The Most asked Mortgage Questions

There is a myth that you need 20% for a down payment. This is not true, first-time home buyer programs (FTHB) require as low as 3% and there are special programs that may require even less – as low as 0%.

Mortgage insurance, also known as private mortgage insurance (PMI), is a type of insurance that protects the lender in case a borrower defaults on their mortgage. It’s usually required when a borrower makes a down payment of less than 20%.

The cost of mortgage insurance depends on several factors, including the loan program, type of insurance, credit score, loan-to-value ratio, and more.

With conventional lending mortgage, mortgage insurance automatically falls off with your loan to value reaches 78%. You can request that mortgage insurance be removed when there is 20% equity. It is important to remember that mortgage insurance never falls off an FHA loan. The only way to remove mortgage insurance from an FHA loan is to refinance into a conventional loan.

Many self-employed borrowers write off practically everything on their tax returns so they can minimize their tax liability, but they have plenty of cash and cash flow to service a mortgage successfully.

By reviewing 12-24 months of business bank statements, a lender can determine income allowing a borrower to qualify for a home loan.

The answer to this question is a mathematical equation. We need to ask a few questions: How much longer will I stay in my home? What is the monthly savings? And what is the cost of the refinance?

For VA and FHA loans, refinances can be streamlined as long as there is .5% decrease in mortgage interest rate. Income documents and appraisals are generally not required.

If your account is escrowed for property taxes, your monthly mortgage payment will include funds to pay the taxes. Funds are held in an escrow account and property taxes are paid from the escrow account when they are due. If your account is not escrowed for property taxes, you are responsible for paying the taxes by the due date.

Unfortunately, the three credit bureaus sell your information to other mortgage companies and, from what I gather, they’re sold to other agencies as well.

The information that companies can obtain from trigger leads includes a consumer’s name, address, contact information and financial information like FICO credit scores and credit balances.
You can alleviate that by going on the Do Not Call Registry https://www.donotcall.gov/, but it takes
sometimes a month for the Do Not Call Registry to catch up.

You can also register with OptOutPrescreen.com, an official consumer credit reporting website that processes requests from consumers to opt out.

FHA loans generally accept modest credit scores: Borrowers with lower credit scores or credit challenges are frequently approved with an FHA loan. Conventional loans generally favor higher credit scores: Borrowers tend to need moderate to high credit scores to receive opportune loan terms and rates.

Sometimes, it will make sense to use an FHA loan as borrowers can be approved at higher loan amounts depending on the credit score.

With a conventional loan, gift funds from a family member are allowed for some or all of your down payment, closing costs and reserves.

Remember, the acceptable sources are limited to family members and romantic partners, and gift funds can’t be used on investment properties. When an FHA loan, gift funds are allowed from family friends as well.

You’ll need to provide a gift letter with information including the gift amount, the donor’s contact information and relationship to you and the donor’s statement that repayment isn’t expected. Borrowers must also provide evidence that the donor has sufficient funds or proof of transferred gift funds.

VA Loans allow for 100% financing as long one/ both borrowers are approved through the VA with a Certificate of Eligibility (COE.) Remember, the veteran(s) still need to have the funds for closing costs. There are ways for sellers to pay for the Veterans closing costs and this is a conversation you should have with your real estate agent and loan officer when making an offer. Thank you for your service!