1. What is a credit report?
A report outlining the credit history of an individual which includes current and previous debts, payment amounts, late payments and past due amounts and other related information on every credit source the individual has used.
2. What is the scoring range on a credit report from low to high?
Credit scores range from 300 to 900, with the average around 750. As your score increases, your risk of default decreases. Industry experience shows a direct correlation between low scores and high default rates.
3. How does your credit report affect your home purchase?
When applying for a mortgage, they will check your credit history to determine your interest rate based on your credit score.
4. What is the average current interest rate?
The interest rate for a Direct Consolidation Loan is the weighted average of the interest rates on the loans being consolidated (as of the date we receive the application), rounded to the nearest higher one-eighth of one percent. This rate is fixed for the life of the loan and cannot exceed 8.25 percent.
5. What is PMI?
Private Mortgage Insurance. An insurance contract which insures that the named lender will recover a specific percentage of the loan amount from the insurer in the event the loan goes bad. Many lenders require this on higher percentage loans.
6. What is the difference between a 15 year and a 30 year mortgage?
The interest savings are enormous as the term decreases. Always make a comparison between a 15 year term payment and a 30 year term payment. The difference is often surprisingly smaller than anticipated. The savings over the term of the loan, however, can be substantial due to interest on your loan.
7. How do you determine how much of a home you can afford?
Your total monthly debt obligation should not be more than 36 percent of your gross income. You can also estimate that you can afford a home 3 times your yearly income.
8. How much do you need for a down payment?
Ideally you would put down 20% to start up with a good chunky of equity but realistically, today most first time buyers pay around 5% to 10% for a down payment.
9. What are some examples of real estate companies.
Prudential, RE/MAX, and Century 21.
10. What are closing costs?
The numerous expenses which buyers and sellers normally incur to complete a transaction in the transfer of ownership of real estate. These costs are in addition to price of the property and are items prepaid at the closing day.
12. What are property taxes?
Taxes paid by property owners annually to local and state governments, on average about 1.5% to 2% of the assessed (appraised) value of the home, as determined by the county property appraiser. The assessed value is typically lower than a fair market appraisal would find.
13. What is homeowners insurance?
Insurance that protects the homeowners from Casualty losses or damage to the home or personal property and from liability damages to other people or property. Homeowners insurance is required by the lender and may be included in the monthly mortgage payment.