Frequently Asked Questions
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The process of evaluating a loan application to determine the risk involved for the lender.
Credit scoring models are intricate and vary among creditors and credit types. If a factor changes, your score may change, but improvement depends on how it relates to other factors in the model. Only the creditor can explain what might boost your score under their specific model.
Scoring models assess these aspects of your credit report:
Payment History: Timely bill payments are crucial, while late payments, collections, or bankruptcy negatively affect your score.
Outstanding Debt: The amount you owe compared to credit limits can impact your score.
Credit History Length: A short credit history may affect your score but can be offset by timely payments and low balances.
Recent Credit Applications: Multiple recent credit inquiries may harm your score, but not all inquiries are counted.
Types and Number of Accounts: Having diverse credit accounts is good, but too many credit cards might have a negative effect.
Credit scores can also consider information from your credit application, like your job, employment duration, or homeownership. To improve your score, focus on paying bills on time, reducing outstanding balances, and avoiding new debt. Significant score improvement may take time.
At the “Closing” or “Funding” stage, the property’s ownership shifts from the seller to you. This process involves various parties, including real estate agents, attorneys, lender representatives, and more. If you can’t attend, you can have an attorney represent you, especially if you’re out-of-state. The duration of the closing can vary, often taking one to several hours, depending on contingencies and escrow accounts.
Attorneys and real estate professionals typically handle most of the paperwork. Your level of involvement depends on your specific arrangement.
Before closing, it’s common to conduct a final inspection or “walk-through” to ensure agreed-upon repairs are completed, and included items like drapes and fixtures are in place.
In many states, a title or escrow firm handles the settlement. You provide them with necessary documents and cashier’s checks for disbursement. Your representative then hands the check to the seller and gives you the keys.
A pre-approval is a preliminary evaluation of a potential borrower by a lender to determine whether they can be given a pre-qualification offer.
A pre-approval is a preliminary evaluation of a potential borrower by a lender to determine whether they can be given a pre-qualification offer.
On a conventional mortgage, when your down payment is less than 20% of the purchase price of the home mortgage lenders usually require you get Private Mortgage Insurance (PMI) to protect them in case you default on your mortgage. Sometimes you may need to pay up to 1-year’s worth of PMI premiums at closing which can cost several hundred dollars. The best way to avoid this extra expense is to make a 20% down payment, or ask about other loan program options.
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