What is Mortgage Insurance?

It protects the investors of mortgage-backed securities from loses if a mortgage loan goes into default.

Am I required to pay Mortgage Insurance?

For conventional loans with and LTV greater than 80% you will be required to have mortgage insurance. It can be removed once the LTV drops below 78%, but it will not happen automatically. You must ask for it. FHA loans requires mortgage insurance regardless of the LTV. We have programs that do not require mortgage insurance; however, you will pay a higher rate.

What are some other cost I might incur?

Title Insurance, escrow, tax fees, appraisal, processing, underwriting, flood cert, notary fee, etc. You will receive a Loan Estimate that list all fees associated with your loan.

What is an Appraisal Waiver?

Only for Conventional loans. Sometimes we can get an Appraisal Waiver, meaning you do not need an appraisal to close the loan, saving you time and money. Certain restrictions apply. Not everyone will qualify.

Why do you need to pull credit?

With any type loan, auto, home, etc. even some employers look at your credit score. It is used to determine what loan programs you qualify for. Your credit score also determines what the interest rate is. A better score 740 or higher will help you get a lower rate.

How can I increase my credit score?

Many times, we see a borrower whose credit score is only a few points below qualifying. It may be as simple as paying down a credit card. We can help you improve your credit score, and we do this at no cost to you.

What is a FICO score?

Fair Isaac Corporation created the FICO scoring system in the 1950’s. Today it is the standard used by lenders. It’s not just banks and mortgage lenders the rely on your credit score to help make important credit decisions. Landlords, employers, insurance companies, and even cell phone and other utility companies all utilize credit scores to help determine their business and credit relationships with consumers.

How does a mortgage lender use my Credit Score?

Mortgage lenders pull what is called a tri-merge credit report. This means they pull all 3 credit bureau scores. They are looking at the middle of the 3 scores. In the event there are only 2 scores they look at the lesser of the 2.

What is LTV?

Loan to Value, calculated as a percentage. Loan Amount divided by the appraised value.

Loan amount / Value
(400,000 / 500,000 = .80) .80 x 100 = 80% LTV

What is DTI?

Debt to Income ratio, calculated as a percentage. There are 2 calculations front end and back end. The front end is the total mortgage liability, principle, interest, hazard insurance, taxes, mortgage insurance and HOA.

The back end is the total of all debt, front end and all other liabilities, credit cards, auto loans, etc.

Total Debt / monthly Income
(2896 / 7500 = .386) .386 x 100 = 38.60% DTI