home loan info
Home Loan InformationBefore shopping for a home, you should get pre-approved by our approved lender. Pre-qualification typically is based on an in-file credit report and a loan application. Pre-approval is based on a hard copy credit report, verification of employment, income, and funds to closes, and back up documentation required by your particular loan program. Any conditions for loan pre-approval should be satisfied during this time.
The following is a list of the different types of loans:
Fixed Rate Loan The interest rate remains the same throughout the life of a loan. Fixed rate loans usually are available for terms of 15, 20, 25 or 30 years.
Adjustable Rate LoanThe interest rate can adjust during the life of the loan. The adjustable rate mortgage (A.R.M) can be designed to adjust as often as every year or may not adjust for 3-10 years. All adjustable rate loans have an annual cap, which means they cannot adjust more than that each year, and a life cap, which means they cannot adjust more than for the life of the loan. Some adjustable rate loans have a conversion clause allowing you to convert to a fixed rate loan at the time of the first adjustment.
FHA LoansThese types of loans are available in many programs similar to Conventional Loans. Your Loan Officer can recommend a program that will work best for you. They allow for lower credit scores and FHA also allows a higher debt ratio.
VA LoansThese types of loans are available to qualified veterans who have VA entitlement. For qualified veterans the benefit is the ability to obtain a 100% loan at a rate slightly higher than conventional. Higher debt rations are allowed.
Credit ScoresAll lenders use credit scoring for conforming loans, and your credit score will affect the type of loan and the terms available to you. Keep in mind that there will be other underwriting requirements. Because the three reporting agencies report differently and may update at different times, your score may vary from one agency to another. Typically, the lender will use your middle score.
It would be a good idea to order a copy of your credit report in advance of applying for a loan if you are unsure of your credit rating. This will enable you to correct any mistakes or pay off any old debts and have your credit report updated. All credit reported remains on the report for 7 YEARS from the last date of activity, except for bankrupcies which are on the report for 10 YEARS. The last activity is any change reported on your account, including your last charge, your last payment, or the date you paid off your balance.
You will find a variety of offers for purchasing an online credit report. Our Approved Lender offers this service for FREE.
Here are some TIPS:
1. Always make payments on time. Delinquent accounts in the most recent 24 months have the most weight on your scores.
2. Avoid inquiries (loan shopping). Excessive inquiries may diminish your credit rating.
3. Avoid store accounts, including 90 day "same as cash" offers, as most stores sell their accounts to finance companies, and this will not look as favorable as a bank credit card or loan.
4. Avoid balances of more than 35% of your available credit line on your cards. Note: It is not a good idea to consolidate all of your debt on one card. A lower balance and longstanding good payment history on several cards is better than one larger balance.
5. Legal actions such as judgements (court decisions), collections, and bankruptcies harm credit ratings.
6. Check your credit reports regularly for accuracy. If you find a mistake, be sure to have it corrected in writing and check to make sure it has been corrected.
7. Be sure to get a commitment from the creditor that your date of activity will not be changed at the time of the pay off when you you have paid off an old debt. Otherwise, it may remain on your credit for 7 years from the time of payoff. NOTE: Paying off a deliquent account will not remove this bad credit from your report. It will remain for 7 years from the date of last activity, but will show that it has been paid off.
8. If you decide to pay off and close an account, be sure that it has been reported that the account was closed at the consumer's request. Closing debts can have an adverse effect on your credit scores. You should seek professional advise prior - our preferred lender does this for FREE.