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Frequently Asked Questions
1. What are “Fannie Mae”, “Freddie Mac” and “Ginnie Mae”?
“Fannie Mae” stands for Federal National Mortgage Association and deals in Federal Housing Administration (FHA) and Department of Veteran Affairs (VA) loans as well as conventional loans. Freddie Mac is the Federal Home Loan Mortgage Corporation and is concerned with convertional loans. Ginnie Mae is the Government National Mortgage Association dealing with FHA and VA loans. These agencies do not deal directly with the public but do business through approved mortgage companies (mortgage bankers).
2. What kind of information will I have to provide?
Since the lender is going to assess their risk of loaning you money, the lender will need to find out and document everything they can about you and the property. Be prepared to provide employment information, current loan info. (If you are re-financing), a cash trail, and property information, including the sales contract. (Purchase)
3. Is my information sold or used by other Internet companies?
Absolutely not, we will never sell your information.Your information is secured with us.
4. How much loan can I qualify for?
You can usually obtain a mortgage valued at between two and three times your annual household income, assuming you have an average debt load.
5. What if I have had credit problems?
You will need to explain the circumstances. If you have overcome the problem and kept up with your obligations on a timely basis for a year or more, most lenders will accept your mortgage application. However, if you believe you have a possible credit problem, please contact us to discuss it. We may be able to help.
6. What is the difference between a conventional loan and an FHA loan?
A conventional loan requires you to place a down payment of between 5% and 20% of the selling price of the home you want to buy. However, with loans insured by the Federal Housing Administration (FHA) you can qualify for a mortgage with as little as 2.5% down. Loans guaranteed by the Department of Veterans Affairs (VA) require no money down.
7. What is the difference between fixed rate mortgages and adjustable rate mortgages?
The Adjustable rate mortgage (ARM) loan offers an interest rate that is adjustable throughout the entire life of the loan, and down payments change accordingly. Lenders generally charge lower initial interest rates for ARMs than for fixed-rate mortgages.If interest rates remain steady or decrease, ARM loan could be less expensive over a long period of time than a fixed-rate mortgage.
8. What happens at closing?
This is also called the “settlement”. The buyer, seller and lender, or its agents, meet and legally transfer the property and all associated funds.
9. How often do I have to make mortgage payments?
This depends on the lender you choose as you may select from monthly, bi-weekly or weekly payments.
10. What happens if I’m late with a payment or miss a payment?
Continued delinquency (late payment) or defaulting on your mortgage (failing to make one or more payments) can lead to foreclosure, or judgment against you on the note for the amount owed.
11. What if I want out of my mortgage?
You may pay off the loan prior to the end of the term. Some mortgages do have a prepayment penalty, but many do not. Ask your lender or broker about the program you are applying for.
12. What is title insurance? Why do I need it? Doesn’t the seller pay for it?
Title Insurance is an “insurance” against loss resulting from defects of title to a specifically described parcel of real property. “Defects” may run to the fee (chain of title) or to encumbrances. “Title” is evidence one has the right to possession of a specific parcel of real property.
13. Why do I need mortgage insurance?
Lenders require mortgage insurance on all loans that exceed 80 percent of the purchase price. Therefore, mortgage insurance makes it possible for home buyers lacking 20% down to purchase a home with as little as 5 percent down.
14. What does mortgage insurance do?
Private mortgage insurance protects a lender if a home owner defaults on a loan. Lenders generally require mortgage insurance on low down payment loans because experience shows that borrowers with less than 20 percent invested in a house are more likely to default on a mortgage. Because the mortgage insurance company shares the risk of foreclosure with the lender, the lender is willing to lend you money with a significantly smaller down payment. Mortgage insurance is unique compared to other types of property or life insurance purchased by a home buyer. It should not be confused with credit life insurance, a policy that repays an outstanding mortgage debt upon the death of the borrower who holds the insurance policy. Private mortgage insurance is available on a wide variety of mortgages, including fixed and adjustable-rate loans.With the wide variety of conventional loans available in the marketplace, the borrower has the freedom to choose the type of loan that best suits his or her needs. Private mortgage insurers use underwriting guidelines similar to those of most lenders when evaluating a borrower. Because both use similar guidelines, if the lender approves the buyer, the odds are the mortgage insurer will as well.