What factors determine mortgage approval?
 What are the advantages of Home Ownership?
 How much of a downpayment is needed to buy a home?
 What are points?
 What is Credit Scoring?
 What is PMI?
 What is the difference between Pre-Qualification and Pre-Approval?
 If I have been late on one payment, or default on one loan, will that disqualify me from getting a mortgage?
 Why was my mortgage transfered to another lender?

• What factors determine mortgage approval?

Lending guidelines require that prospective borrowers meet the following four categories to qualify for a mortgage:

Funds- Do you have enough cash for your down payment and closing costs? Do you need a gift from a relative? Will you have a cushion left after you purchase your home? How are funds verified when purchasing a home?

Income- Can you repay the debt? We will ask for employment information such as your occupation, length of time at your current position, and how much you earn. Income is verified by your employer or by having two year's W2's and one month's pay stubs. Your income should be sufficient to meet the appropriate qualifying ratios.

Credit History- Will you repay the debt? Your credit history includes how much you owe and how timely your payments have been made.

Appraisal- We will have your home appraised to insure that its value is sufficient to secure your mortgage.

• What are the advantages of Home Ownership?

The advantages of homeownership are both financially and personally fulfilling. The financial benefits range from accumulating home equity to writing off interest when filing taxes. As your home appreciates it becomes more and more marketable and increases its value. The personal revolves around psychological boosts that go hand-and-hand with the financial ones of security, stability and control:

• How much of a downpayment is needed to buy a home?

As you begin planning the purchase of your home, you'll want to make sure that you understand the options available in financing your purchase. Whether you're a first-time home buyer or a repeat buyer, how you choose to finance your home can make a difference in the home you are able to purchase and in the cash you have available for other expenses.

For instance, some first-time home buyers may think a 20% down payment is required and as a result buy a smaller home with the intention of moving up to a larger home sometime in the future. However, in many cases they skip the starter home, go directly into a larger home, and use a lower downpayment to do so. A variety of financing options is available with as little as 3% down.

Some buyers postpone purchasing home furnishings or landscaping because they think that making a 20% down payment is standard practice. Others choose a downpayment less than 20% in exchange for using cash towards extra touches that make a house a home.

• What are points?

"Points" are what the borrower pays the lender. The lender charges a point that precisely represents the percentage of the mortgage amount due from the borrower. For example, 1 point equals one percent. (A $100,000 loan with 1 point means the lender gets $1,000.)  Typically this charge is due at settlement.

• What is Credit Scoring?

Consider if everyone had perfect credit and think about what it takes to really have it. If you pay your bills on time, you're never late on your credit card payments, you are generally considered a no-risk, then you're probably an A-1 customer. The standard range for credit scores are 300's to a high above 800. The score represents a statistical evaluation of how likely you are to default on a loan. The lower the score, the higher you are likely to default. Lateness, collections and bankruptcies weigh most heavily against your credit score. Ross Mortgage has a Home Ownership Plan, a written guide designed to put you on the road to home ownership, after examining your credit situation.

• What is PMI?

Private Mortgage Insurance (PMI) is often a necessary expense that accompanies buying a house with less than 20% down in cash.

By definition, PMI is insurance designed to protect the lender from individuals who default on their loans and who have less than 20% equity in their property. Therefore, lenders require buyers putting less than 20% down to purchase PMI to insure the cost of risks like foreclosure.

PMI has its up side for buyers, too. About 30% of homebuyers, most of them first-timers, can't put together enough cash for a 20% down payment. PMI allows many people to purchase property years earlier than they otherwise would have been able to. Buyers who are required to purchase PMI have to pay for that additional security, but they gain from being able to get a mortgage with much less cash up front.

• What is the difference between Pre-Qualification and Pre-Approval?

Pre-qualification differentiates itself from Pre-Approval, as it is not a commitment to lend. Prequalifying only gives you an idea of how much home you can afford, based on your word of what assets and debts you have.

Pre-Approval requires us to pull your credit and have you fill in a Pre-Approval Package. This package ensures we have your signed authorization to pull credit. Provided you give us the past 3 months of bank statements and pay-stubs, we ensure commitment in full, after verifying your employment and financial information. Accordingly, the credit report and statements determine what underwriting guidelines we can follow to approve your loan. Once approved, you get a mortgage amount, rate, which you can choose to lock, and APR. You then agree to the loan and all you have to do is find your home!

You have cash-buying power with a pre-approved mortgage. This allows you to confidently negotiate the best price on the home you desire. In instances of tough competition between your offer and others, you carry clout with pre-approval that almost guarantees you win, especially when your competitor does not have a mortgage commitment from a lender.

If you just want to know roughly how much you can afford, pre-qualification is for you. If you’re a serious buyer, ready to shop for a new home, and prepared to commit then make the move and become Pre-Approved!

• If I have been late on one payment, or default on one loan, will that disqualify me from getting a mortgage?

Late payments will not necessarily keep a mortgage application from being approved. People
whose past credit problems have been resolved can also qualify.

• Why was my mortgage transfered to another lender?

When you take out a mortgage with a mortgage company or a bank, there is always a possibility that the lender will “sell” or “transfer” the servicing of your loan to another institution. “Servicing” means the collection of payments and management of operational procedures related to a mortgage. When servicing is sold, it means that another lender will be taking your payments, handling your escrow accounts, paying your insurance and taxes and answering your questions. This may happen right after you close on the loan or several years later.

The practice of selling or “transferring” the servicing of your loan is legal and very common in the mortgage industry. When the servicing is sold, it is usually packaged in a bundle with lots of other loans. Some mortgage companies only originate loans and sell or transfer the servicing immediately. It is more cost-effective for these companies to do this because servicing is not a part of their business. It is not uncommon to get your mortgage from a neighborhood lender
and have it transferred to an institution in another state. It is also possible for your mortgage servicing to be transferred more than once during the life of your loan.

Whether or not your servicing is sold has nothing to do with the quality of your loan or your payment history. It has, in fact, nothing whatever to do with you personally.

To learn more about the transfering of loans, your rights, and how it affects you, click here.