What is a Mortgage?
A mortgage loan is a loan that a bank or lender gives you to help finance the purchase of a house. It is most advantageous to borrow approximately 80% of the value of the house or less. The house you buy acts as collateral in exchange for the money you are borrowing to finance the house (mortgage).
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Understanding Mortgage Credit Scores
Your credit report is separate from your credit score, though the score is developed from the report. In addition to viewing credit reports from the three major reporting bureaus, you also should obtain your FICO score. Your score is like a report card. Fair Isaac & Co. (the FICO score keeper) assigns you a number based on the information in your credit report.
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Debt to Income Ratios - What Are They?
When you apply for a mortgage, your lender will analyze your debt ratios, which are also known as your debt-to-income ratios, or DTI. Lenders calculate DTIs to ensure you have enough income to comfortably pay for a new mortgage while still being able to pay your other monthly debts.
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Loan to Value Ratio Explained - Why Does It Matter?
A loan-to-value ratio (LTV) is a comparison between the value of your loan and the value of your home.
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Mortgage Insurance - What is PMI and how does it work?
Mortgage lenders make many borrowers purchase mortgage insurance to protect the lender if the borrower is unable to pay the mortgage. In other words, mortgage insurance guarantees your lender will get paid if you default.
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How Does Self-employment Affect Your Ability to Get a Mortgage
If you're self-employed, you probably already know that it may be a little harder for you to get a mortgage loan than for someone who works at a big company.
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What is a Financing Contingency on a Home Purchase?
A financing contingency is a clause in a home purchase and sale agreement that expresses that your offer is contingent on being able to secure financing for the house. Typically a buyer uses this clause to establish a set period of time to apply for a mortgage and/or close on the loan.
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What Does a Title Company Do?
A title company makes sure that the title to a piece of real estate is legitimate and then issues title insurance for that property. Title insurance protects the lender and/or owner against lawsuits or claims against the property that result from disputes over the title.
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What Are Closing Costs and How Much Are They Typically?
When you get a mortgage, you will need to pay closing costs, which are fees - charged by lenders and third parties -- related to the purchase of the home. So, in addition to owing the lender the down payment on the home and the principal and interest related to the mortgage.
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Finding a Mortgage with Bad Credit - Information and FAQ
So, what do you do if your credit reports make you want to hide under the covers and never use your credit cards again? Relax, you can turn your ratings around.
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When to Buy a Home?
Buying a house has never been more affordable. Low prices coupled with record low mortgage rates have made purchasing a primary residence, second home or investment property very appealing. However the decision to buy a house is also a very personal one.
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Owning vs. Renting, What Is the Right Decision for You?
Buying a home in order to build equity is one of the main financial reasons prospective buyers jump into the market, but many people also yearn for the satisfaction of home ownership.
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Can I Afford a Mortgage?
Whether you're a first-time buyer looking for the perfect starter house or a seasoned pro trading up to your waterfront dream home, you are probably asking the same questions: Can I afford this? And is this the right move at the right time?
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Down Payments: How Much You Need to Save
A down payment is the amount of money you spend upfront to purchase a home and is typically combined with a mortgage to total the full purchase price of a home.
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How to Get Pre-Approved for a Mortgage
A pre-approval is a commitment in writing from a lender that a borrower would qualify for a particular loan amount based on income and credit information. Most pre-approval letters are good for 60 to 90 days.
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What Does a Mortgage Broker Do? Broker vs. Banker vs. Lender
Lenders are the ones who give you the money — either directly or through a third-party — to fund your loan. Lenders have various names based on how they acquire their clients and what they do with your loan after it is funded.
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All About Mortgage Lenders: License Info, Reviews
Zillow's goal has always been to empower consumers with information so that they can make more informed decisions.
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Questions You Should Ask Your Mortgage Lender
When you ask the questions below, listen carefully to see if the lender is answering in a straightforward way, without using jargon you don't understand. When you ask about fees, do they include them all voluntarily? If you think they are trying too hard to push you in a certain direction, go elsewhere.
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How to Choose a Mortgage Lender: Criteria and Help
On Zillow Mortgage Marketplace you can sort quotes you receive by whatever matters most to you: APR, interest rate, monthly payment, lender fees, loan program, lender rating or cheapest cost over a certain amount of time.
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How to Shop for a Mortgage?
When shopping for a mortgage, we'd encourage you to compare mortgage quotes from different mortgage lenders. The easiest way to do this all at once is to submit an anonymous loan request on Zillow Mortgage Marketplace. You will get real-time, customized mortgage quotes back from many different lenders.
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Qualifying for a Mortgage
A basic truth: A mortgage loan holds your house and land as collateral; it's not a pound of flesh, but the loss can seem just as life-threatening.
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How to Fill Out Mortgage Application Paperwork
To get a loan to buy a home, you'll need to fill out a mortgage application. This application -- typically called the Uniform Residential Loan Application, or Fannie Mae Form No. 1003 -- will help the lender determine whether you're a good candidate for a loan and how much they'll let you borrow.
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Sourcing Down Payment Funding: Gift Funds, Etc.
When you purchase a house, you will likely have to put a large sum of money down as your down payment. Most loan programs require you to put down 3 percent or more of the value of your house in cash.
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When to Lock in a Mortgage Rate
A rate lock is a guarantee from a mortgage lender that they will give a mortgage loan applicant a certain interest rate, at a certain price, for a specific time period. The price for a mortgage loan is typically expressed as "points" paid to obtain a specific interest rate.
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How Do Appraisals Affect Your Mortgage?
During an appraisal, an expert evaluates your home and property and gives you an estimate on how much it is worth. Appraisals are conducted by professionals who are licensed by the state -- they have to take courses and do an internship to get licensed -- to do evaluations of homes. Here's what you need to know about appraisals.
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Mortgage Closing Process: When Does It Close & When Do I Get a Key?
A mortgage closing is the last step in buying a home: At the end of the closing, the buyer becomes the legal owner of the home. Obviously, this can seem intimidating, so in this article, we'll walk you through the details of a mortgage closing so you'll know exactly what to expect.
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The Complete Guide to Home Insurance
A homeowners insurance policy provides homeowners with financial compensation should they suffer losses related to their home. It would pay for the structure and contents of your home if they were damaged or destroyed, as well as legal costs if someone is injured in your home or on your property.
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What is an Assumable Mortgage?
An assumable mortgage is one that a buyer of a home can take over from the seller – often with lender approval – usually with little to no change in terms, especially interest rate. The buyer agrees to make all future payments on the loan as if they took out the original loan.
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What is a GFE?
The Good-Faith Estimate is a document that includes the breakdown of approximate payments due upon the closing of a mortgage loan. The GFE helps borrowers shop and compare costs of loans with lenders. Smart shoppers apply for at least two loans and use the GFEs to determine which lender to use.
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What is a PITI?
PITI is an acronym for Principal, Interest, Taxes and Insurance, pronounced "pity." It is the collective amount a borrower pays when buying a home with a mortgage loan. It is the total dollar amount a lender's underwriter factors into the borrowers monthly payments when determining how much house one can afford.
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What is an APR?
The Annual Percentage Rate, or APR, reflects the true cost of the loan, factoring in the interest rate plus any upfront costs and fees to obtain that rate or to close the loan. The APR, usually shown next to the advertised, or nominal, interest rate, is always higher than the actual, or effective, loan rate because it annualizes the fees.
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There are several costs involved in mortgage loan transactions. One of the closing costs charged by the lender is called 'mortgage points' or just 'points.' One 'point' is the equivalent of 1 percent of the loan amount. For example, if you purchase a home and borrow $100,000, every point would cost $1,000. These points are charged by the lender to obtain the amount borrowed at a particular rate. Points can be negotiated between the buyer and seller and can be paid by either party.
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Subprime loans are mortgage loans that do not meet the borrower credit requirements of Fannie Mae and Freddie Mac.
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Prime rate is the short-term interest rate charged by a lender to customers who are the least likely to default on their loans. The most credit-worthy customers receive the best or lowest rate that the lender would offer any of its customers. Each lending institution sets its own prime rate.
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Mortgage Life Insurance
Mortgage life insurance is a policy designed to pay off the remaining loan balance on the insured person's home in case of death. The major difference between mortgage life insurance and a term life insurance policy is that the lender is named as the beneficiary of the policy so the proceeds must be used to pay off the mortgage; whereas, with a term life policy, the heirs decide what to do with the proceeds.
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Mortgage Interest Deduction
Prior to the tax reform act of 1986, all interest payments were tax deductible including credit cards, car loans, personal loans as well as mortgage loans. The tax reform act eliminated all the other consumer loan interest deductions but kept the mortgage interest deduction intact. The idea was to give Americans an incentive for homeownership.
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What is a Planned Unit Development?
When you're shopping for a home, you'll encounter many property types along the way, and even the standard property types like single family homes, condos, and planned unit developments (PUDs) have small but important differences.
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How to Get your Free Credit Report: FACTA Overview
For more than a decade now, federal law has allowed U.S. consumers to obtain a free credit report each year. Since many people don't know exactly how this works, let's review a brief history of this law, where to get your free credit report, exactly what credit report data you'll get for free, and which "free credit report" services to avoid.
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Community Reinvestment Act (CRA) & How It Relates To Mortgages
One common term you'll hear when it comes to mortgage lending in low- to moderate-income areas is "CRA." But what is CRA? Let's answer that question and explain how it relates to the mortgage process.
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What Is a Short Sale: Your Guide to Buying Or Selling a Short Sale
When you owe more on your home than it's worth and you need to sell, the transaction is called a short sale. You need your lender's approval to do a short sale because they'll be accepting less than they're owed at closing. If you're a buyer, a short sale can enable you to buy at a discount because the seller is distressed and has fewer options. Let's review how short sales work for sellers and buyers.
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