FREQUENTLY ASKED QUESTIONS
Q. Can I buy a home if I have less-than-perfect credit?
A. Yes. Keep in mind that we don’t just look at your past history, but also at your ability and willingness to pay in the future. At AHL, we may be able to help you buy a home, even if your credit isn’t perfect.
Q. How does Atlantic Home Loans use my credit report?
A. Your credit report is used to evaluate your mortgage request by showing AHL how you have handled your credit obligations in the past. The following companies can provide you with a copy of your credit report, often free of charge.
Q. Which is better: a fixed or adjustable interest rate?
A. If you plan to be in your home for more than seven years, you may want to consider a fixed rate mortgage, which offers predictable payments and long-term protection against rising mortgage interest rates. If you plan to be in your home for seven years or less, an adjustable rate mortgage could be attractive. Keep in mind that with an adjustable rate mortgage, your monthly payments have the potential to go up each time your interest rate adjusts.
Q. When should you pay discount points?
A. When you pay a discount point, you are essentially paying part of your interest to the lender up front. This will lower your interest rate — as well as your monthly payment — over the life of the loan. One discount point is typically equal to 1% of the loan amount. For example, one point on a $100,000 loan would require payment of $1,000 at closing. Generally speaking, the longer you plan to remain in a property or hold your mortgage, the more advantageous it is to pay points. There is no requirement to pay discount points; whether or not you decide to pay points is completely up to you.
Q. What documents will I need to apply for a mortgage?
A. Traditional loans usually require documents that verify your employment, income and assets, and may include:
· Your Social Security number and Drivers License
· Pay stubs for the last two months
· W-2 forms for the past two years
· Bank statements for the past two months
· One to two years of federal tax returns
· A signed contract of sale (if you’ve already chosen your new home)
· Information on current debt, including car loans, student loans and credit cards
Q. How much do I need for a down payment?
A. There is no set amount. In fact, you might be surprised to learn that many first-time homebuyer programs require as little as 3.5% down. Today, there are many loan programs that can be tailored to fit your needs and financial resources. Keep in mind that for down payments of less that 20%, private mortgage insurance may be required.
Q. Why do I need to pay for another policy of title insurance when we already own the property and purchased title insurance when we bought the house?
A. Before closing your new mortgage, your new lender must be certain that the title to the property will be free and clear, free of prior defects and indebtedness. A new policy is needed to protect the new lender and subsequent investor of your new mortgage. Both a homeowner and prospective lender need to be certain that what is available on the property is what is referred to as a “marketable title”. A title company researches the legal history of the property that entails searching public records in the offices of the county recorder. Problems with the title could threaten the mortgage, limit ones use and enjoyment of the property and could result in financial loss. A policy of title insurance protects a homeowner’s title and the insurer covers the cost of any legal challenges.
Q. What is APR and how is it calculated?
A. APR stands for annual percentage rate and its purpose is to give borrowers a truer representation of the effective interest rate on their mortgage. APR factors in certain closing costs and fees and spreads these costs over the life of the mortgage, along with the note rate, to arrive at a more accurate annualized percentage rate than the note rate alone represents. However the note rate determines the payment.
Q. Will the Atlantic Home Loans require an appraisal of the property? If so, will I receive a copy of it?
A. Yes. The property is the collateral for the mortgage, therefore an appraisal is almost always required and if a borrower pays for the appraisal he or she is definitely entitled to receive a copy of it.
Q. What is and escrow account?
A. An impound/escrow account is an account set up by a lender to hold funds that are set aside for the payment of property taxes and insurance. In addition to the principal and interest payment on your mortgage loan, you may elect—or be required—to put aside additional funds each month in an impound/escrow account to pay for property taxes and mortgage and hazard insurance. The lender holds the money in an impound/escrow account and makes the payments from the account when they are due.
Q. Why are you asking me for more information or something I already provided?
A. You may be asked to provide additional information as your application moves further along the process and is reviewed by a loan underwriter, or if the document that was submitted is no longer current.