Probably the most important factor in acquiring a new home loan is your personal credit history. Mortgage lenders in today's market rely heavily upon the credit scoring system. The three major credit bureaus are Equifax, Trans Union and Experian. Their respective credit scoring models are called Beacon, Empirica and Fair Isaac (FICO).
Consumers that have experienced recent bankruptcy, foreclosure, judgments and/or collections will normally have lower credit scores than those that have a credit history of low balances, consistent and timely credit payments. The higher the credit score, the lower the credit risk is for a potential lender. Interest ratesare directly related to the credit score of a potential borrower.
Unfortunately, due to the tremendous amount of data handled by these bureaus, reporting errors are routinely made. From our experience, many more mistakes are made than most people would imagine. As little as one reporting error made by one creditor or credit bureau could lower your score enough to disqualify you from some premium loan programs.
As we take you through the loan process, your credit report will be reviewed with you by one of our senior loan officers. If you determine your credit report contains inaccurate information, we will advise you on the steps to correct the problem. Our loan officers are kept aware of the latest credit reporting policies and credit scoring procedures through ongoing continuing education and training seminars. Fortunately Cobblestone has loan programs available for customers with varying credit scores. For the customers with lower scores we can give you a long-term course of action on how to improve your credit standing.
FREQUENTLY ASKED QUESTIONS
QWhen is it a good idea to refinance my current mortgage?
AThere are several reasons why a refinance would be beneficial. The best reason is to save money on your monthly budget by lowering your interest rate. Many people choose to consolidate their high interest credit card and personal loan debt into a lower monthly payment with tax-deductible interest. Another reason would be to turn an adjustable rate mortgage into a fixed rate mortgage loan. You may presently have both a first and second mortgage and want only one new lower mortgage payment. You can also "cash-in" on some of the equity you have built in your home. Call or e-mail one of our mortgage counselors to determine if you would benefit from a refinance. We will recommend a loan only if it improves your financial situation and makes sense to you.
QHow long does the loan process take?
A Unless there are unforeseen difficulties we can close a refinance loan in seven to fourteen days. A purchase loan will take a little longer because there are more issues we must address to protect your interests.
Q What is the difference between a pre-qualification and a pre-approval?
AA pre-qualification is a mathematical calculation using your monthly income and debt to determine how much of a home you can afford to purchase. It is only an estimate and not a precise figure. A loan pre-approval is the result of a complete mortgage loan application. Your credit report is obtained and a particular loan program and interest rate has been used and approved by the lending underwriter.
QShould I apply for a loan before I find a house?
AYes. If you have already been pre-approved you will have more bargaining strength when negotiating with the seller of the home you want to buy. Also some real estate agents will not show you homes unless they know you are serious and ready to buy. A pre-approval lets everyone know you are a serious buyer. One of our mortgage counselors can get you pre-approved with no cost or obligation to you.
Q What does my mortgage payment include?
AYour new mortgage payment will include both an interest charge and principal reduction payment. It will also probably include an escrow payment that includes a monthly portion of your annual property taxes and homeowners property insurance. This escrow payment may be optional in some cases. It may also include mortgage insurance. For complete details, call our office at 704-821-8159.
QHow much will it cost me to get a loan?
ALoan costs and fees vary from state to state. Refinance loans have different fees than purchase loans. You may want to "buy down" your rate or you may not want an escrow account. All closing costs and fees will be disclosed to you prior to any loan closings. Often, part or all of your closing costs can be paid by your lender. Call for details. Right after your loan is pre-approved we send a "compliance packet" to you. It contains a breakdown of all costs and fees as well as your loan application and additional fair lending and equal opportunity notices, which are required by federal law. With Cobblestone Mortgage you will know exactly what's going on and we're here to answer any questions you have. We make getting a mortgage clear and simple.