Want more information about a link or item on the screen? Simply roll over it with the mouse for a popup tip.
Our site uses popup windows to deliver content and information in a user friendly interface. We will never use popup windows to deliver unwanted ads or content to your browser. Please disable popup blocker programs for this site in order to use the site properly.
Can I qualify for a home loan or refinance if I have questionable credit?
Answer:
Absolutely. Top industry lenders have many products to accommodate credit-challenged customers and may even provide credit counseling upon request. The home mortgage expert we assign to you can assist with your credit counseling request.
How much money do I need to put down for a purchase? Answer:
It all depends on what program you qualify for based on income, credit and program eligibility. Usually government loans (VA, FHA) provide minimal down payments. An overall average is 3% to 10% down. Some lenders have no down payment programs, if you qualify. All lenders will require you to either put down 20%, pay private mortgage insurance, or get a second mortgage on the remaining percentage after 20%.
Do I have to pay broker fees every time I refinance?
Answer:
No. If you are dealing directly with a mortgage lender it will bypass a broker and his/her fees. When dealing with a broker, it is okay to ask him/her to take off some of their fees or any indirect fees that do not deal with the actual loan process.
What is PMI and do I have this on my loan?
Answer:
PMI stands for Private Mortgage Insurance. Private Mortgage Companies insure a percentage of the loan to reduce risk to the lender. If you did not put 20% down on a purchase or refinanced over 80% of the value of your home, chances are you may have PMI. Most mortgage companies will remove PMI once it has been proven that the loan is below 80% of value through a property appraisal. Some conventional loans do not have PMI.
How do I get approved for a home loan if I am self-employed and did not show a profit on my tax returns?
Answer:
Easy. More and more mortgage companies are providing products to accommodate self employed borrowers where income is stated.
Can I refinance my home if I have recently claimed bankruptcy?
Answer:
Yes. There are various lenders who provide conventional loans for borrowers in bankruptcy. Due to the higher risk factor the rates may be higher, but achievable. Some lenders can provide you with a program that will buy out a chapter 13 equity permitting.
I am a first time homeowner. Are there any programs to assist me in financing and down payment?
Answer:
Absolutely. There are government and conventional loans that will provide you with aggressive first time home buyer programs that include down payment assistance.
Is a low interest rate always important?
Answer:
Not always. Interest rates on a mortgage in certain circumstances are tax deductible. Sometimes it is more cost efficient to pay off higher interest non-bearing accounts. The advantages and disadvantages are assessed on an individual basis by your particular financial situation and tax history. It is always good to consult a CPA and/or your personal home mortgage expert assigned through us.
What is an ARM and why would I want one?
Answer:
ARM stands for Adjustable Rate Mortgage. It is a mortgage that is usually fixed for a certain amount of time, then it can fluctuate. An ARM is appropriate if you plan to stay in the home for a certain amount of time or pay the loan off in that time frame. This would also be ideal for borrowers who are trying to clean up credit issues in order to qualify for other programs in the future.
Why do I have to pay closing costs?
Answer:
There are various costs in completing an origination process on a loan. Some costs are state specific: title recording, taxes, doc. stamps, etc. Others are lender fees, title company fees and/or attorney fees. These fees vary depending on loan amount and program. Some closing costs may be tax deductible. Contact your CPA for more information. Most mortgage companies can roll closing back into the loan refinancing and home equity loans.
What are the financial reasons for buying a home?
Answer: Reducing Income Taxes - With a mortgage, you may be able to deduct the interest you're paying — and property taxes — from your taxable income. In some cases, owning is less expensive than renting.
Buying for Profit - While there are no guarantees that your home will appreciate in value, real estate is often a good investment over the long haul.
Building Equity - As you pay down a mortgage, you build equity in your home. You can use that value to secure a home equity loan or line of credit.
When is the right time to purchase a home?
Answer:
If you buy when the real estate market is hot, you risk paying a higher price. You may also be vulnerable to future price downswings, particularly if you don't plan to stay in your home for more than a few years.
What do I need to know about my credit before beginning the purchasing process?
Answer:
Understanding what your credit report entails is the first step to maintaining or building a good credit history. The credit bureau collects and organizes information about people who have credit.
This report includes:
• Your Name
• Address
• Employer
• Length of employment
• Previous credit history, including account types, balances remaining, payment status, collection information and inquiries
Should I pull my credit report prior to shopping for a broker?
Answer:
A good rule of thumb is that if you are going to do the kind of shopping that requires filling out applications, you should request copies of your credit reports from the credit bureaus first and then take them with you to the mortgage broker. Ask them to give you a Good Faith Estimate based on the reports. This avoids lots of inquiries gathering on your reports, which can cause problems in the long run.
Why should I be concerned with the number of inquiries on my credit report?
Answer:
Many applications are rejected, because the applicant has too many inquiries. By general rule, too many is defined as more than 6 - 8 inquiries on your report. Credit bureaus have told creditors that if a person has more than this on their report it usually means that they are bouncing around looking for credit which generally indicates that they are either desperate or careless. If you have more than 6 - 8 inquiries on your credit reports you have two options. No inquiry can stay on your report for longer than 1 year, so if they are showing older than that you can have them removed. You can remove duplicate inquiries as well.
What criteria must I submit in order to use an automated approval system?
Answer:
To complete your loan application, you will need a valid credit card to pay for your application fee. You may also need the following information:
Property Information: • Your current address (or previous address if less than two consecutive years).
• The length of time you have lived at each residence.
• The current value of your home.
• If you currently rent, your landlord’s name and address (for the last 12 months).
Employment and Income Data: • Your Monthly income
• W-2 tax forms
• 1040 tax forms (if self-employed)
• Supplemental income (rental income, etc.)
• The dates you worked for each place of employment
• An explanation of any gaps in your employment
Assets: • The name and address of your financial institution
• Bank account statements or your account number and current balance/value
• Investment account statements
• Retirement account statements
How many different quotes should I get before making a decision?
Answer:
Home loans are available from thrift institutions, commercial banks, mortgage companies and credit unions. Different lenders may quote you different prices, so you should contact several lenders to make sure you're getting the best price. You can also get a home loan through a mortgage broker. Brokers arrange transactions rather than lending money directly, so they find a lender for you. A broker's access to several lenders can mean a wider selection of loan products and terms from which you can choose. Brokers will generally contact several lenders regarding your application, but they are not obligated to find the best deal for you unless they have contracted with you to act as your agent. Consequently, you should consider contacting more than one broker.
What fees can I expect to incur when purchasing a home/qualifying for a mortgage?
Answer:
A home loan often involves many fees, such as loan origination fees, broker fees, transaction, settlement, and closing costs. Every lender or broker should be able to give you an estimate of its fees. Many of these fees are negotiable. Some fees are paid when you apply for a loan, and others are paid at closing. In some cases, you can borrow the money needed to pay these fees, but doing so will increase your loan amount and total costs. "No cost" loans are sometimes available, but they usually involve higher rates.
• Ask what each fee includes. Several items may be lumped into one fee.
• Ask for an explanation of any fee you do not understand. Some common fees associated with a home loan closing are listed on the Mortgage Shopping Worksheet in this brochure. [http://www.ftc.gov/bcp/conline/pubs/homes/bestmorg.htm]
What are the differences between mortgage prequalification, pre-approval and final loan approval?
Answer:
Prequalification is the process where the lender will look at a basic copy of your credit report and use the information you supply to determine how much mortgage you can afford based on your income. No-accounts or employment information is verified. Pre-approval occurs when all credit and employment is verified and the mortgage is approved, subject to the appraisal of the property you have chosen to buy. Final loan approval occurs when the property has been appraised, all documentation is in the hands of the lender and all contingencies have been met.
What first-time buyer programs are available?
Answer:
Many first-time buyer programs are locally developed and administered. Your state, province or local community is much more likely to have a program available than on a national level. Your Agent can generally review with you the availability of programs in your area.
There seem to be so many mortgage programs and offers available. How can I compare them?
Answer:
You will want to consult a few sources, including a local bank that has mortgage availability and a mortgage broker, who will deal with several different lenders.
Can I use my IRA retirement funds for a down payment on a house?
Answer:
For most first time buyers, you can use the funds in these retirement accounts without penalty. According to the IRS, if both husband and wife are first-time homebuyers, they each can withdraw up to $10,000 for qualified acquisition costs penalty-free for a first home.
Should I pay points? Along with the interest rate, the number of points (up-front interest) is an important consideration when comparing mortgages.
Answer:
What mortgage options are available for those with poor credit? There are lenders available for many of those with tarnished credit records. One of the mistakes commonly made by homebuyers involves their credit report. Some buyers assume that their credit is worse than it really is, and may well have been able to secure a more advantageous mortgage. Other buyers are unaware of problems in their credit report and need to scramble to get the problems handled. You can avoid many of these hassles by getting a copy of your credit report up-front and examining it both for errors that need to be corrected and accounts that need to be handled.
I have heard about different "ratios" when qualifying for a mortgage. What are front and back ratios?
Answer:
Part of the mortgage application process will be the determination of how much house you can afford based on your income. The two ratios that will be computed are the front ratio and the back ratio.
• Front Ratio: The total mortgage payment including principal, interest, taxes and insurance (PITI) as well as any condominium or homeowner association fees divided by your total GROSS income. Traditionally this ratio must be below 28% Example: With a gross income of $3700 per month, a total mortgage payment (PITI) of $973, the front ratio would be 26%.
• Back Ratio: The total mortgage payment PLUS any car payments, credit card and any other loan payments divided by your total GROSS income. Traditionally must be below 36%. Example: With a gross income of $3700 per month, a total mortgage payment of $973, a car payment of $212, 1 credit card payment of $59 and 1 credit card payment of $43 for a total of $1287 with a back ratio of 35%.
What options are there for buyers with no money down and no cash for closing costs?
Answer:
Although there are some new programs that allow buyers to purchase a home with little or no cash, you will generally need some funds for down payment, closing costs or both. Since a mortgage payment will take a good percentage of your income, lenders will usually want you to be "involved" (meaning having your money involved) from the very beginning. There are options for low down payment (5% or less) mortgages such as FHA mortgages and there is always the possibility that the seller could absorb some of your closing costs (which are usually 3-5% of the selling price) but to buy a home with no cash down is a rare occurrence. If you have cash for closing costs, though, and excellent credit, there are new options in the conventional loan arena.
