What type of loan is best for me?
The best loan type depends on your situation. We’ll ask questions about your down payment amount, estimated credit score, time period you expect to be in the home, and if you have any special qualifications or circumstances. These are initial questions that will frame our presentation of loan products, and is a means to point us in the right direction making the best impact on your financial future. We have the tools and the wherewithal to change gears, if needed, to ensure you obtain the perfect loan program for your situation.
What about my credit score?
Before deciding on what terms lenders will offer you on a loan (which they base on the “risk” to them), they want to know two things about you: your ability to pay back the loan, and your willingness to pay back the loan. For the first, they look at your debt-to-income obligation ratio. For your willingness to pay back the loan, they consult your credit score. The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score is between 350 (high risk) and 850 (low risk). More details can be found by clicking here.
What are closing costs?
You incur closing costs to obtain the loan and your new home. Along the journey to purchase or refinance, many different services are provided. Some are charged in advance such as for the credit report
and appraisal and others are charged to you at the time of closing. The entire process is highly regulated, which results in very controlled and straight-forward costs. In our presentation of loan programs, we’ll make the total costs clear and offer you various options. These options generally include the best rate available, as well as low-to-no-closing-cost options.
What are pre-paids and escrows?
Pre-paids are items that are paid at the time of closing used to pay for items in advance; such as the first year premium of home insurance, and interest on the loan from the day of closing to the end of that particular month. Escrows for taxes and insurance are collected at closing to start your escrow account. You will continue to add to this account each month when you make your payment which typically consists of your loan principal, interest, taxes, insurance, and mortgage insurance, if required. This may be referred to as your PITI = principal, interest, taxes, and insurance. The lender will access these funds each year when the insurance and taxes are due, paying for them using your escrowed funds on your behalf.
Do all loans require escrow accounts?
If you are taking out an FHA, VA, or USDA loan, escrow accounts are required. Conventional loan requirements will vary depending on the Lender and the amount of down payment.
What are PMI and MIP?
PMI and MIP are different types of mortgage insurance. If you have less than 20% equity in a purchase or home you already own, and are obtaining a conventional loan, Private Mortgage Insurance (PMI) will be required. This will automatically be removed from the loan when your loan balance reaches 78% of the lower of the original purchase price or appraised value. Mortgage Insurance Premium (MIP) is used if an FHA loan is being obtained. If there is less than 10% equity in the property, the MIP will remain on the loan for the entire life of the loan.
How can I get rid of mortgage insurance?
The best way to get rid of mortgage insurance is to refinance your current loan. If you have an FHA loan, the ONLY way to remove mortgage insurance is to refinance to a conventional loan. However, if you have the patience and at least 20% equity, contacting your current lender and requesting the PMI be removed is an option. They will provide information as to their requirements to make this happen. You will need to abide by their requirements to the letter. They will require that you pay for an appraisal to be prepared by an appraiser they desgnate directly. If you do not have 20% equity in the property yet, but have cash to pay down the mortgage to 78%, they will remove the PMI. Refinancing may be a better option than paying down an existing loan. Be sure to check current rates first.
ACADEMY NATIONAL MORTGAGE CORPORATION - NMLSR #191799
SERVING ALL OF COLORADO
Phone: 303.987.0622 / Cell/Text: 303.902.0082