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Buyers
Can a home depreciate in value?
Generally, real property never depreciates in value, or more so, it is not very common for property to depreciate. This is why it's a great investment. Make sure you carefully consider location and community when choosing a home, it can effect the homes future value greatly.
If you are in a newly developed area, do some research on the construction of the surrounding areas being developed to determine if they may effect your homes value.
What are closing costs?
Closing costs are expenses incurred by buyers and sellers in transferring ownership of a property.
What is a contingency?
A contingency is a provision included in a sales contract stating that certain events must occur or certain conditions must be met before the contract is valid.
What is a debt-to-income ratio?
A debt-to-income ratio is the percentage of a person's monthly earnings used to pay off all debt obligations.
What is title insurance?
Title insurance is insurance that protects the lender and buyer against any losses incurred from disputes over the title of a property.
Generally, real property never depreciates in value, or more so, it is not very common for property to depreciate. This is why it's a great investment. Make sure you carefully consider location and community when choosing a home, it can effect the homes future value greatly.
If you are in a newly developed area, do some research on the construction of the surrounding areas being developed to determine if they may effect your homes value.
What are closing costs?
Closing costs are expenses incurred by buyers and sellers in transferring ownership of a property.
What is a contingency?
A contingency is a provision included in a sales contract stating that certain events must occur or certain conditions must be met before the contract is valid.
What is a debt-to-income ratio?
A debt-to-income ratio is the percentage of a person's monthly earnings used to pay off all debt obligations.
What is title insurance?
Title insurance is insurance that protects the lender and buyer against any losses incurred from disputes over the title of a property.
Mortgages
How long does the loan process take?
The number of days from application to closing can vary from just a few days to 45 or more days, depending on a number of factors. Some of the factors include: loan type, whether an appraisal is needed, and title clearance. Time delays also occur if outside sources or the borrowers do not promptly provide documents to the lender.
How much time will it take to close my loan (sign the loan documents)?
Generally, the process takes as long or short as the borrower wishes. Explaining and signing the documents takes approximately 30 to 45 minutes. However, the borrower may choose to sign the documents and be on his/her way or ask a number of questions and spend more time. Closings may also vary from closing agent to closing agent.
Is there a minimum credit score?
This answer depends largely upon the type of mortgage you are trying to obtain. For a USDA no money down loan the credit score must be 640 or higher. The most attractive and most common type of mortgage financing is FNMA & FHLMC also known as agency paper. To get an agency approval, the rumored acceptable credit score is 620. This can vary widely depending on other factors when underwriting the buyer (down payment, income, liquid assets...). To offer a range, consider the following: below 620 is poor, 620-650 marginal, 650-680 nothing special, 680-700 fairly good, 700-720 good, 720-750 very good, above 750 is excellent. Many loans are closed every day with credit scores less than 620. More than likely they are not on agency paper. Alternatives to agency paper are government loans (FHA & VA) and sub-prime money.
Should discount points be paid to lower (buy down) an interest rate?
This question is best answered after careful consideration of your own personal financial goals. Buying down the interest rate (paying points on the mortgage - one point is one percent of your mortgage amount) may not be in your best interest. Here are some reasons why:
Mortgage interest paid is tax deductible in most cases (seek the advice of an accountant or the IRS).
The funds are no longer available to invest, save or use (ie. purchase an IRA, pay off credit card debt at a higher rate, etc.)
Falling interest rates can be taken advantage of sooner if discount points are not paid to buy down the interest rate (the original interest rate was higher).
In the past, if a consumer bought down the interest rate and then refinanced (buying down the rate again), it is possible not enough time will have elapsed to recover the |buy down| amount through the reduced monthly payment. This also occurs if the consumer sells the home before recovering the |buy down| amount.
Not only does the amount paid in discount fees (buy down amount) need to be recovered, the |time value| of the money spent or its |present value| also needs to be recovered. Present value is the income you could have earned or the satisfaction you could have received through alternative use of your money. Remembe to consider the tax consequences of your ultimate decision.
Individuals should do what best fits their own personal situation and goals.
What is a lock in?
A lock in guarantees a certain interest rate for a certain period of time.
What is Pre-approval or Pre-qualification?
These are similar terms thrown loosely around by many loan officers. They essentially mean that a mortgage professional has reviewed your qualification ability from a credit, income, debt obligations, and assets available for the purpose of getting a home mortgage.
The number of days from application to closing can vary from just a few days to 45 or more days, depending on a number of factors. Some of the factors include: loan type, whether an appraisal is needed, and title clearance. Time delays also occur if outside sources or the borrowers do not promptly provide documents to the lender.
How much time will it take to close my loan (sign the loan documents)?
Generally, the process takes as long or short as the borrower wishes. Explaining and signing the documents takes approximately 30 to 45 minutes. However, the borrower may choose to sign the documents and be on his/her way or ask a number of questions and spend more time. Closings may also vary from closing agent to closing agent.
Is there a minimum credit score?
This answer depends largely upon the type of mortgage you are trying to obtain. For a USDA no money down loan the credit score must be 640 or higher. The most attractive and most common type of mortgage financing is FNMA & FHLMC also known as agency paper. To get an agency approval, the rumored acceptable credit score is 620. This can vary widely depending on other factors when underwriting the buyer (down payment, income, liquid assets...). To offer a range, consider the following: below 620 is poor, 620-650 marginal, 650-680 nothing special, 680-700 fairly good, 700-720 good, 720-750 very good, above 750 is excellent. Many loans are closed every day with credit scores less than 620. More than likely they are not on agency paper. Alternatives to agency paper are government loans (FHA & VA) and sub-prime money.
Should discount points be paid to lower (buy down) an interest rate?
This question is best answered after careful consideration of your own personal financial goals. Buying down the interest rate (paying points on the mortgage - one point is one percent of your mortgage amount) may not be in your best interest. Here are some reasons why:
Mortgage interest paid is tax deductible in most cases (seek the advice of an accountant or the IRS).
The funds are no longer available to invest, save or use (ie. purchase an IRA, pay off credit card debt at a higher rate, etc.)
Falling interest rates can be taken advantage of sooner if discount points are not paid to buy down the interest rate (the original interest rate was higher).
In the past, if a consumer bought down the interest rate and then refinanced (buying down the rate again), it is possible not enough time will have elapsed to recover the |buy down| amount through the reduced monthly payment. This also occurs if the consumer sells the home before recovering the |buy down| amount.
Not only does the amount paid in discount fees (buy down amount) need to be recovered, the |time value| of the money spent or its |present value| also needs to be recovered. Present value is the income you could have earned or the satisfaction you could have received through alternative use of your money. Remembe to consider the tax consequences of your ultimate decision.
Individuals should do what best fits their own personal situation and goals.
What is a lock in?
A lock in guarantees a certain interest rate for a certain period of time.
What is Pre-approval or Pre-qualification?
These are similar terms thrown loosely around by many loan officers. They essentially mean that a mortgage professional has reviewed your qualification ability from a credit, income, debt obligations, and assets available for the purpose of getting a home mortgage.