What determines getting approved for a mortgage? There are a few factors that are taken into consideration: Funds - You will need to determine if you have enough cash for your down payment and closing costs. Income - You'll need to verify your employment information, including your occupation, length of time at your current position and your salary. Either your employer verifies your income or you must have two years of W2's and one month of consecutive pay stubs. Credit History - Your credit history will be checked, including how much you owe and how timely you've made your payments. Appraisal - Your home will be appraised to insure that its value is sufficient to secure your mortgage. What is a good faith estimate? It's a mandated disclosure listing the estimated settlement costs associated with the loan. The lender is required to provide it within three business days after the application is received. The typical settlement charges include appraisal fees, credit report fees, mortgage insurance premium and interest paid in advance. What are points? Points are upfront loan fees that are paid to lenders and mortgage brokers to reduce your monthly interest rate and total interest due over the life of a loan. Here's how it works: 1 point equals 1% of the total loan amount. Paying points for a lower interest rate is a matter of paying money now versus paying money later. Is hazard insurance the same as homeowner's insurance? Yes. It's insurance for the buyer that would compensate the insured for a loss on the property due to specified hazards — fire, theft, etc. What is Private Mortgage Insurance (PMI)? If the down payment is less than 20%, most lenders require it on conventional loans. It is insurance that acts as protection for the lender in the event of a default. Why is the Annual Percentage Rate (APR) different from the interest rate applied for? APR is computed from the amount financed and is based on what your proposed payments will be on the actual loan amount credited to you in the settlement. Why do I have to wait three days to receive my money when I refinance? Because it is a rescindable transaction under federal law. This means that the actual proceeds of the finances are not disbursed for a period of three full banking days after the settlement. During this period, you have the right to rescind (cancel) the transaction. What tax advantages do you have for buying a home? After buying a new home, you can take advantage of substantial tax savings available only to homeowners. These include: Real estate taxes — the full amount of property taxes is a permissible income tax deduction. Mortgage interest payments — in most cases, you can deduct all of the interest paid on your mortgage. Points paid to lenders — you can also deduct, as interest, the points paid to a lender to obtain a new mortgage, provided that the payment represents compensation paid to the lender solely for the use of money, rather than for any special services. The points are fully deductible only in the year of payment. How do I get a copy of my credit report? Call the three major credit bureaus listed below. You will need to give them your: name address telephone number previous addresses (for the past five years) social security number date of birth Keep in mind that these bureaus don't share information with each other. It's a good idea to contact each of them. Don't get discouraged, the process can take many months. But if you're in a rush, we do know a few ways to speed up the process. Your best bet may be to contact us so that we can handle it quickly for you. Equifax - EISC, 800.685.1111 TRW, Inc. - Complimentary Report, 800.392.1122 Trans Union Corporation, Consumer Relations Center, 313.689.3888