Mortgage Process

A credit report is a summary of an individual’s credit history. It shows loan payment history, late payments, existence of liens or other encumbrances, debt forgiveness, bankruptcy filings, and number of inquiries by prospective lenders. The credit bureaus (Equifax, Experian and Transunion) calculate your credit score and submit it to a lender/broker to assist in making a credit decision. Your credit score is one criteria used for the lender’s credit decision. The lender also adheres to loan-approval guidelines that are set by the company itself. Credit scores do not have information on your age, gender, color, religion, marital status, and employment. Contact Information for the Major Credit Bureaus is shown below.

A down payment is the cash you deposit towards a purchase. The larger the down payment, the less you are required to borrow. A conforming loan allows you to avoid private mortgage insurance if you make a down payment of at least 20% on the home purchase price. Not everyone has enough savings for a 20% down payment so in many instances, borrowers put down 3-5% of the purchase price.

Closing costs can comprise fees for a credit reports, application and processing, points, title search, title insurance, as well as the home owner’s insurance premium and property taxes collected.

In general, you should expect to pay for expenses directly related to processing and approving your application, and funding your loan. Certain items, such as the title insurance are standard, county charges according to the loan amount. The amount of taxes and insurance paid at closing can be based on the month the closing takes place. Other fees vary according to lender/broker institution and available programs.

A Loan Estimate is prepared to show the borrower a breakdown of the loan profile, including closing costs, with or without points, rate, term and monthly payment.

Appraisal is the process of estimating fair market value of an asset. Appraisals are routinely required for real estate transactions. All Shores Mortgage uses certified professional appraisers that are an independent party to the transaction. Real estate appraisers use methods that are common in local practice. Comparable-sales method is widely used to appraise real estate.

Also called property insurance, homeowner’s insurance protects the homeowner from weather-related damage, as well as potential liability from events that occur on the property. Lenders require homeowner’s insurance coverage to protect the collateral that secures their loan. Some homeowner’s insurance policies do not cover catastrophic events such as tornadoes, hurricanes or floods. These kinds of events generally require a separate insurance policy. Since homeowner’s insurance premiums can vary in cost, it is worthwhile to “shop” and get quotes.