1 – What documentation will I need in order to get approved for a home loan?
- Loan application to be taken by your loan officer which is also knows as a 1003
- 2 most recent months bank statements
- Most recent quarterly 401K statement, if applicable
- For purchase transactions, a fully executed purchase contract
2 – What’s a FICO score?
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.
3 – If my credit scores are low, how can I raise them?
- 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
4 – What’s a rate lock?
A mortgage rate lock is a promise to you from the lender to hold a specific combination of an interest rate and points for an agreed upon time (typically 15, 30, 45 or 60 days) until you can close on your home. Locking in a rate protects you from unforeseen interest rate increases that can occur in the days or weeks leading up to closing, but conversely, if the rates fall, you will not be able to take advantage of the lower rates. Should discuss this with in detail with your loan officer
5 – What is an APR?
The annual percentage rate (APR) is an interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate on the mortgage because it takes into account points and other credit costs The APR is designed to measure the “true cost of a loan.
6 – Can my lender sell my loan?
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.
7 – What is Private Mortgage Insurance (PMI)?
Private mortgage insurance (PMI) protects the lender from the costs of foreclosure. You may be obligated to purchase PMI if you can’t make a sufficient down payment of at least 20%. By purchasing PMI, you will have access to a mortgage without having to make a large down payment, and the lender is insured in the event that you default on the loan.
The price of PMI is inversely proportional to the size of your down payment. The larger your down payment, the lower the cost of PMI will be.
8 – Why do I need a home inspection?
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.
9 – What is an appraisal?
An Appraisal is an estimate of a property’s fair market value. It’s a document generally required (depending on the loan program) by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property. The Appraisal is performed by an “Appraiser” typically a state-licensed professional who is trained to render expert opinions concerning property values, its location, amenities, and physical conditions.
10 – How long does it take for a loan to close?
This can vary generally most purchase contracts are written for 30-days. At M & M Funding we are able to close loans in 2 ½ weeks provided all parties are willing.