RatesAreHot.com made it q…

RatesAreHot.com made it quick and EZ for me to prequaify for the home of my dreams!! I just want to take the time to say Thank you!

What is a credit Score?

First of all if you do not know what your credit report looks like please visit www.annualcreditreport.com and obtain a copy of your credit report.  Of course they will give you your report only and not your scores.  You will have to pay for the scores however, they will send you a free copy of your existing current report and you can pull it once a year through this company.  You should know your scores and you should know how your creditors are reporting you to the 3 major bureaus.  Let’s talk about the 3 major bureaus.  There are 3 major credit bureaus in the United States who have relationships with millions of creditors across the country and this is why everyone has 3 scores because your creditors (such as your Mortgage, car, installment loans, visa, mastercard, etc…) are reporting you.  These millions of creditors will report how your paying your bills to these 3 major bureaus they also report your address, date of birth, etc….  The creditors that I mentioned above do not always report to all 3 bureaus sometimes they only report to two bureaus.  Who are the 3 credit bureaus?  Let’s talk about who these bureaus the first one is a company called TU which stands for Transunion, 2nd one is Equifax which you see all over the internet, and than there is Experian.  There will be times where say for example your visa company will only report to Equifax but your Toyota dealer that you have your car payment with will report to Transunion and your Mastercard reports to Experian.  As you notice the creditors are not reporting to all 3 bureaus just to 1 bureau.  When you are applying for a mortgage or any other line of credit you really should know what your credit report looks like and what your scores are I cannot stress that enough.  When you are applying for a mortgage or prequalifying for a mortgage the mortgage company will pull your credit report and take the middle of the 3 scores and rate you.  For example, if you have a high score of 789 a middle of 760 and a low of 723 the mortgage company lender, broker or banker will use the middle scores which is the 760 when you apply.  People ask all the time if their high score will get them a better mortgage interest rate and of course it will but remember there will be add on to your rate or the pricing of your mortgage interest rate if your scores are below 720.  That is why it is so important to know your credit score.

Planning is key to buying a home!

The key to buying a home is in the planning.  In order to make the entire home buying purchase successful you need to have a plan.  You should try to have very little bills as possible.  If you have credit cards pay them off or pay them down as much as you possibly can.  However, don’t close them out completely just pay them down or pay them off.  The least amount of debt that you have going into the home buying process the better.   In order to prequalify for a mortgage what you would need to do is take your “New” monthly principal, interest, real estate taxes and homeowners insurance and multiply that by your gross monthly income.  This number can not exceed 28%.  This would be called your housing expense ratio.  Another important number to know is your debt to income ratio.  What you need to do here is take your total monthly debts including mastercard, visa, car payments plus your new mortgage payment including principal, interest, real estate taxes and insurance and divide that by your gross monthly income.  This number cannot exceed 36%.  Most of the time the mortgage underwriter will allow this number to go up to 41% however, only if there are compensating factors such as a consistent and past history of overtime or bonuses.   Everyone’s situation is different and unique that’s why it is extremely important to go into the homebuying process with very little liabilities and lots of assets.

Get the Most Benefit Out of Refinancing Your Mortgage

In order to get the most benefit from refinancing your mortgage you should continue to make your mortgage payments every month and hold out as long as you can in order to build up enough equity so that your loan to value remains below 80%.  If your loan to value is over 80% the mortgage company will charge you PMI which is private mortgage insurance. Private Mortgage Insurance only covers the costs incurred to the mortgage lenders in case you default.  Private Mortgage Insurance is charged monthly and can turn out to be a hefty number when it is added to your monthly mortgage principal and interest.  Alot of timesthe borrower’s think that PMI is helping them but it’s not it only helps the mortgage lender who is refinancing your mortgage.  In order to figure out whether or not you need PMI is quite simple…. all you have to do is take your balance for example let’s say the balance of your mortgage is $150,000 and divide that by your value.  So, in this case let’s say your value is $300,000.  In this case your loan to value would be 50% which is less than 80% so in the above case you would not have to pay PMI. 

“If you do what you’ve…

“If you do what you’ve always done, you’ll get what you’ve always gotten.”
Anthony Robbins

“The Mortgage Loan Process”

Whether you are applying for your first home mortgage loan or your fifth home mortgage loan you need to know what to expect.  Most first time borrowers have no idea what to do first and here is where I am going to explain to you how the mortgage loan process works.

1.  You need to be prequalified for a mortgage.  You need to talk to a specialist in the mortgage field.  Somebody that is experienced and knows what they are talking about.  If you are thinking about buying a home the first thing you need to know is whether you qualify for the home so talk to a specialist.  It is extremely important for you to know whether you can “Afford” the mortgage payment.

2.  Gathering your personal information.  A mortgage specialist is first going to ask you for some personal information so you will need to start gathering that together.  You will need the following:  last 30 days pastubs for everyone that will be on the loan, last two years W-2’s, tax returns for the last two years and also bank statements for the last 3 months.  Start gathering all of this information together.  The mortgage company will need it.  The question here is will you be able to repay this mortgage loan.

3.  Know your credit history.  Go to www.annualcreditreport.com and pull up your credit and review it and make sure you are in good standing with all of the credit bureaus.  If not, dispute any times that you do not agree with.

4.  Sign the Documents.  You will need to sign a complete disclosure package with the mortgage lender.  This package will consist of about 45 pages of RESPA documents and disclosures.  Today everything in this industry is government regulated so you will need to sign every page.

5.  Submit to Underwriting.  After the entire package is gathered the mortgage processor will submit your loan to the mortgage underwriter.  At that point they will review everything in your package and check your ratios as well as check your appraisal.