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Does each lender I receive a quote from pull my credit report and does it affect my credit score?
Once you've received a loan quote through the website and are working with a lender, each lender will follow their own policy regarding pulling credit. Some may pull your credit before they make you a loan offer; others may pull your credit after you have accepted their offer. Presently, Fair Isaac Corporation (the company that provides "FICO" credit scores) treats multiple inquiries from auto, mortgage or student loan lenders within a short period of time as a single inquiry. For these types of loans, the FICO score ignores inquiries made in the 30 days prior to scoring. FICO scores calculated from older versions of the scoring formula use a 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score. However, if you apply for multiple new credit lines in a short period of time (as opposed to rate shopping for a single loan), your FICO score can be lower.
What is a FICO score?
A FICO score is a credit score derived from the credit model developed by Fair Isaac Corporation. The FICO score is the best-known credit score in the United States, and a version of the FICO score calculated by all three of the major credit bureaus from reported information. A higher FICO score indicates better credit, and a FICO score below 600 is considered poor. The most important factor in determining a FICO score is past payment punctuality. The percentage of credit limit used is another critical parameter in the FICO score models, with a penalty for using too much of available credit. These two factors are given a total weight of around two thirds in determining the typical individual's FICO score. Other major FICO score variables include length of credit history and types of credit used. Bankruptcy, foreclosure, court judgments, and tax leins receive a strong FICO score penalty, especially when recent.
Does having a co-borrower improve my chances of finding a loan?
Including a co-borrower on your loan request may or may not affect your ability to qualify for offers. Lenders are required to consider the credit reports, income, assets, debt and other information for all borrowers identified on an application. Before you decide whether or not to include a co-borrower on your loan request, consider your combined financial picture and the credit (FICO score) of those you may list on the application.
What is APR?
When you apply for a mortgage the Federal Truth in Lending Disclosure form will be sent. At the top of the page you will see lots of numbers. Two of those numbers are the Note Rate (the actual rate used to calculate your monthly payments) and the Annual Percentage Rate (APR). The Annual Percentage Rate will most always be slightly higher than the note rate because the APR includes other items associated with obtaining a mortgage.
How do I determine my credit range?
There are many ways to get information on your credit, but not all include a credit score. Every 12 months you can request a free credit report from any of the nationwide consumer credit reporting companies – Equifax, Experian and TransUnion. After you receive the report, you have the opportunity to also purchase a credit score. You may also find other resources to get your credit score, some requiring a credit card and some offering a “free credit score” which may be tied to other offers.
What is a typical down payment?
Most lenders generally require a down payment of 20%; and if you are unable to contribute 20% towards the purchase price of a house, lenders will require you to pay for private mortgage insurance (PMI). There are a variety of mortgage products which allow a lower down payment. There are also a number of programs to assist first-time homebuyers with their down payment.
What are discount points?
Discount Points are used to "buy" down your interest rate which will lower your payment. A general rule of thumb is that one full Discount Point will lower your fixed interest rate .250% or your adjustable rate .375%.
What is a fixed rate mortgage?
Fixed-rate loans are the most common type of home loan. A fixed rate mortgage usually runs for terms of 15 or 30 years. Applying for a fixed-rate loan means you will have the same monthly payment and the same interest rate over the life of your mortgage.
What is an adjustable rate mortgage?
Adjustable-rate mortgages, or ARMs, generally provide lower initial interest payments than fixed-rates. People who do not plan to stay in their home for very long, or those who may not qualify for a fixed-rate mortgage, may choose an ARM loan. ARMs lack the security of steady payments and buyers need to be prepared for a larger payment after the initial interest rate period. Consumers have some protection on the amount the rate can increase.
What is a FHA Loan?
An FHA loan is a government mortgage that is insured by the Federal Housing Administration (FHA). These loans have been insured by the FHA since the creation of the agency in 1934. Since then, various Housing and Community Development Acts have been passed which have slightly altered the laws regarding FHA loans. FHA loans have been particularly helpful for individuals who otherwise would not have been able to secure a loan from another source due to low income or high risk. The Mortgage Insurance Premium (MIP) fee is a charge to the borrower to secure a loan from FHA. There is a one-time, up-front MIP payment as well as a monthly recurring charge.
What is a definition for the fair market value of a home?
There are numerous definitions but in general the fair market value of a home is the price at which the home passes from a willing seller to a willing buyer. This definition is based on the assumption that both buyer and seller are rational and they have a reasonable knowledge of relevant facts. In short, it is the value a person should expect to receive when selling or buying your home under normal conditions with full disclosure. There are a number of online resources which MAY give you an indication of the value of a home or property but are rarely exact and should not be considered the true market value.
What is a Mortgage Appraisal?
A mortgage appraisal is a written analysis of the estimated value of a property, and is a binding assurance to the lender of a home’s value as prepared by a licensed or authorized appraiser. The appraisal fee is typically paid by the buyer when purchasing or refinancing a home.
How an appraisal is developed or generated?
A real estate appraisal is comprised from information from a wide variety of sources, including the local Multiple Listing Service, local tax assessor records, local real estate professionals, county courthouse records, private “public record” data vendors, interviews with sellers and buyers, appraisal data co-operatives and the appraisers own personal knowledge or office files from previous appraisals. The quality and reliability of each piece of information is considered by the appraiser and based on their experience and knowledge of the local market helps them derive a fair value for the lender and the homeowner.
