Adjustable rate mortgages determine what you must pay based on an outside index, they may adjust every six months or once a year. Most programs have a cap which prevent your payment from going up to much at once. There may be a cap on how much your interest rate can go up in one period, say no more than two percent. You may have a "payment cap" that instead of capping the interest rate directly caps the amount your monthly payment can go up in one period. Almost all ARM (adjustable rate mortgages) programs have a "lifetime cap" meaning your interest rate can never exceed that cap amount, no matter what. ARM's often have their lowest rate at the beginning of the loan, and can guarantee that rate for anywhere from a month to ten years. You may hear about 3/1 ARM's or 5/1 ARM's or the adjusts according to an index every year thereafter for the life of the loan. Loans life this are often best for people who anticipate moving and therefore selling the house to be mortgaged within 3-5 years, depending on how long the lower rates will be in effect.

A rate lock period can very in length, longer ones usually cost more. A lender will agree to "hold" your interest rate and points for a longer period, but in exchange the rate and maybe points are higher than with a shorter rate lock period.

There are ways to get a lower rate, a large down payment will result in a lower rate than a smaller one, because you're starting out with more equity. You can pay points to lower your rate over the life of the loan, but that means you pay more up front. Closing cost are fess paid by the lender, which the lender then charges you to close the loan. Some people finance their closing costs, but by paying closing costs when the loan closes you will reduce your interest rate.

The interest rate a lender is willing to offer you depends on your credit score and your     income-to-debt ratio. If you have good credit and your income far exceeds your debt obligations, you will qualify for a lower rate.

A point which equals 1% of the total loan amount, is an up-front fee that lowers your monthly payment interest rate and total interest due over the life of the loan. So, a one point loan will have a lower interest rate than a no point loan. Basically, when you pay points you trade off paying money later in favor of paying money now you can pay fractions of points, meaning there are a lot of points packages that can make a loan's terms more favorable if that's what's right for you.

There are a variety of rate and pint combinations available. When you look at different loan programs, don't look just at the rate, compare the whole package. Federal law requires lenders to publish their loans' annual percentage rate which is a tool used to compare different terms, offered rates, and points.

Make sure that the information each of the three credit reporting bureaus has on you is consistent and up to date. Order a copy of your credit report about once a year, and dispute any inaccuracies. if a series of credit reports is requested on your behalf during a limited amount of time, your score goes down until time passes without any inquiries. Changes in the law though have made "consumer-originating" credit report requests not count so much. Also, a series of requests in relation to getting a mortgage or car loan is not treated the same as a number of credit card requests in a limited time. This is because the credit bureaus, and lenders, realize that people request their own credit reports to keep up with what's on them, and smart consumers shop around for the best mortgage and car loans.

The two main components of your credit score are your payment history and the amounts you owe. Bankruptcy filings and foreclosures, which can stay on your credit report for as many as 10 years, can significantly lower your score. It's never a good idea to take on more credit than you can handle.

Late payments work against you, it's important to pay bills on time, even if it's only the monthly payment.

Don't max out your credit lines. Since the size of the balance on your open accounts is a factor, lower balances are better.

By carefully managing your credit, it's possible to add as much as 50 points per year to your score.

Credit scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount, or demographics. Credit scoring was developed as a way to consider only what was relevant to somebody's willingness to repay a loan.  

Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative information. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Different portions of your credit history are given different weights, 35% of your FICO score is based on your specific  payment history. 35% is your current level of indebtedness. 15% each is the time your open credit has been in use and types of credit available to you. Finally, 5% is pursuit of new credit, credit scores requested.

Your credit report must contain at least one account which has been open for six months or more, and least one account that has been updated in the past six months for you to get a credit score. This ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.  

You may not be able to borrow up to 100% of your home's value. Many loan programs are based on what is called a loan-to-value ratio. You may qualify for a refinanced mortgage if you borrow no more than 80% of your homes value, but may not qualify for the same terms if you borrow 90%. The lower your loan-to-value ratio the better terms you'll generally qualify for. In many cases you can reduce your up-front costs for refinancing your mortgage in exchange for higher monthly payments for the life of the loan. But whether you can do this depends on the value of your home and the amount of your new mortgage, and what options you decide are best for you.

You can always use the calculators available on our site to an idea of how much mortgage you can afford, but it's important to meet with us because you'll need a pre-qualification letter.

2.Be honest and complete when you fill out your application.

3. Respond promptly to request for additional information.

4. Be prepared to explain derogatory items in your credit information

5. Get an appraisal done.

There are certain standard costs associated with closing the sale of a house. These fees are split between the buyer and the seller, as spelled out in the sales contract.

Standard Closing Costs

Loan-Related Costs

• Loan origination fee (1% of the loan amount. Can be negotiable)
• Appraisal Fee ($350)
• Credit Report ($20)
• Interest Payment (depends on loan amount)
• Escrow Account (depends on loan amount)

Taxes

• Property taxes
• Transfer taxes and Recording Fees

Insurance

• Homeowners Insurance
• Flood or Quake Insurance
• Private Mortgage Insurance (PMI)
• Title Insurance