Mortgage Basics

Best Home Loan Providers

One of the best ways to create success in a situation is to perform mental modeling. Pro athletes, navy seals, nobel laureates, successful CEOs and performance driven individuals use mental modeling to visualize high pressure, new situations before they perform them.

You might ask, what does all this have to do with mortgages? Good question. More than you might think. For a lot of borrowers, the mortgage process is new and can be daunting. And even for home buyers with previous experience, the home loan marketplace is constantly changing. Rates are tied to decisions made by the Fed and daily fluctuations in indexes like the LIBOR, the London InterBank Offered Rate. LIBOR is simply the interest rate that the world's leading banks charge each other to borrow money. It is used as the first step in calculating interest rates for various loans, including home loans, throughout the world. Mortgage rates change daily.

Additionally, the real estate market in today's world is competitive. The internet has given rise to the free flow of information, and many portals to access...

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Whether you are buying your first home, refinancing or looking to purchase another property, the mortgage world can feel like people are speaking a completely different language. From the acronyms to the specific documentation needed for your mortgage. Not to worry.

We have compiled a list of common terminology, so you can familiarize yourself with the vocabulary used when discussing your mortgage.

Preapproval

Preapproval is the process of receiving a letter from a lender, to approve the amount they will let you borrow for a home. Many times, this is the first step in the home buying journey. To learn more about the process and what is required visit our blog on Why you Should get Preapproved.

Loan Application

This is the form used to apply for a loan as a borrower. The lender will review details about your finances to determine whether they can accept the request to grant funds for credit.

Credit Report

The credit report is a statement that provides the...

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Have you started searching for that new place to call home?

You’ve scoured the internet for the perfect home. Taken drives through neighborhoods and pictured the new life you can build there? Before you start visiting all of the open houses, pre-approval needs to be added to the list.

What does Preapproval mean and how can it help you during your home buying journey?

Preapproval is much different that pre-qualification. Preapproval brings you much more power. This is the start of the process to qualify for a mortgage. A lender is now approving the amount they will let you borrow for a home.

This means that the lender will need access to specific financial information and access to your credit report. This will result in a hard inquiry on your credit report but should not affect your score too much, if you have a strong credit score. Once a lender has evaluated documentation, they will then approve a specific loan amount, which will help you set a price range for your new home.

These approvals usually last for a particular period of...

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Homebuying can be quite a stressful time and finding the funds for a down payment can add to this stress. Not to worry, there are many different ways you can fund your down payment. It is important to evaluate your assets and determine where you may be able to supply the funds from. There are many different ways to satisfy a down payment requirement, depending on what options you qualify for.

What is a Down Payment?

A down payment is the cash you’ll pay toward the purchase of your new home. The more you are able to put down upfront, the less you will have to borrow, allowing for lower mortgage payments. This is your contribution towards the initial ownership in the home and the lender provides the rest to purchase the property. Most lenders will require a down payment for a mortgage, with exceptions for VA loans and USDA loans that are backed by the federal government.

Sources of Down Payment

Sourcing your funds is key to helping you purchase your new home. Evaluating all of your options will help you determine funds...

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Credit Score Needed for Mortgage

One of the most commonly asked questions in the mortgage business is how a borrower's credit score will affect their home loan. Your credit score or your FICO score is a key factor in qualifying you for a mortgage.

The mortgage industry divides up credit into 20 point increments. In the mortgage business this is called “loan level pricing.” Each time you go up a level, you are offered better rate.

680 and above is considered good credit. 700 and up is better. 720 and above is considered excellent. A credit score of 760 and above will get you the best rate available from a lender.

The minimum credit score a borrower needs to qualify for a government insured loan is 580.

Mortgage Brokers and companies with access to a diverse list of products can serve clients with scores under 580. More traditional lenders will not offer mortgages to borrowers with credit scores under the 580 threshold.

So how can you check your credit score, and which FICO score will mortgage providers use?

When evaluating a borrower's, lenders use the...

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+ Why should I use a Mortgage Broker versus a Bank or Big Lender

  1. Mortgage Brokers are experts that provide mortgage services only, not checking accounts, or other financial products.
  2. Brokers have access to a Lender Network, and hundreds of loan products, giving the borrower many more options. These options can help the borrower get a better mortgage at a lower cost.
  3. Brokers don't spend millions of dollars per year on advertising, and these savings convert back to you in the form of the savings you will receive on your mortgage.
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