Mortgage FAQs - There are many common questions that people have regarding their mortgage, how to get a mortgage, what they need to qualify, and about specific concerns they have about applying for a mortgage. Here are some of the most common questions and their answers.

Q: If my credit is not very good can I still qualify for a mortgage?

A: Yes, a mortgage can be obtained by people with all kinds of credit (Excellent, Great, Average, Below Average, and Poor Credit). Obviously, the rates will increase slightly as credit score get a little lower but a mortgage can still be obtained. Also, with a lower credit score you may be limited to a few less mortgage loan programs than you would with exellent credit. Sometimes compensating factors such as a lot of money put away in checking or savings accounts, 401ks, investments, etc..., good job time, low LTV (loan to value), low DTIs (debt to income ratios), and lower terms (15 year instead of a 30 year) may help to compensate somewhat for a lower credit score and qualify you for a little better rate.

Q: Can I get a mortgage after a bankruptcy?

A: You may still qualify for a home loan even if you have a prior bankruptcy. The best way to find out if you can qualify for a home loan after a bankruptcy is to meet with a loan officer and discuss your options. Be sure to bring all paperwork regarding your past bankruptcy so that your loan officer can match you with the best lenders to meet your needs.

Q: What is APR?

A: APR, or Annual Percentage Rate, is the effective rate that takes the lender bank's charges into consideration and express the total of all bank charges in the form of an interest rate. Because there are always other finance charges in addition to the note rate (the interest rate base on which payments are calculated), the APR is almost always higher than the note rate. The APR is one of the items required by the Truth-in-Lending to disclose to every potential borrower.

Q: What is PITI?

A: PITI, or Principal, Interest, Taxes (property taxes), and Insurance, is basically the cost of living in your particular home. PITI can also be expanded to include any private mortgage insurance and homeowners association fees or condo association fees.

Q: What is Lender Paid Mortgage Insurance (LPMI)

A: Lender paid mortgage insurance is a program in which the lender will pay the mortgage insurance in exchange for a slightly higher rate.

Q: Do you have the lowest rates?

A: We have loan programs to fit just about every situation with rates that are competetive with anyone. Playing the rate game in the mortgage world can get quite frustrating. Many lenders advertise rates that are simply not available just to get you to talk to them and get you in the process with them. The fact is that mortgage money that all lenders lend comes from the same sources. There is never one lender that will have significantly lower rates than another. Rather than choosing a lender based on whoever can shout out the lowest rate, why not choose on the basis of the loan officer's professionalism, experience and skill in finding a loan program best suited for your particular situation. Doing it this way will get your a proper loan program with a competetive rate and a borrowing process that is stress free.

Q. Can I buy a house with no money down or possibly even with no money out of my pocket?

A. Yes you can buy a home with 0 money down. There are many different types of 100% financing out there for home-buyers and even for first-time homebuyers. There are also programs that will allow you to finance the closing costs so that you will not have to bring any money to closing. Another popular way to not pay closing costs is to have the seller pay for your closing costs with a seller contribution. A seller contribution is something worked into the purchase price of the property where the seller may pay for some or all of your closing costs. Therefore there are many ways to obtain financing for a home purchase with no money down and/or no money out of your pocket.

Q. What is Loan To Value (LTV)?

A. LTV is the size of your loan in proportion to the value of your home. For example, if you are buying a home for $100,000, and you make a down payment of $10,000, then your loan amount would be $90,000. Your LTV would be 90% (the loan is 90% of the value). It is important to know that lenders will always use the lesser of the appraised value or the purchase price for the value. If you refinance, then the appraised value is used.

Q: Can I get a mortgage with bad credit (not so good credit, poor credit)?

A: Of course you can get a mortgage with bad credit. Consult with a licensed mortgage consultant to find out what programs are available for you and your maximum loan amount. Usually, the lower your credit score the higher your rate will be, however most mortgage professionals can provide you with a mortgage loan at maybe a little higher rate now, along with a plan on how to improve your credit so that within a couple of years you can qualify for the best rates available and the rates you deserve. Also, keep in mind that some of the closing costs may be tax deductible and that the mortgage interest is tax deductible too so even paying a little higher rate for a year or two will still have its advantages until you are ready to qualify for the best rates.

Q: What is a Good Faith Estimate (GFE)

A: A GFE is a prelimanary estimate of the closing costs and fees for your mortgage. When comparing a GFE between mortgage brokers be sure to have the Truth N' Lending (TIL) with you.

Q: What is a Truth N' Lending (TIL) statement

A: A TIL is used in connection with the GFE. A TIL gives you the total cost of a mortgage with the closing costs and fees included. A TIL will allow you to determine if a higher rate with low fees is better for you than a lower rate and higher fees, & vice versa.

Q: How big is an acre?

A: An acre is equal to 43,560 square feet. So if you are looking at buying a house that sits on 3 acres of land, that would be equivalent to 130,680 square feet, or a possible lot size of approximately 130 feet wide by 1000 feet deep.

Q. What are "impounds"?
A. Impounds are the part of your monthly house payment that cover Home Owners Insurance and Property Taxes.
This is calculated by taking your annual payment amount and dividing by 12.
Sometimes, for a higher rate, the lender will allow borrowers to pay insurance and taxes themselves. However, lenders prefer to collect these in monthly istallments and pay them when due. This ensures that these are paid on time and prevents tax leins or lapsing of insurance.
Typically, at closing, lenders will collect whatever is currently due plus 2 months extra for reserves or what should have been collected since the last due date for the insurance or taxes plus 2 months extra for reserves. You will always have this 2 months extra in reserves for as long as you have the loan. This allows the lender to pay your taxes and insurance on time even if you should pay your mortgage payment late.

Q: I am self-employed or I have steady income that is difficult to prove. Is there a mortgage for me?

A: Yes. Depending on your credit history, down payment, and several other factors your preferred Mortgage Professional may suggest a 'Stated Income' program

Q: What mortgage loan terms are available for me as a borrower?

A: You can choose almost any loan term that you desire. The most common loan terms are 5, 10, 15, 20, 25, 30 and now even 40 year home loan terms. Some lenders will still let you do the years in between these ones also, although it is not very common. The 40 year loan term is still relatively new to the market but the rest have been around for quite some time. Generally the lower the term you select, the lower the rate can be. The 30 year mortgage term is the most common loan term used for home mortgage financing.

Q: What is the best mortgage for me?

A: There are many mortgage options for a borrower today. We will assess your situation and provide the best options for you at that time. We have any program from a simple fixed rate mortgage, interest only, pay option arms, lot loans, construction, rehab, manufactured, commercial and many other options to fulfill your lending needs.

Q: What is PMI?

A: PMI, or Private Mortgage Insurance, is an insurance from a private company that is required on conforming loans where the borrower does not have a minimum of 20% equity in the home. PMI is an insurance that you, the borrower, pay for to protect the bank in case you default on your loan. Any time that you do not put down 20% for a purchase transaction or have at least 20% equity in a refinance transaction this is considered a higher risk to the bank and this is why they require this type of insurance.

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