Mortgage Information

Have These Items Ready When You Apply For a Loan It used to be that lenders mailed out verifications to employers, banks, mortgage companies, and so on to verify the data supplied by borrowers. Nowadays, the interest is often in speed and getting answers quickly, so alternate documentation has become more widely used. Alternate documentation means that underwriting answers can be obtained with...

Years ago, credit scoring had little to do with mortgage lending. When reviewing the credit worthiness of a borrower, an underwriter would make a subjective decision based on past payment history. Then things changed. Lenders studied the relationship between credit scores and mortgage delinquencies. There was a definite relationship. Almost half of those borrowers with FICO® scores below 550 became...

When you apply for a mortgage loan, you expect your lender to pull a credit report and look at whether you’ve made your payments on time. What you may not expect is that they seem to be more interested in your FICO® score. “What’s a FICO® score?” is a common reaction. Each time your credit report is pulled, it is run through a computer program with a built-in scorecard. Points are awarded...

When buying a home, it is not enough to just come up with the money. Except for no asset verification loans, lenders want to verify where the money for your new home will be coming from. If you can document that the funds are coming from your personal savings, the lender is more confident of your strength as a borrower. Also, if you can verify that you have additional assets that are not needed for the...

This is a detailed summary of costs you may have to pay when you buy or refinance your home. They are listed in the order that they should appear on a Good Faith Estimate you obtain from a mortgage lender. There are two broad categories of closing costs. Non-recurring closing costs are items that are paid once, and you never pay again. Recurring closing costs are items you pay time and again over the...

Now that you know what an ARM is and how it works, you may be wondering what the advantages and disadvantages are. So let’s explore that issue. Offering adjustable rates allows lenders to transfer part of the interest rate risk from themselves to the borrower. If you get a fixed-rate mortgage and the interest rate goes up, it costs the lender money. However, if you have an adjustable-rate mortgage, as...

An adjustable-rate mortgage (ARM) has an interest rate that fluctuates periodically. This is in contrast to a fixed-rate mortgage, which always has the same interest rate. Every ARM has basic components: An index A margin Adjustment Period An interest rate cap An initial interest rate The Index An ARM’s interest rate is tied to one of many economic indices, some examples of which are the...