Yes. An active secondary mortgage market exists in which lenders and investors buy and sell pools of mortgages. If another company purchases your mortgage, it assumes all terms and conditions. A new lender cannot change the rate, payments, or any other aspect of the agreement. You will only have to send payments to the new loan servicer.
How important is the real estate location…really?
Location is key. Factors like crime rate, public school ratings, daily commute times to surrounding metropolitan areas, as well as the vicinity to local parks, libraries, swimming pools, sport arenas, churches, restaurants and shopping centers are essential in the price valuation of real estate. It’s best to consider the location as much as the condition of a home when you are looking to make a purchase.
My credit report is wrong. Can I report errors?
Yes, errors and fraud should be reported to both the credit reporting agency that provided the report with the error or fraud, as well as the creditor that provided the erroneous or fraudulent information to the credit reporting agency. At this time, Experian and Equifax are only accepting disputes via their online forms. TransUnion handles disputes by phone, standard mail and an online form. We have provided you with information below to access these agencies per myFICO.com.
2 Baldwin Place, P.O. BOX 1000
Chester, PA 19022
My credit scores are low. How can I raise them?
Raising a credit score is not always easy and not something that can be done overnight. There are several credit best practices that will raise your rating over time:
- Pay your bills on time. This is extremely important. Collections and late payments can lower your credit scores.
- Reduce your credit balances. Maxed out credit cards will lower your credit score.
- Don’t apply for credit often. This reflects poorly on you and your rating.
- Establish credit history.
Pre-qualified or pre-approved — what’s the difference?
Pre-qualification is a determination of the loan amount you’re likely to receive. It is not a guarantee of approval. To obtain pre-qualification, you usually are interviewed by a licensed loan officer who determines the pre-qualification amount. You will be issued a letter with this information that you can present when making an offer on a home. It’s important to understand that pre-qualification does not imply any obligation from the lender that you will be approved.
Pre-approval is more thorough than pre-qualification. To be pre-approved, you must submit an application and verify your credit and financial history. After you receive your pre-approval certificate, you’re in a stronger position to close earlier and negotiate a better price. It’s highly recommended that you seek pre-approval if you are shopping for a home.
Should I move my finances to improve my chances for loan approval?
Although it may seem intuitive to move money around in accounts to show financial strength, this is actually not advisable. All facets of your income will be considered when applying for a loan. It’s best not to make any financial changes that could alter your eligibility, especially placing money from untraceable sources into your accounts. Additionally, don’t change your employment during the home loan process. Steady employment can be a factor in determining loan qualification. Lastly, large purchases such as cars, appliances or furniture can negatively impact the outcome of the loan.
Should I pay points?
It depends on your particular situation. Three major factors should be considered when deciding whether to pay points:
- How much you can afford to pay upfront?
- How long do you expect to make payments on your mortgage?
- What is the length of your loan, and how long do you plan to live in the home?
Many people looking for a long-term mortgage opt to pay points to ease their monthly payments. People looking at a mortgage with a shorter term or looking to stay in the home for a shorter period of time often opt to make a larger down payment instead of paying points.
What are points?
Points are prepaid interest that you can pay up front. You can pay points to get a lower rate on both fixed rate and adjustable rate mortgages, but the points charged to reduce the rate may vary depending on the type of loan. One point is equal to 1% of the mortgage amount. (Example: $100,000 mortgage amount = $1,000 point)
What do I do if I want to change jobs before I go to settlement?
Talk to your loan officer if there is going to be a change in your employment. It’s best to have steady employment for at least 2 years and verifiable income when applying for a loan.
What do I do if I want to make a large purchase before I complete settlement?
Talk to your loan officer before making a large purchase. Moving money around in your accounts or increasing your debt to income ratio could affect your loan.
What do you look for when considering a loan application for approval?
After selecting and applying for a loan, the approval process begins. For approval, we must verify your credit, employment history, assets, property value, and anything else required by your particular circumstances.
What documentation will I need to provide in order to get my loan approved?
- Form 1003 — The residential loan application — including the attached Fair Lending notice, loan info sheet, and credit authorization. Note: Do not use whiteout on this paperwork. Mistakes should be crossed out and initialed.
- Copies of W-2s or tax returns for the previous 2 years.
- If you own rental units, provide the most recent rental agreement and tax returns for previous 2 years.
- Your last 3 bank statements along with the most recent statements for any mutual funds, IRA/401(k), or stock accounts.
- Settlement agreement and divorce decree (if applicable).
- Letter explaining how you plan to utilize refinance proceeds if you’re seeking a cash-out refinance.
- Non-U.S. citizens must present their Green Card or H-1 or L-1 visa.
- If you’ve filed for bankruptcy, present a schedule of creditors, discharge notice, and filing.
- If you’re applying for a second loan, include the first mortgage note.
These documents may not be all-inclusive, but by having these on hand, you will expedite the application.