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1. How can I prepare for a home purchase? Answer
2. Can I get pre-approved for a home purchase loan before I find my property? Answer
3. Should I check my own credit? Answer
4. How do I know how much house I can afford? Answer
5. What is the difference between prequalified and preapproved? Answer
6. How much cash will I need to purchase a home? Answer
7. How can I increase my credit rating? Answer
8. How do I know which type of mortgage is best for me? Answer
9. What does my mortgage payment include? Answer
10. What is the difference between a fixed-rate loan and an adjustable-rate loan? Answer
11. How is an index and margin used in an ARM? Answer
12. What is a fico score? Answer
13. What are the steps to buying a house? Answer

Q : How can I prepare for a home purchase?
A : 1) Avoid making any large credit card purchases - the added debt could impact your ability to qualify for a loan.

2) Manange all outstanding accounts carefully and avoid missing payments.

3) Contact creditors immediately if you have a concern about your ability to make payments on time.

4) Save money so you will have a financial cushion in case of an emergency.

 
Q : Can I get pre-approved for a home purchase loan before I find my property?
A : Yes.  A loan pre-approval takes the pre-qualification process several steps further.  A few more questions will need to be answered on your application.  You will be required to provide All American Mortgage Corporation with documentation of your income and assets.  This documentation may include, but is not limited to, your current pay check stubs, most recent W2's, bank statements and possibly complete tax returns with all schedules.  *A credit report is also required for a loan pre -approval. 

 

 

 
Q : Should I check my own credit?
A : If you have never seen a copy of your credit report, you should definitely order a 3-in-1 credit report, which includes your credit report from TransUnion, Equifax and Experian.  The three national credit bureaus do not communicate with each other, so you have three credit histories on file.  It is your total responsibility to make sure your credit histories are accurate.  For peace of mind, order a 3-in-1 credit report today. The Federal Trade Commission website www.ftc.gov/bcp/conline/pubs/credit/freereports.htm provides all of the contact information you need to run a free credit report.  The website that is recommended to run the report is  www.annualcreditreport.com.  There may be a fee when ordering your reports.  We can assist you with your credit and help answer any questions you may have.

Do you actually know who has had previous access to your credit information?  Do you know if the information they saw was accurate?  Previous studies have shown that up to 70% of all credit reports contain some type of error, 29% of those errors were considered serious, like false delinquencies and judgements that did not belong to that individual.

Before you start shopping for a home loan, you should take a look at your credit reports before the mortgage companies do.  If there are errors on any of your credit reports, your loan request may not get approved.  All errors, if any, need to be corrected before you submit an application for any type of loan. 

 
Q : How do I know how much house I can afford?
A : Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford.
 
Q : What is the difference between prequalified and preapproved?
A : This is somewhat misleading and easy to confuse.  Remember, until a Broker/Lender pulls your credit and then submits your loan to an underwriter, you are only prequalified.  This simply means that using the income you are stating and the monthly payments that you have informed the loan officer of, you qualify for the amount that you have requested. 
 
Q : How much cash will I need to purchase a home?
A : The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
  • Earnest Money: The deposit that is supplied when you make an offer on the house
  • Down Payment: A percentage of the cost of the home that is due at settlement
  • Closing Costs: Costs associated with processing paperwork to purchase or refinance a house
  •  
    Q : How can I increase my credit rating?
    A :

    Here are a few general tips to assist you in raising and maintaining your score:

    • Maintain two to three revolving charge accounts such as Visa or MasterCard in good standing.
    • Have a couple of other credit card accounts such as department stores or gas cards in good standing.
    • Avoid too many credit inquiries; they can lower your credit score.
    • Do not max out your credit cards, the ratio of available credit to your total credit balances is very important.
    • Pay your bills on time or within 30 days from the date they are due.
    • Do not apply for multiple credit lines; it triggers an inquiry of your credit, which lowers your credit score.
     
    Q : How do I know which type of mortgage is best for me?
    A : There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. All American Mortgage Corporation can help you evaluate your choices and help you make the most appropriate decision.
     
    Q : What does my mortgage payment include?
    A : For most homeowners, the monthly mortgage payments include three separate parts:
  • Principal: Repayment on the amount borrowed
  • Interest: Payment to the lender for the amount borrowed
  • Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.
  •  
    Q : What is the difference between a fixed-rate loan and an adjustable-rate loan?
    A : With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.
     
    Q : How is an index and margin used in an ARM?
    A : An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).
     
    Q : What is a fico score?
    A : A FICO score is a credit score developed by Fair, Isaac and Co. Credit scoring is a method of determining the probability that credit users will meet their obligations.  Fair, Isaac began its pioneering work with credit scoring in the late 1950's and since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation.

    A credit score attempts to condense a borrowers credit history into a single number.  Fair, Isaac and Co. and the credit bureaus do not reveal how these scores are computed.  Credit scores are calculated by using scoring models and mathematical tables that assign points for different pieces of information that best predict future credit performance.  Developing these models involves studying how millions of people have used credit.  Score-model developers find predictive factors in the data that have proven to indicate future credit performance.  Models can be developed from different sources of data.  Credit bureau models are developed from information in consumer credit-bureau reports.

    Credit scores analyze a borrower's credit history considering numerous factors such as;        Late payments                                                                                                                    The amount of time credit has been established                                                                   The amount of credit used versus the amount of credit available                                         Length of time at present address                                                                                  Employment history                                                                                                Negative credit information such as bankruptcies, charge-offs, collections, etc.          FICO scores are computed by data provided by each of the three credit bureaus: Experian, Trans Union, and Equifax.  Some lenders use one these three scores, while others may use the middle score.                                                                                           

     

     
    Q : What are the steps to buying a house?
    A : Organize your documents

    If you are buying or refinancing a home -

    1. If you are salaried: provide two years W-2 and one month of paystubs OR If you are self-employed: Provide two years tax returns and a YTD profit and loss statement.

    2. If you own rental property, please provide rental agreements and two years tax returns.

    3. Provide recent copies of any stock brokerage or IRA/401K accounts that you may have.

    4. If applicable, provide a copy of divorce decree.

    5. Please provide the contact information (or a copy) of your Homeowners Insurance.

    6. If you are not a US citizen, provide us with a copy of your green card (front and back) or, if you are NOT a permanenet resident provide us with your H-1 or L-1 Visa.

    If you are applying for a home equity loan -

    1. If you are salaried: provide two years W-2 and one month of paystubs OR If you are self-employed: Provide two years tax returns and a YTD profit and loss statement.

    2. If you own rental property, please provide rental agreements and two years tax returns.

    3. Please provide a copy of the Deed on your first Mortgage. This will normally be found in your closing loan documents.

    4. Please provide a signed letter explaining what you plan to do with the proceeds.

    5.  If applicable, provide a copy of divorce decree.

    6. If you are not a US citizen, provide us with a copy of your green card (front and back) or, if you are NOT a permanenet resident provide us with your H-1 or L-1 Visa.