Unsure where to start? Do you find yourself asking if it better to get pre-qualified or pre-approved?
Or how to raise your credit score? You’ve come to the right place.
Yes. An active secondary mortgage market exists in which lenders and investors buy and sell pools of mortgages. If another company purchases your mortgage, it assumes all terms and conditions. A new lender cannot change the rate, payments, or any other aspect of the agreement. You will only have to send payments to the new loan servicer.
Location is key. Factors like crime rate, public school ratings, daily commute times to surrounding metropolitan areas, as well as the vicinity to local parks, libraries, swimming pools, sport arenas, churches, restaurants and shopping centers are essential in the price valuation of real estate. It’s best to consider the location as much as the condition of a home when you are looking to make a purchase.
A prepayment penalty is a fee that some lenders charge if you pay off all or part of your mortgage early. If you have a prepayment penalty, you would have agreed to this when you closed on your home. Not all mortgages have a prepayment penalty. Typically, a prepayment penalty only applies if you pay off the entire mortgage balance – for example, because you sold your home or are refinancing your mortgage – within a specific number of years (usually three or five years). In some cases, a prepayment penalty could apply if you pay off a large amount of your mortgage all at once. Prepayment penalties do not normally apply if you pay extra principal on your mortgage in small chunks at a time–but it’s always a good idea to double check with the lender.
The credit check is reported to the credit reporting agencies as an “inquiry.”Inquiries tell other creditors that you are thinking of taking on new debt. An inquiry typically has a small, but negative, impact on your credit score. Inquiries are a necessary part of applying for a mortgage, so you can’t avoid them altogether. But it pays to be smart about them.
As a general rule, apply for credit only when you need it. Applying for a credit card, car loan, or other type of loan also results in an inquiry that can lower your score, so try to avoid applying for these other types of credit right before getting a mortgage or during the mortgage process.You can shop around for a mortgage and it will not hurt your credit. Within a 45-day window, multiple credit checks from mortgage lenders are recorded on your credit report as a single inquiry. This is because other creditors realize that you are only going to buy one home. You can shop around and get multiple preapprovals and official Loan Estimates.
The impact on your credit is the same no matter how many lenders you consult, as long as the last credit check is within 45 days of the first credit check. Even if a lender needs to check your credit after the 45-day window is over, shopping around is usually still worth it. The impact of an additional inquiry is small, while shopping around for the best deal can save you a lot of money in the long run. Note: the 45-day rule applies only to credit checks from mortgage lenders or brokers – credit card and other inquiries are handled separately.
Yes, errors and fraud should be reported to both the credit reporting agency that provided the report with the error or fraud, as well as the creditor that provided the erroneous or fraudulent information to the credit reporting agency. At this time, Experian and Equifax are only accepting disputes via their online forms. TransUnion handles disputes by phone, standard mail and an online form. We have provided you with information below to access these agencies per myFICO.com.
2 Baldwin Place, P.O. BOX 1000
Chester, PA 19022
Raising a credit score is not always easy and not something that can be done overnight. There are several credit best practices that will raise your rating over time: Pay your bills on time. This is extremely important. Collections and late payments can lower your credit scores. Reduce your credit balances. Maxed out credit cards will lower your credit score. Don’t apply for credit often. This reflects poorly on you and your rating. Establish credit history.
Pre-qualification is a determination of the loan amount you’re likely to receive. It is not a guarantee of approval. To obtain pre-qualification, you usually are interviewed by a licensed loan officer who determines the pre-qualification amount. You will be issued a letter with this information that you can present when making an offer on a home. It’s important to understand that pre-qualification does not imply any obligation from the lender that you will be approved. Pre-approval is more thorough than pre-qualification. To be pre-approved, you must submit an application and verify your credit and financial history. After you receive your pre-approval certificate, you’re in a stronger position to close earlier and negotiate a better price. It’s highly recommended that you seek pre-approval if you are shopping for a home.
Although it may seem intuitive to move money around in accounts to show financial strength, this is actually not advisable. All facets of your income will be considered when applying for a loan. It’s best not to make any financial changes that could alter your eligibility, especially placing money from untraceable sources into your accounts. Additionally, don’t change your employment during the home loan process. Steady employment can be a factor in determining loan qualification. Lastly, large purchases such as cars, appliances or furniture can negatively impact the outcome of the loan.
Interest rates vary depending on the program you happen to be working with as well as credit scores, down payment amount and few other factors. We can help you figure out the best course of action as well as educate you on how you can work with these rates.
In most instances, as well as the program that you are a part of, your down payment may be at a minimum of 3%. Programs vary depending on whether you are a first time homebuyer as well. Talk to us about what program is right for you and we can make sure you are putting the correct amount down on your next home!
• Form 1003 — The residential loan application — including the attached Fair Lending notice, loan info sheet, and credit authorization. Note: Do not use whiteout on this paperwork. Mistakes should be crossed out and initialed.
• Copies of W-2s or tax returns for the previous 2 years.If you own rental units, provide the most recent rental agreement and tax returns for previous 2 years.
• Your last 3 bank statements along with the most recent statements for any mutual funds, IRA/401(k), or stock accounts.
• Settlement agreement and divorce decree (if applicable).Letter explaining how you plan to utilize refinance proceeds if you’re seeking a cash-out refinance.
• Non-U.S. citizens must present their Green Card or H-1 or L-1 visa.If you’ve filed for bankruptcy, present a schedule of creditors, discharge notice, and filing.
• If you’re applying for a second loan, include the first mortgage note.
These documents may not be all-inclusive, but by having these on hand, you will expedite the application.
Points are prepaid interest that you can pay up front. You can pay points to get a lower rate on both fixed rate and adjustable rate mortgages, but the points charged to reduce the rate may vary depending on the type of loan. One point is equal to 1% of the mortgage amount. (Example: $100,000 mortgage amount = $1,000 point)
The interest rate isn’t always the most important factor in selecting a mortgage. You want to make sure you’re doing business with a reliable, reputable business. A trustworthy lender will be able to provide all of the details of your loan, including pre-approval, in writing. When shopping for a mortgage provider, don’t forget to ask friends and family members for recommendations. Although online reviews are available, they may not be as thorough as hearing feedback from the people you know. It’s also reasonable that if the people closest to you were happy with their experience, you will be, too.Also, make sure that you understand the full cost of the loan and that you feel comfortable with all of the terms. For instance, pre-payment penalties, a large down payment requirement, or larger monthly payments may cause the loan to be less than ideal — regardless of the interest rate.
Proof of Income – Find and make copies of your pay stubs.
Tax Information – Gather your W-2s, 1099s, and tax returns for the last 2 years. If you’re self-employed or an independent contractor, you’ll be required to provide your 1099-MISC information.
Credit Details – We’ll perform a credit check when you apply.
Debt Documentation – You’ll be required to provide documentation on your outstanding financial commitments. Gather materials on your current mortgage, car loans, student loans and any other debts.
FICO stands for Fair Isaac Corporation. This company is a pioneer and leader in credit scoring. Your FICO score is a number that tells creditors how likely you are to pay off your debts. FICO and the credit bureaus do not disclose their exact computation methods. However, most credit scores are calculated through models that assign points to different factors of your credit history to best predict future performance. There are many commonly analyzed factors in your credit history, including:
• Payment history
• Employment history
• How long you have had credit
• How much credit you have used compared to how much you have available
• How long you’ve lived at your current residence
• Negative credit/financial events such as collections, bankruptcies, charge-offs, etc.
Inspections are important to understand the condition of the home. They can also be helpful when it comes time to negotiate with the sellers, in terms of lowering the price of the home, or adding service stipulations to the contract.
We send you a needs list that consists of the necessary documentation that we need to help process and adequately determine the loan program that is best suited for you. The needs list details all the info needed for the process such as income, assets, etc. The turnaround time for a pre-approval is less than a day so you could be looking for your next home faster than you think!
Whether you are active military, a veteran or in the reserves you are able to qualify for a VA loan. You are unable to qualify for a VA loan if you have been dishonorably discharged however.
No! We are able to assist you in your loan if you are able to obtain a gift from a family member. Now, when we say family member, we do not mean your best friends, a nice boss or your fiancee. These family members have to be immediately related to you in some way for the gift to be accepted.
Mortgage insurance lowers the risk to the lender of making a loan to you, so you can qualify for a loan that you might not otherwise be able to get.
Typically, borrowers making a down payment of less than 20 percent of the purchase price of the home will need to pay for mortgage insurance. Mortgage insurance also is typically required on FHA and USDA loans. Mortgage insurance lowers the risk to the lender of making a loan to you, so you can qualify for a loan that you might not otherwise be able to get. But, it increases the cost of your loan. If you are required to pay mortgage insurance, it will be included in your total monthly payment that you make to your lender, your costs at closing, or both.
Warning: Mortgage insurance, no matter what kind, protects the lender – not you – in the event that you fall behind on your payments. If you fall behind, your credit score may suffer and you can lose your home through foreclosure.
There are several different kinds of loans available to borrowers with low down payments. Depending on what kind of loan you get, you’ll pay for mortgage insurance in different ways:
If you get a conventional loan, your lender may arrange for mortgage insurance with a private company. Private mortgage insurance (PMI) rates vary by down payment amount and credit score but are generally cheaper than FHA rates for borrowers with good credit. Most private mortgage insurance is paid monthly, with little or no initial payment required at closing. Under certain circumstances, you can cancel your PMI.
If you get a Federal Housing Administration (FHA) loan, your mortgage insurance premiums are paid to the Federal Housing Administration (FHA). FHA mortgage insurance is required for all FHA loans. It costs the same no matter your credit score, with only a slight increase in price for down payments less than five percent. FHA mortgage insurance includes both an upfront cost, paid as part of your closing costs, and a monthly cost, included in your monthly payment.If you don’t have enough cash on hand to pay the upfront fee, you are allowed to roll the fee into your mortgage instead of paying it out of pocket. If you do this, your loan amount and the overall cost of your loan will increase.
If you get a US Department of Agriculture (USDA) loan, the program is similar to the Federal Housing Administration, but typically cheaper. You’ll pay for the insurance both at closing and as part of your monthly payment. Like with FHA loans, you can roll the upfront portion of the insurance premium into your mortgage instead of paying it out of pocket, but doing so increases both your loan amount and your overall costs.
If you get a Department of Veterans’ Affairs (VA)-backed loan, the VA guarantee replaces mortgage insurance, and functions similarly. With VA-backed loans, which are loans intended to help service members, veterans, and their families, there is no monthly mortgage insurance premium. However, you will pay an upfront “funding fee.” The amount of that fee varies based on:
• Your type of military service
• Your down payment amount
• Your disability status
• Whether you’re buying a home or refinancing
• Whether this is your first VA loan, or you’ve had a VA loan before
Like with FHA and USDA loans, you can roll the upfront fee into your mortgage instead of paying it out of pocket, but doing so increases both your loan amount and your overall costs.