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Frequently Asked Questions |
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What steps do I take to apply for a loan? Can I still get a loan if my credit isn't perfect? New World can help you secure a loan even if you have a past bankruptcy or poor credit history. We offer a variety of easy qualification programs that have competitive interest rates. What types of information is contained in a credit profile (or credit report)? It typically contains your present and past employment, any public records, credit established, identification data, and recent credit inquiries. How can I correct errors in my credit file? Get a copy of your credit report and review it. If you find errors, contact the credit reporting agency that sent you the report and explain the error. They must research the information and correct it in your file. You are allowed to state a reason for why you had the credit problem (illness, losing your job, divorce, nature's devastation, etc), which gets placed into your file to be seen by future inquirers. You should request your credit report in advance of making a loan application to be prepared to discuss any derogatory data. What can I do to improve my credit rating? Keep credit card use to a minimum and pay your bills on time. Pay off balances if possible. Debt consolidation is another way to improve your credit rating and can result in a lower interest rate, and provide a larger tax benefit. What are FICO scores and how do they influence my getting the loan? FICO scores can determine if a loan application is approved and the interest rate offered. They are calculated from information contained in your credit file. They include your payment history, the amount of recent inquiries for credit, the kinds of credit you use (revolving credit, loan types, etc.), how long credit has been used, current balances versus highest previous credit. What are "points"? Points are prepaid interest assessed at closing by the lender. One point is equal to 1 percent of the loan amount. For example, two points on a $100,000 mortgage would cost $2,000. You can lower your interest rate by paying more points. Paying points is not a requirement. It's simply an option lenders offer to accommodate their home mortgage customers. What is involved in an appraisal? An appraisal is an estimate of the value of property made by a qualified, state licensed appraiser. The appraiser will measure and inspect your home, take photographs of your home, as well as photos of other "comparable" homes in the neighborhood. What happens at closing? By this time the loan documents have been prepared and are ready to be signed. A meeting will be set between the escrow company or one of their contracted employees and the homeowner. Depending on the situation, the meeting can take place at the escrow office or the owner's home. What are the closing costs? Closing costs can be as low as zero and depend on the loan package as a whole. Depending on the situation, fees can include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report and notary fees. What is equity? The value an owner has in real estate over and above the obligation against the property. Put another way, equity is the difference between the fair market value of your home and what you currently owe. What is APR? Annual percentage rate, or APR, is an interest rate reflecting the cost of a mortgage as a yearly rate, allowing borrowers to compare different types of mortgages based on the annual cost for each loan. The APR includes the interest rate of the loan plus other finance charges such as mortgage insurance, points and credit costs. Why do I need mortgage insurance? In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment- as low as 3 percent in some cases. With the smaller down payment loans, however, borrowers are sometimes required to carry private mortgage insurance, referred to as PMI. Private mortgage insurance will usually require an initial premium payment and may require an additional monthly fee depending on your loan's structure. What is a pre-approval and how can it help me? Pre-approval is a written commitment from a lender, subject to a property appraisal and other stated conditions, that lets you know exactly how much home you can afford. Not only will real estate agents perceive you as a serious homebuyer, but sellers are much more apt to accept offers from pre-approved buyers. Finally, it makes the mortgage process go more quickly, since much of the information is in place. |
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