Who is most likely to refer me to a good lender

A borrower can always depend on luck, by throwing a dart at the yellow pages. A referral is of value if it raises the probability of a good outcome above that from throwing the dart. The four major sources of referrals are real estate sales agents, other borrowers, Internet referral sites, and builders. Home purchasers accept more referrals from real estate sales agents than from all other sources combined. Sales agent referrals generally are to individual loan officers or brokers, as opposed...

Should you refinance with your current lender

The case for refinancing with your current lender is that this lender may be in a position to waive some settlement costs because you are an existing customer. The case against is that that lender may offer a deal that is better than the one you have but inferior to one you might obtain elsewhere. Hence, I recommend shopping other lenders first, and your current lender last. In a refinance market, lenders are conflicted with regard to how they treat their existing borrowers. They don't want to...

Is there recourse against bad servicing

When a mortgage loan is closed, the origination file is closed and a servicing file is opened. It remains open for the life of the loan. Whether the process goes smoothly or badly depends on both the borrower and the servicing agent. The servicing agent is the entity that receives the mortgage payment, keeps the payment records, provides borrowers with account statements, imposes late charges when the payment is late, and pursues delinquent borrowers. In many transactions, servicing agents also...

What is the monthly payment

All mortgages in the United States have a monthly mortgage payment of principal and interest. In most cases, this is the payment the borrower is obliged to make every month. In a few cases, the monthly payment is divided in half, and the borrower pays half every two weeks (a biweekly), or twice a month (a bimonthly). But even in these cases, a monthly payment is calculated as the first step. The monthly payment has two components interest and principal. In each month, the interest is calculated...

What market niche are you in

Market nichification is a unique feature of the U.S. mortgage system that complicates life for mortgage shoppers. Nichification means that lenders vary the terms they offer borrowers based on a large number of loan, borrower, and property characteristics that they believe affect the risk or cost of the loan to them. For example, lenders consider loans that are used to purchase a property for investment riskier than loans used to purchase a property that will be occupied as a residence by the...

Is it difficult for the selfemployed to qualify

Some loan providers prefer not to deal with self-employed borrowers, because getting them qualified and approved is more complicated and onerous than with borrowers who work for a salary. But there are plenty of others that welcome business from the self-employed. A major problem with lending to the self-employed is documenting an applicant's income to the lender's satisfaction. Applicants with jobs can provide lenders with pay stubs and lenders can verify the information by contacting the...

What are the requirements for documenting income and assets

The most important of the documentation requirements are as follows. Full documentation Both income and assets are disclosed and verified, and income is used in determining the applicant's ability to repay the mortgage. Formal verification requires the borrower's employer to verify employment and the borrower's bank to verify deposits. Alternative documentation, designed to save time, accepts copies of the borrower's original bank statements, W-2s, and paycheck stubs. At one time, full...

Will my credit score fall if I shop many loan providers

Credit inquiries impact credit scores negatively because statistical studies show that multiple inquiries are associated with high risk of default. Distressed borrowers often contact many lenders hoping to find one who will approve them. On the other hand, multi- many delinquencies in past two years balance below 75 of line on all cards three new cards acquired in last month Table 2-1. Best and worst of credit card usage Table 2-1. Best and worst of credit card usage ple inquiries can also...

Who should take a Federal Housing Adminstration FHA loan

FHA loans are for borrowers who seek loans no larger than the loan size limits set by the FHA program, and either can't meet a 3 down payment requirement, have poor credit, or both. FHA loan size limits vary by county, are reset every year, and can be found at Second mortgages are prohibited with the FHA loan. Most FHA borrowers make down payments of less than 3 percent. FHA allows you to buy a home with 1 down. Private mortgage insurers require 5 percent down on most loans, and only allow 3...

Does a lock commit the borrower as well as the lender

A borrower who wants to be protected against a rate increase during the lock period, but would like to take advantage of a rate decline, can purchase a float-down. A float-down provides the same upside protection as a lock, plus an option to reduce the rate if market rates decline. Since it carries more value to the borrower than a lock, and is more costly to the lender to provide, the borrower pays more for it. A lender who charges 1.25 points for a 60-day lock might...

How do lenders decide how much I can borrow

From a lender's point of view, a good loan is one to a borrower who can demonstrate both the ability and the willingness to repay it. Qualification has to do with determining the borrower's ability to repay only. The borrower's willingness to repay is assessed largely by the applicant's past credit history. For a loan to be approved, the lender must be satisfied on both scores. This is the difference between qualification and approval. Lenders ask two basic questions about the borrower's...

Can I improve my credit score by paying off delinquent credit cards

Most everyone understands that if you don't pay your bills on time, your credit score suffers. There is a com mon misperception, however, that if you pay off these accounts, all will be forgiven since the lender has been paid, the credit score will return to what it was before the delinquency. But it doesn't work that way. Delinquencies reduce your credit score because the credit-scoring genie views delinquent accounts as evidence of a weak commitment toward meeting your obligations. The...

What should I know about mortgage auction sites like Lendingtreecom

Mortgage auction sites such as LendingTree.com pull together a group of up to four lenders who bid for your loan. I once called them lead-generation sites, because from a lender's perspective, that is what they do. A lead is a packet of information about a consumer in the market for a loan. Lenders pay for leads and auction sites are an important source of them. I recently looked at nine mortgage auction sites Cityloans.com, GetSmart.com, InterestRatesOnline. com, LendingTree.com, LoanApp.com,...

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