Neja Fedrigo

Associate Broker

COLDWELL BANKER

Weir Manuel

nfedrigo@cbweirmanuel.com

 Office: 734-930-0200

 Fax: 734.930-0552

  Mortgage Information

    Financing your Dream Home

Mortgage Info

Most buyers need some form of financing. Be cautious. It is very important to research and shop around to ensure you get the mortgage that best meets your needs at the lowest cost to you. 

First check your credit report.  It's free.

The federal Fair Credit Reporting Act guarantees you access to a free credit report from each of the three nationwide reporting agencies — Experian, Equifax, and TransUnion — every twelve months. Some people choose to check their report every four months, rotating the three agencies. Make sure the facts are correct, and fix what's not.

AnnualCreditReport.com is the ONLY federal government authorized source to get your free annual credit report.

To help you save money, and pay a lower interest rate, three-five months earlier, check that all information on your credit history is accurate. It's critical to have credit cards paid on time. However, if you have 20 cards with a $20k limit, banks will see a risk of you charging $400,000 and perhaps being unable to pay it back. The higher the risk, the higher the interest rates lenders will charge you. Even if you avoid charging more than  50% of your limit in any card. Make sure any accounts that you've closed are reported as "account closed at consumer's request."  Three-five months before shopping for a mortgage, avoid opening or closing accounts, purchasing large items -any new installment loans- or moving funds around.  I highly recommend you consult with your financial advisor. Get your W2 earnings statements or 1099 DIV income statements for the last two years.

Because credit inquiries (each time you apply for credit, a lender requests a copy of your credit report - an inquiry) lower your FICO score, and increase the interest rate you'll pay for your mortgage -large numbers of inquiries mean greater risk because people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries- the federal government advises that consumers do their rate shopping within a short period of time, so it will count as one inquiry,  not lowering your FICO score. For FICO scores calculated from older versions of the scoring formula, the rate-shopping inquiries period is any 14 day span.  For scores calculated from the newest versions, this shopping period is any 45 day span. But caution:  Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score  -ranging between 300 and 850. Above 759 is more desirable. There are many lending institutions that offer a variety of mortgage products. Financing options and rates can vary widely.

Two weeks before starting your house hunting contact as many lending companies as you wish.  Start with your favorite bank, or credit union. The one you've been a client of the longest. Analyze, re-assess, and carefully select the very best lender for you.

The Federal Trade Commission's Information on Free Annual Credit Reports

1. Improving your Credit Score

2. How to help Increase Your Credit Score

3. Credit Inquiries: How Credit Checks Affect Your FICO Score

4. Loan Savings Calculator

5. Federal Help for Homeowners the Federal Government Site

6. Free FICO Credit Education Booklets Available for Download

7. The expired $8,000 Federal Tax Credit

Consider asking these questions before selecting a lender:

A. What type of lender should I use?
There are three basic types of lenders.  Mortgage BROKERS promote a broad product menu, competitive pricing, and an entrepreneurial approach; however, BROKERS cannot lock, commit, or approve your loan because they are not actual lenders.  Banks and Credit Unions rely on financial strength, direct lending capabilities, and stability; however, they sometimes have limited product offerings.  Mortgage BANKERS blend the best of both: direct lending ability, financial strength and stability, wide product offerings and competitive pricing.

B. What loan products should I consider?
Make sure your lender offers multiple loan products (Conventional, FHA, VA, MSHDA, etc.).  While most people today do choose a 30-year fixed, it is not always the wisest choice.  Consider how long you'll be staying in the home and any anticipated income changes before settling for the same loan as everyone else.  Additionally, buyers acquiring properties in need of repairs may want to consider the FHA 203K Program.

C. Should I lock or float my interest rate?
Weighing numerous factors ranging from your projected closing date to upcoming economic reports, look for counsel regarding future interest rate projections.  While no one can predict with absolute certainty, you need to reach a comfort level that the lender you choose has the best information and hopefully your best interest at heart.

D. What are mortgage rates based on?
The pricing of Mortgage Backed Securities, not the 10-year Treasury Bill.

E. What upcoming economic data will impact rates?
How will a Jobs Report, a Fed Board Meeting or Inflation Number affect your home loan? Your mortgage planner should explain it to you, and keep you informed.

F. How can I improve my chances of getting approved and at the lowest possible cost?
Sometimes even minor improvements in a credit score, or how you position your assets can make a big difference. Consult with your financial advisor.

Compare Mortgage Rates                                                FHA Mortgage Limits

Make sure your lender explains all loan fees — the up-front costs of originating, processing and closing the loan. If you like a lender but the offer is missing something you saw in another offer, ask for it. If you’re going to refinance in a few years, make sure there is no prepayment penalty (any prepayment penalty should be disclosed in the truth-in-lending statement.) Consult with your financial advisor.

Take your time, assess, and select wisely. Then get a pre-approval letter from the lender you select, and go find your dream home.