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Equal Housing Lender | Mid America Mortgage, Inc. | Company NMLS ID 150009

14900  Landmark Blvd. Suite 600, Dallas, TX 75254

NMLS 150009 (www.nmlsconsumeraccess.org) is an equal opportunity lender, Arizona Lic BK 091759; licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act Lic 4131103 and Finance Lenders Law Lic 603J732; regulated by the Colorado Division of Real Estate; Georgia Lic 31847; Illinois Residential Mortgage Licensee MB.6760775; Kansas Licensed Mortgage Company MC.0025093; Massachusetts Lic ML150009; New Hampshire Banking Department; Oregon ML-5045; Washington Lic CL-150009.

Frequently Asked Questions


FAQs: The Loan Process

  • How does buying a home compare with renting?

    • Purchasing a home enables you to receive tax benefits while building equity. Owning a home also gives you the freedom to personalize and decorate as you wish and gives you the personal satisfaction of owning your own home

  • Should I prequalify before I find a property?

    • Yes, prequalification can help determine how much money you will be eligible to borrow before the loan application process occurs. You will know upfront how much home you can realistically afford. It also lets Realtors and sellers know that you’re a serious buyer, which can be an advantage when making an offer.

  • How does a Lender determine how much I can afford?

    • Your Lender will consider a number of factors when determining your maximum loan amount. Some of these include: your debt-to-income ratio, cash available for down payment and closing costs and credit history.

  • What is an appraisal?

    • An appraisal compares the current market value of the home you’d like to buy to other homes in the area that have recently been sold. A recent appraisal is necessary to confirm the property’s current value. 

  • What is an interest rate lock?

    • An interest rate lock represents rate you selected and will be the interest rate used to factor your monthly payment. The lock-in secures the interest rate during the process of your loan approval as long as your loan is processed and closed prior to the rate expiration date. 

  • What are closing costs?

    • Closing costs are fees that both buyer and seller must pay at closing. They generally include:

      • Origination fee

      • Discount point(s)

      • Appraisal fee

      • Credit report

      • Recording fees

  • What documents will I receive at closing?

    • At closing, you’ll sign and receive copies of all legal documents that are recorded and filed for the property you’re purchasing. In addition, you will receive information regarding your monthly mortgage payment and servicing information for your new loan.

 


FAQs: Refinancing

  • What are the benefits of refinancing?

    • Refinancing your mortgage could potentially be beneficial for your financial circumstances if you are interested in paying off high-interest-rate debt, shortening the length of your repayment term for your mortgage or reducing your monthly mortgage payment.

  • Should I refinance?

    • Determining whether to refinance your mortgage depends on your individual financial situation. It can make sense to refinance if mortgage rates are decreasing, your home has appreciated in value or if you have been making consistent, on-time payments on your original 30-year mortgage for less than ten years.

  • What fees are associated with refinancing a mortgage?

    • In addition to an application fee, you will generally need to pay the same expenses that were incurred with your original mortgage.

  • How long does it take to refinance?

    • Refinancing typically takes between two and four weeks. The length of time can depend on a number of factors like the appraisal and neighborhood comparables.

  • Can I refinance to take cash out of my house?

    • Yes, there are a variety of loan options that allow you to tap into your home's equity. Your Lender can help determine a solution for you.

 
 


FAQs: Insurance

  • What is mortgage insurance (MI)?

    • MI is required if you plan to make a down payment of less than 20% of the purchase price of the home. It is a type of financial guaranty that helps protect your Lender from losses, should you be unable to make mortgage payments and default on your loan.

  • What is private mortgage insurance (PMI)?

    • Privately-owned companies provide PMI. These companies provide guidelines to Lenders that detail the types of loans they will insure and determine borrower eligibility.

  • What is homeowners insurance?

    • Homeowners insurance, also known as hazard insurance, is a policy that covers damages to your home, your belongings and accidents as outlined in your policy.

  • Is homeowners insurance required at closing?

    • Yes, proof of homeowners insurance will be required before you can close your home.


FAQs: Mortgages

  • How do I know what loan program to choose?

    • Your Loan Officer will work with you to determine which loan product benefits you. You will review your current financial situation, future goals and also consider factors like the length of time you plan on living in the home and comfortable monthly payments. 

  • What is the difference between a fixed-rate and adjustable-rate mortgage?

    • A fixed-rate mortgage has an interest rate and payment that remain constant over the life of the loan. With an adjustable-rate mortgage, the rate can either increase or decrease, based upon the terms of the loan. This could result in an increase in the monthly payments in order to have the loan paid in full by maturity. 

  • What is a balloon mortgage?

    • A balloon mortgage has a fixed-rate payment for the first 5-7 of the loan, then a lump sum payment is due on the balance of the loan at a specified date when it matures.

  • What is a conventional mortgage?

    • A conventional mortgage is a fixed-rate loan over a specific time frame. It’s secured by a mortgage or deed of trust with an acceptable loan-to-value (LTV) ratio range.

  • What is a jumbo mortgage?

    • A jumbo mortgage is a conventional loan that exceeds the maximum agency (Fannie Mae, Freddie Mac) mortgage amount guidelines for a conventional loan.

 


FAQs: Mortgage Glossary

Adjustable Rate Mortgage (ARM): A mortgage having an interest rate which is usually initially lower than that of a mortgage with a fixed rate but is adjusted periodically according to the cost of funds to the lender. 

Appraisal: A professional opinion of the market value of a property. 

Amortization: The act of paying off (as a mortgage) gradually, usually by periodic payments of principal and interest or by payments to a sinking fund 

Annual Percentage Rate (APR): The annual equivalent of a rate of interest when the rate is quoted more frequently than annually, usually monthly. APR allows homebuyers to compare different mortgages based on the annual cost for each loan. Not all lenders calculate APR the same way. 

Buydown: A lump sum payment made to the creditor by the borrower or by a third party to reduce the amount of some or all of the consumer’s periodic payments, to repay the indebtedness. In the context of project financing, refers to a one-time payment out of liquidated damages to reflect cash flow losses from sustained underperformance. 

Construction Loan: A short-term loan to finance the building phase of a real-estate project. 

Discount Point: One percentage point of the principal of a mortgage loan that some lenders require borrowers to pay immediately as a condition of making the loan. That is, if the lender makes a mortgage loan, it may require the borrower to pay a certain amount of discount points up front. The amount paid is deducted from the interest the borrower would otherwise owe on the loan. Discount points are tax deductible for the borrower because they qualify as prepaid interest. 

Down Payment: The portion of the purchase price which the buyer pays in cash; is not financed with a mortgage. 

Down Payment Assistance Program (DPA): Funds given to buyers to assist with the purchase of a home. Buyers do not have to repay these funds. 

Earnest Money or Escrow Deposit: The holdings of documents and money by a neutral third party prior to closing. 

FHA Loan: A loan insured by the Federal Housing Administration open to all qualified home purchasers. There are limits to the size of FHA loans, but they are usually generous enough to handle moderately-priced homes. 

First Time Homebuyer Program: Mortgage loans with special qualifying terms for those who have never owned real estate or have not in the past few years. Although the programs and terms vary by state, they often offer down payment and closing cost assistance. 

Fixed-Rate Mortgage: A mortgage in which the interest rate does not change during the loan term. 

Index: The benchmark interest rate an adjustable-rate mortgage’s fully indexed interest rate is based on. 

Lien: A legal claim against a property that must be paid when the property is sold. 

Lock-in: A written agreement guaranteeing the homebuyer a specified interest rate provided the loan is closed within a set period of time. 

Margin: The amount a lender adds to the index on an adjustable rate mortgage to establish the adjusted interest rate. 

Mortgage Insurance: Money paid to insure the mortgage when the down payment is less than 20%. 

Preapproval: The lender has verified a borrower’s credit, bank references and employment, and approved a target mortgage loan amount and sales price prior to the borrower buying a home. Subject to other conditions (i.e., property appraisal) and is not binding on the lender. 

Prequalification: The process of determining how much money a prospective homebuyer will be eligible to borrow before a loan is applied for. 

PITI: Acronym for total monthly housing expense: principal, interest, taxes, and insurance. 

Title Insurance: Title insurance protects a real estate owner or lender against any loss or damage they might experience because of liens, encumbrances, or defects in the title to the property, or the incorrectness of the related search. 

Underwriting: The process of evaluating a loan application to determine the risk involved for the lender. 

USDA Rural Home Loan: A USDA Guaranteed Loan is government-insured 100% purchase loan. These loans are only offered in rural areas and serviced by direct lenders that meet federal guidelines. 

VA Loans: Fixed-rate loans guaranteed by the U.S. Department of Veterans Affairs. They are designed to make housing affordable for eligible U.S. veterans.

 


FAQs: Credit

  • What is a credit report?

    • Your credit payment history is recorded in a file or report. These files or reports are maintained and sold by “consumer reporting agencies” (CRAs). One type of CRA is commonly known as a credit bureau. You have a credit record on file at a credit bureau if you have ever applied for a credit or charge account, a personal loan, insurance, or a job. Your credit record contains information about your income, debts, and credit payment history. It also indicates whether you have been sued, arrested, or have filed for bankruptcy.

  • Do I have a right to know what's in my report?

    • Yes, if you ask for it. The CRA must tell you everything in your report, including medical information, and in most cases, the sources of the information. The CRA also must give you a list of everyone who has requested your report within the past year-two years for employment related requests.

  • What type of information do credit bureaus collect and sell?

    • Credit bureaus collect and sell four basic types of information:

      • Identification and employment information: Your name, birth date, Social Security number, employer, and spouse’s name are routinely noted. The CRA also may provide information about your employment history, home ownership, income, and previous address, if a creditor requests this type of information.

      • Payment history: Your accounts with different creditors are listed, showing how much credit has been extended and whether you’ve paid on time. Related events, such as referral of an overdue account to a collection agency, may also be noted.

      • Inquiries: CRAs must maintain a record of all creditors who have asked for your credit history within the past year, and a record of those persons or businesses requesting your credit history for employment purposes for the past two years.

      • Public record information: Events that are a matter of public record, such as bankruptcies, foreclosures, or tax liens, may appear in your report.

  • What is credit scoring?

Credit scoring is a system creditors use to help determine whether to give you credit. Information about you and your credit experiences, such as your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report. Using a statistical program, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points — a credit score — helps predict how creditworthy you are, that is, how likely it is that you will repay a loan and make the payments when due.

The most widely use credit scores are FICO scores, which were developed by Fair Isaac Company, Inc. Your score will fall between 350 (high risk) and 850 (low risk).

Because your credit report is an important part of many credit scoring systems, it is very important to make sure it’s accurate before you submit a credit application. To get copies of your report, contact the three major credit reporting agencies:

Equifax: (800) 685-1111
Experian (formerly TRW): (888) EXPERIAN (397-3742)
Trans Union: (800) 916-8800
These agencies may charge you up to $9.00 for your credit report.

You are entitled to receive one free credit report every 12 months from each of the nationwide consumer credit reporting companies – Equifax, Experian and TransUnion. This free credit report may not contain your credit score and can be requested through the following website: https://www.annualcreditreport.com

  • Why is credit scoring used?

    • Credit scoring is based on real data and statistics, so it usually is more reliable than subjective or judgmental methods. It treats all applicants objectively. Judgmental methods typically rely on criteria that are not systematically tested and can vary when applied by different individuals.

  • How is a credit scoring model developed?

To develop a model, a creditor selects a random sample of its customers, or a sample of similar customers if their sample is not large enough, and analyzes it statistically to identify characteristics that relate to creditworthiness. Then, each of these factors is assigned a weight based on how strong a predictor it is of who would be a good credit risk. Each creditor may use its own credit scoring model, different scoring models for different types of credit, or a generic model developed by a credit scoring company.

Under the Equal Credit Opportunity Act, a credit scoring system may not use certain characteristics like — race, sex, marital status, national origin, or religion — as factors. However, creditors are allowed to use age in properly designed scoring systems. But any scoring system that includes age must give equal treatment to elderly applicants.

  • How reliable is the credit scoring system?

Credit scoring systems enable creditors to evaluate millions of applicants consistently and impartially on many different characteristics. But to be statistically valid, credit scoring systems must be based on a big enough sample. Remember that these systems generally vary from creditor to creditor

Although you may think such a system is arbitrary or impersonal, it can help make decisions faster, more accurately, and more impartially than individuals when it is properly designed. And many creditors design their systems so that in marginal cases, applicants whose scores are not high enough to pass easily or are low enough to fail absolutely are referred to a credit manager who decides whether the company or lender will extend credit. This may allow for discussion and negotiation between the credit manager and the consumer.

  • What can I do to improve my score?

Credit scoring models are complex and often vary among creditors and for different types of credit. If one factor changes, your score may change — but improvement generally depends on how that factor relates to other factors considered by the model. Only the creditor can explain what might improve your score under the particular model used to evaluate your credit application.

Nevertheless, scoring models generally evaluate the following types of information in your credit report:

  • Have you paid your bills on time? Payment history typically is a significant factor. It is likely that your score will be affected negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy, if that history is reflected on your credit report.

  • What is your outstanding debt? Many scoring models evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, that is likely to have a negative effect on your score.

  • How long is your credit history? Generally, models consider the length of your credit track record. An insufficient credit history may have an effect on your score, but that can be offset by other factors, such as timely payments and low balances.

  • Have you applied for new credit recently? Many scoring models consider whether you have applied for credit recently by looking at “inquiries” on your credit report when you apply for credit. If you have applied for too many new accounts recently, that may negatively affect your score. However, not all inquiries are counted. Inquiries by creditors who are monitoring your account or looking at credit reports to make “prescreened” credit offers are not counted.

  • How many and what types of credit accounts do you have? Although it is generally good to have established credit accounts, too many credit card accounts may have a negative effect on your score. In addition, many models consider the type of credit accounts you have. For example, under some scoring models, loans from finance companies may negatively affect your credit score.

Scoring models may be based on more than just information in your credit report. For example, the model may consider information from your credit application as well: your job or occupation, length of employment, or whether you own a home.

 

To improve your credit score under most models, concentrate on paying your bills on time, paying down outstanding balances, and not taking on new debt. It’s likely to take some time to improve your score significantly.

  • What happens if you are denied credit or don't get the terms you want?

If you’ve been denied credit, or didn’t get the rate or credit terms you want, ask the creditor if a credit scoring system was used. If so, ask what characteristics or factors were used in that system, and the best ways to improve your application. If you get credit, ask the creditor whether you are getting the best rate and terms available and, if not, why. If you are not offered the best rate available because of inaccuracies in your credit report, be sure to dispute the inaccurate information.

If you are denied credit, the Equal Credit Opportunity Act requires that the creditor give you a notice that tells you the specific reasons your application was rejected or the fact that you have the right to learn the reasons if you ask within 60 days. Indefinite and vague reasons for denial are illegal, so ask the creditor to be specific. Acceptable reasons include: “Your income was low” or “You haven’t been employed long enough.” Unacceptable reasons include: “You didn’t meet our minimum standards” or “You didn’t receive enough points on our credit scoring system.”

If a creditor says you were denied credit because you are too near your credit limits on your charge cards or you have too many credit card accounts, you may want to reapply after paying down your balances or closing some accounts. Credit scoring systems consider updated information and change over time.

Sometimes you can be denied credit because of information from a credit report. If so, the Fair Credit Reporting Act requires the creditor to give you the name, address and phone number of the credit reporting agency that supplied the information. You should contact that agency to find out what your report said. This information is free if you request it within 60 days of being turned down for credit. The credit reporting agency can tell you what’s in your report, but only the creditor can tell you why your application was denied.

  • Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is designed to help ensure that CRAs furnish correct and complete information to businesses to use when evaluating your application.

  • Your rights under the Fair Credit Reporting Act:

    • You have the right to receive a copy of your credit report. The copy of your report must contain all of the information in your file at the time of your request.

    • You have the right to know the name of anyone who received your credit report in the last year for most purposes or in the last two years for employment purposes.

    • Any company that denies your application must supply the name and address of the CRA they contacted, provided the denial was based on information given by the CRA.

    • You have the right to a free copy of your credit report when your application is denied because of information supplied by the CRA. Your request must be made within 60 days of receiving your denial notice.

    • If you contest the completeness or accuracy of information in your report, you should file a dispute with the CRA and with the company that furnished the information to the CRA. Both the CRA and the furnisher of information are legally obligated to reinvestigate your dispute.

    • You have a right to add a summary explanation to your credit report if your dispute is not resolved to your satisfaction.