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FAQ
1. How much cash will I need to purchase a home? Answer
2. What is the difference between a fixed-rate loan and an adjustable-rate loan? Answer
3. How is an index and margin used in an ARM? Answer
4. How do I know how much house I can afford? Answer
5. What does my mortgage payment include? Answer
6. How do I know which type of mortgage is best for me? Answer
7. What is a Credit Score? Answer
8. What factors can affect my Credit Score? Answer
9. What documents will I need to process my Loan Application? Answer

Q : How much cash will I need to purchase a home?
A : The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
  • Earnest Money: The deposit that is supplied when you make an offer on the house
  • Down Payment: A percentage of the cost of the home that is due at settlement
  • Closing Costs: Costs associated with processing paperwork to purchase or refinance a house
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    Q : What is the difference between a fixed-rate loan and an adjustable-rate loan?
    A : With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.
     
    Q : How is an index and margin used in an ARM?
    A : An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).
     
    Q : How do I know how much house I can afford?
    A : Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford.
     
    Q : What does my mortgage payment include?
    A : For most homeowners, the monthly mortgage payments include three separate parts:
  • Principal: Repayment on the amount borrowed
  • Interest: Payment to the lender for the amount borrowed
  • Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.
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    Q : How do I know which type of mortgage is best for me?
    A : There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. Proliant Mortgage can help you evaluate your choices and help you make the most appropriate decision.
     
    Q : What is a Credit Score?
    A :

    Commonly called FICO ® scores, there are actually different scores used by each of the three major repositories (Equifax, Transunion, and Experian) to measure your credit. They were all developed by FICO but modified for each company. Scores can vary between the repositories and most lenders will take the MIDDLE of the 3 scores. For more information go to www.myfico.com

    The chart below shows typical score ranges and what they represent to a credit provider.

    SCORE

    COMMENT

    720 and over

    Top line. Best rates and terms offered.

    700 - 719

    Excellent score. You are a very good borrower but still not all loans offered.

    680 - 699

    Good credit. Most loan programs available

    660 - 679

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    640 - 659

    Borderline credit.

    620 - 639

    Weak credit.

    600 - 619

    Difficult. Needs some work, or a special program

    Below 600

    You could be in trouble and need to fix your credit situation.  Some programs down to 580 score and a few below that.

     
     
    Q : What factors can affect my Credit Score?
    A :

    The availability of many loan programs and / or the interest rate within those programs may be determined by your credit scores which are based on a number of factors related to your credit history and consumer behavior. There are five key factors used by the credit bureaus to determine your credit score:

     

    1. Payment History (35% impact on overall score). Paying your debt on time and in full has a positive impact on your score. Late payments, charge-offs, judgments, and collections have a negative impact on your score. Missing a large payment has more of an impact than missing a small payment.
    2. Outstanding Credit Balance (30% impact on overall score). The ratio marking the difference between your outstanding balance and your available credit is important. You should keep your balance below 10% of the available credit limit on your lines of credit.
    3. Credit History (15% impact on overall score). This marks the length of time a particular credit line or debt was established. A borrower who has adequate debt history is much stronger than one with limited history.
    4. Type of Credit (10% impact on overall score). A mix of credit types, auto loans, credit cards, retail accounts, and a mortgage is more positive than a concentration of credit card debt. You want to avoid excessive credit card debt.
    5. Inquiries (10% impact on overall score). The number of inquiries made on your credit history within a six-month period. Each inquiry can ‘cost’ you from 2 to 50 points, up to a maximum of 10 inquiries during any six month period.
     
    Q : What documents will I need to process my Loan Application?
    A :

    Typically we will ask you to provide:

  • Pay stubs for all present jobs for the past thirty days
  • Copies of W2s for the last two years
  • Last two original monthly bank statements (all pages)
  • Your most recent property tax and hazard insurance statements
  • Complete tax returns for the two most recent tax years if you're self emplyed
  • Name and address of your landlord if you are currently renting
  • Purchase Agreement (if this transaction is a purchase)
  • A photocopy of your picture ID and, if you are not a U.S. citizen, a copy of your green card or work visa
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