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MORTGAGE QUESTIONS

Q: What is the difference between a mortgage lender and a broker?
A: Banks (commercial and savings and loans) and credit unions may be local, regional or national mortgage lenders. They usually have retail and wholesale departments. The retail department makes loans directly to home buyers. The home buyer pays retail fees to the lender for that loan. Wholesale departments often offer interest rates and processing fees to brokers that are lower than the retail price. Mortgage brokers tend to be local sources of home financing. Most brokers work with a variety of wholesale lending sources to search for the best product and rate for the home buyer. In the final analysis, when all fees are calculated into the loan cost, the borrower is likely to pay about the same for the loan on the retail or the wholesale side. The advantage of using a broker is that the shopping is done for the home buyer.

Q: What are the most important items to compare from lender to lender?
A: When comparing loan programs, particular attention should be paid to interest rates and closing costs (calculated within the Annual Percentage Rate (APR)). Shop around for the best interest rate and the lowest closing costs available. If you have decided on an ARM, compare not only start rates but rate caps (price ceiling) as well.

Q: How much of a mortgage can I qualify for?
A: Generally, lenders prefer that your housing expenses (including mortgage payment, insurance and property taxes) are less than one-third of your total gross income. Debt ratios (total debt divided by gross income) should not exceed 38%. This loosely translates to mortgage affordability of two-and-one-half times to three times gross household income. Although these ratios are fairly widely accepted parameters in the mortgage industry, compensating factors, like the amount of a down payment and credit scores, are also taken into account.

Q: How much is normally required for a down payment on a home purchase?
A: There are many programs available with low or no down payment required.

Q: Should I get pre-approved?
A: Most sellers require that a pre-approval accompany an offer. M and P Mortgage offers pre-approvals free of charge and can pre-approve you over the phone.

Q: What does it cost to apply for a mortgage?
A: M and P does not charge an application fee. So there is little risk for the borrower to find out what they kind of purchase or refinance they can qualify for.

Q: What information is needed at the time of application?
A: This may vary depending on the type of loan you choose. M and P typically requires the following items for purchases and refinances: most recent 2 pay stubs from each borrower; W-2s for the last two years. Home buyers will also need; documentation of the source of your down payment and closing costs and copies of the signed Purchase and Sale (P&S) Agreement;.

Q: How long does it take to close on my loan?
A: Most closings occur within 21-30 days after the application has been submitted.

Q: When can I lock in an interest rate?
A: You can lock in an interest rate when you submit the application or anytime during the application process; up to three business days before the closing.

CREDIT QUESTIONS

Q: What is a credit report?
A: A credit report is a file that contains information on how you pay your bills, where you live and work, and any information that is on public record, such as bankruptcy, judgments, tax liens and lawsuits. Your permission is required before a lender can order a copy of your credit report. In order to obtain the report, they will request your name, address and social security number.

Q: What are credit scores?
A: Many lenders rely on FICO (Fair Isaac Company) scores to determine the credit worthiness of a potential borrower. These scores appear on your credit report. The FICO score is based on a mathematical model and is calculated by the credit reporting agencies based on the amount of current and historical credit, payment history, late payments, etc. Lenders frequently use an average of the FICO scores to determine credit worthiness.

Q: How long can unfavorable information remain on my credit report?
A: Most derogatory credit comments remain on credit reports for seven years. Exceptions are bankruptcies, which can appear for 10 years, and some lawsuits, which can remain on a credit report until the statute of limitations runs out.

Q: What can I do if incorrect information appears on my credit report?
A: Contact each credit reporting agency or the provider of the credit information immediately. Credit reporting agencies are required to investigate disputed items you question within 30 days. If the information on your credit report is incorrect, you will receive a copy of the investigation results in writing along with your corrected credit report.

M & P Mortgage offers...

Debt Consolidation

VA Loans

Full Service Mortgage Company in Maryland