|
|
|
|
|
|
|
| Frequently
Asked Mortgage Questions |
|
| |
|
|
| |
|
|
| 5.
What is the difference between
being pre-qualified and pre-approved?
|
|
|
Pre-qualification is normally
determined by a loan officer.
After interviewing you, the
loan officer determines the
potential loan amount for
which you may be approved.
The loan officer does not
issue loan approval; therefore,
pre-qualification is not a
commitment to lend. After
the loan officer determines
that you pre-qualify, he/she
then issues a pre-qualification
letter. The pre-qualification
letter is used when you make
an offer on a property. The
pre-qualification letter informs
the seller that your financial
situation has been reviewed
by a professional, and you
will likely be approved for
a loan to purchase the home.me.
|
|
|
Pre-approval is a step above
pre-qualification. Pre-approval
involves verifying your credit,
down payment, employment history,
etc. Your loan application
is submitted to a lender's
underwriter, and a decision
is made regarding your loan
application. When your loan
is pre-approved, you receive
a pre-approval certificate.
Getting your loan pre-approved
allows you to close very quickly
when you do find a home. Pre-approval
can also help you negotiate
a better price with the seller.
|
|
|
|
| |
|
|
|
| |
|
|
|
|
A FICO score is a credit score developed
by Fair Isaac & Co. Credit scoring
is a method of determining the likelihood
that credit users will pay their
bills. Fair, Isaac began its pioneering
work with credit scoring in the
late 1950s and, since then, scoring
has become widely accepted by lenders
as a reliable means of credit evaluation.
A credit score attempts to condense
a borrower’s credit history
into a single number. Fair, Isaac
& Co. and the credit bureaus
do not reveal how these scores are
computed. The Federal Trade Commission
has ruled this to be acceptable.
|
|
|
Credit scores are calculated by
using scoring models and mathematical
tables that assign points for different
pieces of information which best
predict future credit performance.
Developing these models involves
studying how thousands, even millions,
of people have used credit. Score-model
developers find predictive factors
in the data that have proven to
indicate future credit performance.
Models can be developed from different
sources of data. Credit-bureau models
are developed from information in
consumer credit bureau reports.
|
|
|
Credit scores analyze a borrower's
credit history considering
numerous factors such as:
|
|
|
•
Late payments
• The amount of time
credit has been established
• The amount of credit
used versus the amount of
credit available
• Length of time at
present residence
• Employment history
• Negative credit
information such as bankruptcies,
charge-offs, collections,
etc.
|
|
|
|
There are really three credit scores
computed by data provided by each
of the three bureaus--Experian,
Trans Union and Equifax. Some lenders
use one of these three scores, while
other lenders may use the middle
score.
|
|
|
How can I increase
my score? While
it is difficult to increase
your score over the
short run, here are
some tips to increase
your score over a period
of time.
|
|
|
•
Pay your bills on
time. Late payments
and collections can
have a serious impact
on your score.
• Do not apply
for credit frequently.
Having a large number
of inquiries on your
credit report can
worsen your score.
• Reduce your
credit-card balances.
If you are "maxed"
out on your credit
cards, this will affect
your credit score
negatively.
• If you have
limited credit, obtain
additional credit.
Not having sufficient
credit can negatively
impact your score.
|
|
|
|
|
What if there is an error
on my credit report?
|
|
|
• If you see an error
on your report, report it
to the credit bureau.
|
|
|
The
three major bureaus in
the U.S:
1. Equifax (1-800-685-1111)
2. Trans Union (1-800-916-8800)
and,
3. Experian (1-888-397-3742)
|
|
|
• All 3 have procedures
for correcting information
promptly. Alternatively,
your mortgage company may
help you correct this problem
as well.
|
|
|
|
|
|
|
| |
|
|
| 7.
How do I know which type of mortgage
is best for me? |
|
|
There is no simple formula
to determine the type of mortgage
that is best for you. This
choice depends on a number
of factors, including your
current financial picture
and how long you intend to
keep your house. SLC Mortgage
can help you evaluate your
choices and help you make
the most appropriate decision.
|
|
|
|
|
|
