In the past, when you wanted to borrow money or open a credit account, you’d sit in front of a banker or department store manager,…

Credit means I’m going to loan you some money and you’re going to pay me back. If you pay me back on time, every time,…

You’ll have to be able to afford both payments. There’s no sense in using this strategy if it’s nearly impossible to pay all the mortgages…

Get a temporary loan on your current house, called a bridge loan, to cover down payment and closing costs for the new home. More on…

There may be one exception: Fannie Mae’s My Community Mortgage (MCM). This zero-down program has been highly successful mainly because it has been fine-tuned to…

Putting zero money down is also an option. However, zero-moneydown loans will carry—you guessed it—a slightly higher interest rate and a still higher mortgage insurance…

If you had to put less than 20 percent down or otherwise had to come up with a PMI payment each month, it’s not likely…

Yes, you can, on some policies. You do so by rolling your PMI into your loan. It’s another alternative to piggyback mortgages and mortgage insurance,…

Historically, no. As an insurance policy, mortgage insurance has never been tax deductible as a separate payment. Until a recent law was passed making it…

Mortgage insurance (MI), also known as private mortgage insurance (PMI), is simply another form of insurance. The cost is based on the type of loan…

That depends largely on how much you have, or will have, available. The main issue concerning down payments is the amount you actually put down.…

You have to contact one of these programs and ask. There are no universal guidelines, but most programs expect you to be a first-time home…

Organizations that are not government agencies with their very own nonprofit status also have DPAPs. Recent IRS rulings, however, have made such entities rare, putting…

There are organizations whose job it is to assist people with their down payments. Many times these are nonprofits dedicated to getting people into their…

Of course any family member can help you out. If you are one of the chosen few fortunate enough to have relatives who can provide…

Sure you can, if your plan allows you to do so. Lenders have allowances to borrow all or part of a down payment from a…

A down payment must be your very own blood, sweat, and tears. Lenders want your down payment to come from your own savings or checking…

There’s no formula. You can figure out what works with a little trial and error. If you apply for a mortgage and want to put…

Risk elements are your gross monthly income compared to your monthly obligations. It’s a comparison of your debt ratios and your credit standing, plus the…

A down payment is your initial money into your purchase. A down payment is one of the risk elements lenders evaluate when making a mortgage…

For starters, it’s similar to how someone calculates commissioned income when it comes to gross income and expenses. Take your gross income and deduct your…

Your lender needs to determine if the asset has been around for a couple of years by looking at your tax returns. The lender will…

You don’t. You show them on your tax returns. It’s meaningless to write in any expense amount on a loan application because for one thing,…

Good question. And a common error. Some sales jobs require you to pay certain expenses out of your own pocket. Car payments, gasoline, and automobile…

Some jobs have a base salary plus commission. Or a base salary plus a bonus. In both cases, the lender will begin by adding your…

Carefully. If you thought lenders scrutinized your bonus income, they’ll research your employment history even more than normal if you work on straight commission. They’ll…

Bonus income is typically averaged over the most recent two-year period, with any year-to-date bonus money added in. Bonus income can vary from person to…

You can include overtime wages in your income, but there are some important facts about overtime that you need to be aware of. I remember…

If you’re paid by the hour, the lender will simply look at your pay stub to see what you get paid each hour and multiply…

There are two things a lender can do. One is to write a letter to your employer, verifying how much you make and how much…

Lenders need to establish, again via third-party verification, your pay frequency. Your pay stub will show your regular earnings during a particular pay period. This…

It means how much and how often you’re paid. The most common and simplest form of pay is a monthly salary. If you work for…

Most loan programs will require that you have been employed fulltime for the previous two-year period. Why? One of the reasons is to establish a…

That depends on how you’re employed and the nature of your job. How you’re employed and how you’re paid will in fact determine what kind…

To document your assets, the lender typically asks for the three most recent monthly statements or the most recent quarterly or annual statements. These documents…

First and foremost, you need to make sure the assets belong to you and you have access to them. Sometimes first-time home buyers share a…

Escrow accounts are neither good nor bad. Lenders like them. Whether or not to take them is a different issue, and mostly a matter of…

Loans with less than 20 percent down are at a higher risk of default than those with more than 20 percent down. And from a…

If you’re paying for taxes and insurance in addition to principal and interest, that indeed affects your ability to pay your bills on time. Your…

Not all of them do every time. The new sheriff in town is an Automated Underwriting System (AUS). Whereas debt ratios are used to test…

There are debt ratio guidelines for almost every loan program, but they’re only guidelines, not hard-and-fast rules. Different loan programs have different ratio rules. Even…

Debt ratios are two numbers expressed as a percentage of your gross monthly income. The first debt ratio is called your housing ratio because it…

This is the most significant concept in lending today. And maybe the most misunderstood as well. Consumers are told time and time again about their…

That depends on a variety of factors, but the most common answer is that your debt ratios are in line with lending guidelines. But it…

Right after your contract is accepted, you will order an inspection of the property. An inspector crawls throughout your house looking for problems in it.…

Yes, it’s safe. When you apply online you’ll see a security signal at the bottom right of the Web page. This signal is a picture…

Essentially, they are the same, but online applications are typically more user-friendly and don’t take as long to complete because they will only ask for…

Within three days of your application, your lender is required by federal mandate to send you a Good Faith Estimate of Settlement Charges and a…

One note here, gang. Don’t lie on your application. This is serious stuff, which is why the loan application asks you more than once, in…

There are ten sections to the 1003: Type of Mortgage and Terms of Loan Property Information and Purpose of Loan Borrower Information Employment Information Monthly…

First, you apply for a loan. You can do that online, you can mail it in, you can do it over the phone, or you…

The key people are the loan officer, loan processor, loan underwriter, inspector, appraiser, closer, and settlement agent. TELL ME MORE ❑ Loan Officer. This is…

Buying a home brings in another tyrant: terminology. You’ll hear terms like PMI, LTV, FICO, title exam, survey, abstract of title, and so on. Sheesh.…

You know before you go. Before you ever start shopping for a home, you should first have your preapproval letter in your hand. Preap-provals speed…

Not yet. There is still an appraisal to be ordered, an inspection to be performed, a title to be searched, and a review to be…

Almost every lender and mortgage broker now uses an AUS. Fannie Mae and Freddie Mac (see Chapter 8) both developed their own AUS to help…

Your loan application is input into a specialized software program that evaluates your entire application, and within a matter of moments your approval is issued.…

When things called ‘‘loan conditions’’ are tagged onto your approval, they mean that your loan is approved ‘‘conditionally.’’ For example: ‘‘Your loan is approved with…

The ‘‘pre’’ stuff verifies two critical elements in credit approval: your ability and willingness to repay a mortgage. Ability and willingness go hand in hand.…

Before you get into any agent’s car, the first thing you’ll be asked is if you’ve applied for a mortgage and been prequalified or preapproved.…