Mortgage Information

There are plenty of websites that will give you quality mortgage information. I have put some of the most common questions I have asked of me below.

Pre-Qualification Letter, Pre Approval Letter

A Pre-qualification Letter is something I am going to ask you about before we ever open a door. Most sellers - at least my sellers - ask that I only show their house to people that can actually afford to buy it. This letter indicates how much a lender will let you borrow for a home mortgage loan. To get a Pre-qualification letter takes about 30 minutes and can even be done over the telephone in most cases.

A Pre-Approval Letter is a bit different. It is a more in-depth process where you will bring pay stubs and records into the lender. There may be a fee for a pre-approval letter, this is because the lender will actually research and verify the borrower's credit, income, employment status, liabilities and assets in order to determine credit worthiness.

A per-approval letter is a plus for both buyers and sellers. It tells a Seller that there is a serious, ready willing and able buyer looking at their property. It gives a buyer the edge over other buyers if other offers are presented.

Closing Costs are fees for various services related to a homes sale. There are a variety of closing costs. As a rule of thumb you can use a figure equal to 6% of the price of the home.

Credit Score: In order for lenders to judge your ability for a loan they will want to know your credit score. In simple terms your credit score is like a grade on a report card. Higher is better. The higher the score the more trustworthy you are considered to be. Lenders will 'pull your credit' using your personal information like address, social security number and address. The most common is the FICO score. For most mortgages in this market - you will need to have a credit score of over 620 to be considered for a mortgage. There are exceptions.

PMI (private mortgage insurance) is nearly always required for borrowers that put less than 20% down on a conventional mortgage. PMI provides the mortgage lender with compensation if the mortgage goes into foreclosure.

Some lenders will waive the PMI requirement if the buyer accepts a higher interest rate on their loan. This may be a good thing because interest is usually tax deductable where PMI is not. Check with your tax accountant first.

Regardless PMI payments do not last the full term of the loan. As soon as the balance reaches 78% of the homes original value and the borrow is current on payments it is cancelled automatically. This is thanks to the Homeowners' protection act

Cabot AR homes for sale...

I am not a mortgage guru, I don't play one on TV. I like to think I keep up with things, but I am definitely not the end all when it comes to mortgages.

Sit down with your lender, your financial advisor and/or your CPA and ask questions and get the answers that make sense to you. There are many choices in home financing.

I keep a short list of mortgage people I like to work with.  My criteria is based on my dealings with them in the past, the way they attend to detail, how they treat my clients and above all else how they handle themselves in a crunch.  My theory is "stuff" happens.  I like to know that I can count on the mortgage people I recommend to take action and help my clients through the mortgage process.

Pamela Burt

Coldwell Banker RPM