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Questions with answers:
A. The best place to start is with a mortgage lender affiliated with the Mortgage Bankers Association of America, such as First Security Mortgage Corporation. It’s natural to be at least a little bit nervous and maybe even confused, after all, you’re asking for more money than most people have ever seen in their life. By contacting a licensed Loan Originator at First Security Mortgage Corporation, we can help you explore and sort through all of the options to achieve home ownership.
A. The short answer: when you start thinking about buying a home. Scheduling your Pre Application Consultation now with a licensed Loan Originator at First Security Mortgage Corporation will help you to determine how much house you can afford and allow for suggestions that could make it easier to get the best mortgage for you. Another advantage is that you’ll already have a good relationship with your Loan Originator at First Security Mortgage Corporation when it comes time to purchase your home.
A. This is a common, yet very important question. Before you start looking for homes, you need to have some idea of what you can afford. Lots of people don’t even consider buying a home because they’re afraid they can’t afford it, but for many, home ownership is as affordable as renting – in some cases even more affordable. As a general guide, you can purchase a home with a value of two to three times your annual household income, depending on your savings and debts. However, you may be able to take advantage of special loan programs to purchase a home with a higher value. If you’d like to know exactly how much you can afford, schedule your Pre Application Consultation with a licensed Loan Originator at First Security Mortgage Corporation.
A. The terms Pre-Qualification and Pre-Approval are often confused with one another.
Pre-Qualification is the Loan Originator’s opinion of your maximum purchasing power under different loan options based on the income, savings, and credit history information you provide.
Pre-Approval is First Security Mortgage Corporation’s formal decision to grant a mortgage loan based on the verification of the details provided in your completed credit application and credit report before you’ve actually selected a home.
It is not necessary to have selected a property before you complete a Pre-Qualification or apply for a Pre-Approval.
After obtaining your Pre-Approval, you are in a better position to negotiate an offer to purchase a home. You, the buyer, have the increased leverage of a cash buyer, because your mortgage loan approval is already in place. The Pre-Approval letter clearly states that you are approved for the purchase of that home.
Q. What information will the lender ask for when I apply for a loan?
Ø Your full name, birth date, and social security number Ø Your current address and length of time you’ve lived there, and at your previous address Ø Your employment history and income for the past two full years Ø The verifiable source of your down payment and other assets Ø Your outstanding revolving and installment debt.
A. Lenders loan application questions will vary, but in general the information asked for will include:
Q. How do I know which type of mortgage is best for me?
Ø Your current financial picture; Ø How you expect your finances to change Ø How long you intend to keep your house
A. There isn’t a single, simple answer to this question. Only a licensed Loan Originator is qualified to evaluate your financial situation and match your needs with the best available type of mortgage. The reason you need to discuss your options with a mortgage lender is because the right type of mortgage for you depends on many different factors:
The best way to find the “right” type of mortgage for you is to discuss your finances, your plans and your preferences with your licensed First Security Mortgage Corporation Loan Originator.
Q. How much will I need for down payment?
A. It’s probably less than you think. Many homebuyers are surprised to learn that they may be eligible to purchase a home with ZERO down payment. For example, Veterans or those on active military duty can obtain loans with ZERO down payment and homebuyers eligible for USDA guaranteed loans may also purchase with ZERO down payment. For others, the down payment requirement will vary, from three percent of the home’s sale price and up. Some allowable sources of down payment are savings, tax refunds, retirement accounts or gifts from relatives and/or non-profit organizations.
Q. What does my mortgage payment include?
Ø A payment on the principal of the loan (that is, the amount borrowed) Ø A payment on the interest Ø A payment into a special account (called an escrow account) that your lender maintains to pay for things like your hazard insurance and property taxes. Ø A payment for mortgage insurance (for those required to maintain mortgage insurance).
A. For most homeowners, the monthly mortgage payment includes several components
These elements are commonly referred to as P.I.T.I. (Principal-Interest-Taxes-Insurance).
Q. What is the difference between the interest rate and the APR?
A. The interest rate is the rate at which you repay the mortgage loan. It determines the principal and interest component of your monthly mortgage payment. The APR is the actual cost of borrowing in the form of an annual percentage rate. It includes the interest rate, points, mortgage insurance, and other finance charges associated with the loan. Because of these charges, the APR is often higher than the interest rate. Simply stated, if there were no costs associated with obtaining your loan, then the interest rate and the APR would be the same.
Q. What is a Credit Score?
A. A credit score is the translation of your credit repayment history into a numerical value.
In order to streamline the decision making process, the mortgage lending industry utilizes credit scores generated by the credit bureaus. The score is seen as predictive of the borrower’s ability and willingness to repay the loan. Such scoring gives the lender the ability to give the borrower a rapid credit decision by using automated underwriting software currently available. However, lenders do not base their entire credit decision solely on the credit score. Lower credit scores usually trigger a real live underwriter review of the loan application and credit report before a final decision is made.