and submitting your loan. The charge is usually calculated in points, with one point equal to one percent of the loan amount. For example, if your loan amount is $150,000.00, one point would equal $1,500.00.

4. What are the additional closing costs?

In addition to the fees charged by your lender, you will be responsible for additional fees paid to third parties as well as prepaid costs.

Third party fees may include: Appraisal and inspection fees, fees charged by the title company (may include closing fees, title exam, search or commitment, document preparation and notary and attorney's fees), as well as government fees (transfer taxes, recording fees and document or transaction stamps).

Prepaid costs are monies paid in advance and may include: Real estate taxes, homeowner's insurance, prepaid loan interest and HOA fees. These charges are related directly to the home purchase and are paid regardless of whether you obtain a mortgage.

Knowing these costs as early as possible not only gives you the opportunity to compare services and their prices but also prepares you for how much money you will need to come up with at closing. Although lenders are required to provide a written Good Faith Estimate within three days of receiving your loan application, remember it is just an estimate and some fees will vary.

5. Can I lock in my interest rate?

Because of the fluid nature of interest rates, you may have the option to "lock-in" your rate. This may be a good option if you have reason to believe that rates are increasing. Be sure to ask what, if any, fees are associated with locking in your rate, the length of time the rate will be locked for and what rate will be charged if the lock-in expires before closing. Additionally, inquire as to if you will be offered a lower rate should rates fall subsequent to your lock-in date. Remember to request written confirmation of your rate lock.

6. What documents will I need to provide?

In order to process your loan, your lender will request documentation to substantiate the data supplied on your application. This documentation varies depending on your loan type and circumstances and may include copies of your sales contract, pay stubs and W-2's, investment and bank statements and tax returns.

7. Will I be penalized if I pay off my loan early?

If you pay of your loan early due to a refinance or move, you may be subject to a prepayment penalty. If there is a fee, find out how much and for how long the fee is in effect.

8. What escrow requirements do you have?

Your monthly mortgage payment consists of principal and interest and in many cases, escrowed amounts for your taxes and insurance. Some lenders require that money be put aside each month into escrow to cover your taxes and insurance. Approximately 1/12 of the annual required amount is added to your monthly mortgage payment and put aside in an escrow account. The lender pays your annual taxes and insurance when they are due out of this account. If your lender does not require an escrow account or you choose not to have these amounts escrowed, you will be responsible to pay your annual taxes and insurance premiums when they are due.

9. What time frames and deadlines do I need to be mindful of?

In processing your loan, time is of the essence. Delays in getting important documents and paperwork to your lender could delay your loan approval and/or closing. The average loan processing time takes between 30-60 days but varies greatly depending on the lender's workflow or backlog. Make sure to ask your lender how long their closing process will take. While your loan is in process, incurring additional debt, changes in job status and reductions in assets or salary can negatively impact your loan, so be mindful of your employment and financial status.

10. Do you have references?

Check the credentials and references of mortgage lenders and ask your lender to speak with clients in your area.

Glossary of Common Lending Terms

Adjustable Rate Mortgage (ARM): A mortgage in which the interest rate is adjusted periodically according to a pre-selected index. Payments may go up or down accordingly.

Alternative Credit Offer: An offer to extend credit on terms different from those the applicant originally requested.

Amortization: The systematic and continuous payment of an obligation through installments until the debt has been paid in full.

Annual Percentage Rate (APR): The cost of credit expressed as an annual rate. It usually includes a combination of the interest rate, points and certain other fees paid to a lender to acquire a mortgage. The APR is the most meaningful measure for comparing the cost of mortgage loans offered by different lenders.

Application: The printed form used by a mortgage lender to record necessary information concerning a prospective mortgage.

Appraisal: A report made by a qualified person offering an expert opinion or estimate of property value. The term also refers to the process by which this estimate is obtained.

Approval Letter: A lender's written offer to grant a mortgage loan outlining the terms, the amount of the loan, the interest rate and any other conditions. It can also serve as a communication of the lender's decision to the borrower's application.

Assessed Valuation: The value that a taxing authority places on real property for the purpose of taxation.

Buy Down: A payment to the lender from the seller, buyer, or third party, causing the lender to reduce the interest rate.

Cash to Close: Liquid assets readily available to pay the down payment, closing costs, and prepaid items of a mortgage transaction.

Certificate of Occupancy (C.O.): A certificate issued by a local building department to a builder or renovator, stating that the building is in proper condition to be occupied and stating the legally permissible use of the building.

Closing: The meeting during which the title to the property actually changes hands, documents are executed and the sale of the property and/or the loan is completed. Keys are generally transferred to the new owner at this time.

Closing Costs: Money paid by the borrower in connection with the closing of a mortgage loan. This generally involves an origination fee, discount points, appraisal, credit report, title insurance, attorney's fees, survey, and pre-paid items such as tax and insurance escrow payments.

Closing Statement/HUD/Settlement Statement: A form used at closing that gives an account of the funds received and paid at the closing, including the escrow deposits for taxes, hazard insurance, and mortgage insurance.

Co-Borrower: Additional borrower(s) whose income contributes to qualifying for a loan and whose name(s) appear on documents with equal legal obligations.

Commitment Fee (Loan): Any fee paid by a potential borrower to a lender for the lender's promise to lend money at a specified rate and within a given time period.

Covenant: Generally, almost any promise set forth in a written agreement. Most commonly, assurances set forth in a deed by the grantor or implied by law.

Credit Report: A report detailing an individual's credit history.

Credit Score: A credit score is a three-digit number generated by a mathematical algorithm using information in your credit report. It is designed to predict risk; specifically, the likelihood that you will become seriously delinquent on your credit obligations in the 24 months after scoring.

Deed: A legal document conveying ownership (title) to real property from one individual to another.

Deed of Trust: An instrument used in many states in place of a mortgage. Property is transferred to a trustee by the borrower (trustor), in favor of the lender (beneficiary) and reconveyed upon payment in full.

Delinquency: A loan payment that is overdue but within the period allowed before actual default is declared.

Department of Housing and Urban Development (HUD): Organization responsible for the implementation and administration of government housing and urban development programs.

Discount Point(s): An amount payable to the lending institution by the borrower or seller to increase the lender's effective yield. One point is equal to one percent of the loan amount.

Down Payment: The money the homebuyer pays at the time of closing for the purchase of the home. The down payment reduces the amount financed.

Earnest Money: A portion of the down payment delivered to the seller or an escrow agency by the purchaser of real estate with a purchase offer as evidence of good faith.

Equal Credit Opportunity Act (ECOA): A Federal law requiring lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, sex, age, marital status, receipt of income from public assistance programs, or past exercising of rights under the Consumer Credit Protection Act.

Equity: The market value of property minus any outstanding mortgage or cooperative loan balance or other encumbrance.

Escrow: Funds held by the lender, set aside for payment of taxes and possible property and mortgage insurance and other recurring charges against real property. (Monthly mortgage payments usually include principal, interest, and escrow amounts.) Also a procedure whereby a disinterested third party handles legal documents and funds on behalf of a seller and buyer.

Fair Credit Reporting Act (FCRA): A Federal law that requires a lender who is declining a loan request because of adverse credit information to inform the borrower of the source of such information.

Federal Home Loan Mortgage Corporation - FHLMC (FREDDIE MAC): A corporation authorized by Congress which purchases residential mortgages insured by the Federal Housing Administration (FHA) or guaranteed by the Veterans Administration (VA) as well as conventional home mortgages. It sells participation certificates whose principal and interest are guaranteed by FHLMC.

Federal National Mortgage Association - FNMA (FANNIE MAE): A corporation authorized by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by the Federal Housing Administration (FHA) or guaranteed by the Veterans Administration (VA) as well as conventional home mortgages.

Finance Charge: The total dollar amount your loan will cost you. It includes all interest payments during the term of the loan, any interim interest paid at closing, your origination fee, and any other charges paid to the lender or to a third party as a condition of the extension of credit. Certain charges like the appraisal, credit report, and the title search charges are not included in the finance charge calculation.

First Mortgage: A real estate loan that has priority over any subsequently recorded mortgages.

Fixed Interest Rate: An interest rate that does not change during the term of the loan.

Flood Insurance: Insurance protecting against loss by flood damage, required by lenders in areas designated (federally) as potential flood areas.

Foreclosure: A legal procedure in which property mortgaged as security for a loan is sold to pay the defaulting borrower's debt.

Gift Letter: A written explanation signed by the individual giving the gift, stating "This is a bona fide gift and there is no obligation expressed or implied to repay this sum at any time."

Good Faith Estimate (G.F.E.): An estimate of the charges that a borrower is likely to incur in connection with a settlement.

Gross Monthly Income: Total monthly income earned before tax and other deductions.

Guaranteed Loans: A loan guaranteed by Veteran's Administration or Rural Development. The guarantee protects the lender against loss incurred by a mortgage default.

Hazard Insurance: Insurance protecting against loss to real estate caused by fire, some natural causes, vandalism, etc., depending upon the terms of the policy.

Homeowners' Association Dues: The fees imposed by a condominium or homeowners' association for maintenance of common areas.

Index: A published interest rate not controlled by the lender to which the interest rate on an Adjustable Rate Mortgage (ARM) is tied. The index and the interest rate linked to it may increase or decrease.

Insured Loans: A loan insured by Federal Housing Authority (FHA) or a private mortgage insurance company.

Interest: A share or right in some property. Also, money charged for the use of money (principal).

Interest Rate Cap: A limit on how much the interest rate can change, either at each adjustment period or over the life of the loan.

Investment Property: Real estate owned with the intent of earning income and not intended for owner occupancy.

Joint Tenancy: Joint ownership by two or more persons with right of survivorship; all joint tenants own equal interest and have equal rights in the property.

Lien: An encumbrance against property for money due, either voluntary or involuntary.

Loan-To-Value Ratio (L.T.V.): The ratio of the amount of your mortgage loan and the lower of sales price or appraised value.

Margin: The number of percentage points a lender adds to the index value to calculate the ARM interest rate at each adjustment period.

Maturity: Termination or due date on which final payment on a loan must be paid in full.

Monthly Payment: Usually, the amount of PITI (principal, interest, taxes, and insurance) paid each month on a mortgage loan.

Mortgage: The conveyance of an interest in real property given as security for the payment of a loan.

Mortgage Insurance: Insurance protecting the mortgage lender against loss incurred by a mortgage default.

Mortgage Note: A written promise to pay a sum of money at a stated interest rate during a specified term. The note contains a complete description of the conditions under which the loan is to be repaid and when it is due.

Mortgagee: The lender in a mortgage transaction.

Mortgagor: The borrower in a mortgage transaction, who pledges property as security for a debt.

Negative Amortization: Occurs when the monthly payments cover only part of the interest then due. The interest cost that is not covered is added to the unpaid principal balance. This additional amount is additional principal.

Non-Conforming Loan: Conventional home mortgages not eligible for sale and delivery to either Fannie Mae (FNMA) or Freddie Mac (FHLMC) because of various reasons, including loan amount, loan characteristics or underwriting guidelines. Non-conforming loans usually incur a higher rate and origination fee.

Note: A written agreement containing a promise of the signer to pay to a named person, or bearer, a definite sum of money at a specified date or on demand.

Occupancy: The use of a property as a full-time residence, either by the title holder (owner-occupancy) or by another party through a formal agreement (rental).

Origination Fee: The amount charged for services performed by the company handling the initial application and processing of the loan. Usually a percentage of the loan amount.

PITI (Principal, Interest, Taxes, and Insurance): The most common components of a monthly mortgage payment.

Point: One percent of the amount of the loan.

Preliminary Title Report: The results of a title search by a title company prior to issuing a title binder or commitment to insure clear title.

Prepaid Items: Those expenses of property which are paid in advance of their due date and will usually be prorated upon sale, such as taxes, insurance, rent, etc.

Prepayment Penalty: A fee charged for paying off a loan prior to a specified time period.

Primary Residence: A residence that the borrower intends to occupy as a principal residence.

Principal: Amount of debt, not including interest. The face value of a note or mortgage.

Processing: The preparation of a mortgage loan application and supporting documentation for consideration by a lender or insurer.

PUD (Planned Unit Development): A planned combination of diverse land uses, such as housing, recreation, and shopping in one contained development or subdivision. A major feature of a PUD includes areas of common land for use by the housing unit owners. The association of unit owners generally owns, pays fees, and maintains the common areas.

Purchase Contract: An agreement between a buyer and seller of real property, setting forth the price and terms of the sale. Also known as a sales contract.

Qualifying Ratios: The ratio of fixed monthly expenses to gross monthly income. Used to determine how much the homebuyer can afford to borrow.

Rate Lock: An agreement guaranteeing the homebuyer a specified interest rate, provided the loan is closed within a set period of time.

Real Estate Settlement Procedures Act (RESPA): A Federal law requiring lenders to provide home mortgage borrowers with information on known or estimated settlement costs. It also establishes guidelines for escrow account balances and servicing disclosure.

Real Property: Land and that which is affixed to it.

Refinancing: The repayment of a debt from the proceeds of a new loan using the same property as security.

Residential Mortgage Credit Report: A report requested by your lender that utilizes information from at least two of the three national credit bureaus and information provided on your loan application.

Secondary Mortgage Market: A market where existing mortgages are bought and sold. It contrasts with the primary mortgage market where mortgages are originated.

Security: In lending, the collateral given, deposited, or pledged to secure the payment of a debt.

Survey: A print showing the measurements of the boundaries of a parcel of land, together with the location of all improvements on the land and sometimes its area and topography.

Title Insurance: Insurance against loss resulting from defects of title to a specifically described parcel of real property.

Title Search: An examination of public records to disclose the past and current facts regarding the ownership and lien priority of a given piece of real estate.

Total Debt Ratio: Monthly debt and housing payments divided by gross monthly income.

Truth-in-Lending Act: A federal law requiring a disclosure of credit terms using a standard format. This is intended to facilitate comparisons between the lending terms of different financial institutions.

Underwriting: Analysis of credit risk on a specific rate and term for a mortgage on a given property for given borrowers.