Frequently Asked Mortgage Questions

 

Why Should I Refinance?
Refinancing your home clearly has its benefits. First, it can save you money on your monthly payments and cut years off the remaining term of your loan, saving thousands in interest payments. The longer the remaining term on your loan, the more interest you have to pay. Even if rates are just a half point lower than your current mortgage, refinancing can save you a lot of cash.

Also, you can leverage the equity in your house and get immediate cash in your pocket. You can use that money towards a new car, that vacation you've been talking about or home improvements to increase your home's value. Refinance your mortgage today and free up the money you need to do the things you want.
What if I don't have any money for a down payment?
There are programs that offer a no down payment option and in conjunction with seller contributions, can make it so that you will not need to spend any money to buy a home.
What is a FICO score?
A FICO score is a credit score developed by Fair Isaacs Company as an aid to help determine a consumers overall credit quality and ability to repay a loan.
How Can I Improve My FICO Score?
Your FICO score is constantly changing to give lenders an accurate picture of where you are right now. You can always take steps to improve your score and change the way lenders view your credit. We've listed a few of the fastest ways to improve your score.

Pay all your bills on time. This is the number one thing you can do to positively improve your FICO score. Even letting your accounts roll over to the 60 day allowance will usually negatively affect your score, even if you pay it off.

Keep your balances on all of your credit cards as low as possible. This means you need to pay off as much as you can afford to keep your ratio of outstanding balance to total available credit low.

Credit accounts that you have regularly paid off and have a lengthy, clean history will help your score. Research shows that consumers with longer credit history have a lower risk of default than those with shorter credit histories.

Don't close unused cards to try and raise your score. This may backfire and actually hurt your score since it will cause your ratio of balance to available credit to increase. Too many credit inquiries can negatively affect your credit score. Every time you apply for a credit card, an auto loan or a mortgage; an "inquiry" is made. If you do need to apply for credit for an auto or mortgage loan, then do your shopping within a short time period. FICO scores usually identify a group of inquiries as rate shopping and will only count the group as one inquiry.

It is good to have a mix of credit products. Whether they are credit cards, installment loans, automobile loans or a mortgage. Having a healthy mix will generally increase your score. Although, having too much of one could be detrimental.

Get Help. If your credit situation seems overwhelming or unmanageable you may want to call a credit counselor. You can reach one by calling the National Foundation for Credit Counseling at 800-388-2227 or look for them on the Web at www.nfcc.org.
What does it mean to lock in a rate?
When you lock in a rate, you are asking the lender to guarantee the current interest rate for a certain period of time. By locking the rate you are guaranteed that rate for your loan regardless of whether or not the rates go up the next day or not.
I am self employed. Is this going to be a problem?
Generally, the income of self-employed borrowers is verified by obtaining copies of personal (and business, if applicable) federal tax returns for the most recent two-year period. However, based on your entire financial situation, we may not need full copies of your tax returns

We'll review and average the net income from self-employment that's reported on your tax returns to determine the income that can be used to qualify. We won't be able to consider any income that hasn't been reported as such on your tax returns. Typically, we'll need at least one, and sometimes a full two-year history of self-employment to verify that your self-employment income is stable.
How can I find out how much my home is worth?
You can contact a local realtor and ask them for a free market analysis on your home. The realtor can show you recent sales of homes like yours that have sold in the last six months. This will give you a good indication of what homes like yours are selling for in your neighborhood. However, we will require an appraisal be performed by a licensed real estate appraiser.
What is a Loan-to-Value ratio?
The Loan-to-Value ratio, or LTV, is simply the loan amount divided by the value of the property. The LTV is important because it determines your equity in the property. For example, your home is worth $100,000 and the lender will lend up to 80% of that value or $80,000. Your LTV would be 80%.
What is title insurance?
There are two types of title insurance policies. A lender's policy insures that the lender holds an unencumbered first lien position. This coverage is required when obtaining a mortgage loan. An owner's policy is a separate policy that ensures that the borrowers hold a marketable title to the subject property. An owner's policy would ensure against ownership claims against the property that were not identified during the title search.
What is an escrow?
An escrow company acts as a neutral company that holds documents and funds for incremental disbursement as each of the various conditions of your sales contract are met. You will be in escrow from the time you signed the contract and the deposit is sent to the escrow company, until your home sale has closed and the title has been transferred from the seller to you.

Contact us with any questions.