San Diego Home Mortgage Frequently Asked Questions (FAQ) Page 3

A: Generally, the process takes as long or short as the borrower wishes. Explaining and signing the documents takes approximately 30 to 45 minutes. However, the borrower may choose to sign the documents and be on his/her way or ask a number of questions and spend more time. Closings may also vary from closing agent to closing agent.

A: By doing a first and second lien you will avoid private mortgage insurance, get a larger tax deduction, have a better equity position, and you will also be able to waive escrows if desired.

A: These are similar terms thrown loosely around by many loan officers. They essentially mean that a mortgage professional has reviewed your qualification ability from a credit, income, debt obligations, and assets available for the purpose of getting a home mortgage.

A: The easiest way to avoid PMI is by putting 20% down payment; however, PMI can also be avoided if you only have 5% or 10% for the down payment. The way to accomplish this is via a first and second mortgage combination commonly referred to as 80/10/10's or 80/15/5's.

These two methods combine a first mortgage lien for 80% of the home price with a second mortgage lien for either 10% or 15% of the home price leaving the remaining 5% or 10% as the down payment. Because the first lien is at the magical 80% loan=to-value, there is no PMI required, even though a second mortgage is being "piggybacked" onto the financing thus allowing for the lessor down payment.

While the second lien terms are not as attractive as first lien rates, the second mortgage is still home mortgage interest and thus deductible as such on your federal tax return where PMI is insurance and offers no deduction.

A: Your credit score is a one look number at your overall credit rating. The calculation formula for this score is somewhat of a mystery and a secret held by the credit reporting bureaus. We do know that the major variables to derive this score are: public records, late payments, how recent and the number of late payments, amount of credit open, balances on credit open compared to available credit, and inquiries into your credit history. Each of the three major credit bureaus (Experian, TransUnion, and Equifax) offer a credit score for each borrower. So for a married couple there are six credit scores.

A: This answer depends largely upon the type of mortgage you are trying to obtain. The most attractive and most common type of mortgage financing is FNMA & FHLMC also known as agency paper. To get an agency approval, the rumored acceptable credit score is 620. This can vary widely depending on other factors when underwriting the buyer (down payment, income, liquid assets...). To offer a range, consider the following: below 620 is poor, 620-650 marginal, 650-680 nothing special, 680-700 fairly good, 700-720 good, 720-750 very good, above 750 is excellent. Many loans are closed every day with credit scores less than 620. More than likely they are not on agency paper. Alternatives to agency paper are government loans (FHA & VA) and sub-prime money.

A: No. It is your mortgage and you may decide upon the lender. However, most volume builders are effectively "forcing" their buyers to use their in-house mortgage company by refusing to pay certain fees or even altering upgrade packages based upon them getting or loosing the mortgage. This "forced-use" game most often spells higher interest rates for the buyer compared to what is available in the open marketplace.