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Our loan consultants average over 22 years of NJ Residential Mortgage Lending.

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1. How to choose the right loan? Answer
2. All about credit and FICO scores. Answer
3. Common myths about credit:  Take the Credit Test! Answer
4. What to look for in a LENDER? Answer
5. How do I know the best type of mortgage product for me? Answer
6. What is your rate? Answer
7. What Influences Mortgage Rates? Answer
8. Fixed rate loans vs. adjustable rate loans? Answer
9. How is an index and margin used in an ARM? Answer
10. Types of Income Requirements Answer
11. Pay Option Loans Answer
12. How do I know how much house I can afford? Answer
13. What does my mortgage payment include? Answer
14. Recent Study on Mortgage Needs Answer
15. Glossary Answer

Q : How to choose the right loan?
A : This choice depends on a number of factors, including your current financial picture and expected financial future.  How long you intend to stay in your home is probably the most important question to answer when contemplating what loan makes the most sense.  Mortgage debt is primarily the biggest debt for most Americans and that is why it is so important for customers to deal only with mortgage experts.  Customers need to be able to make informed decisions, which help put them in a better financial situation, no matter what their circumstances may be. Second Generation Mortgage Group, LLC can help you evaluate your choices and help you make the most appropriate decision based on your needs.
 
Q : All about credit and FICO scores.
A : The best way to improve your credit scores is simply to pay your bills ON TIME, keep old accounts, limit balances to .25% of available credit, correct any errors, and use cards regularly but pay balances in full.  Like the saying, "time heals old wounds" if you were late in the past it is imperative to re-establish and show at least a 12 month perfect payment history from your last late. 

Credit Scoring - How it Works
 
Credit scoring is a statistical method that lenders use to quickly and objectively assess the credit risk of a loan applicant. The score is a number that rates the likelihood of repayment. Scores range from 350 (high risk) to 950 (low risk). There are a few types of credit scores; the most widely used are FICO scores, which were developed by Fair Isaac & Company, for each of the credit reporting.  A 670 FICO score is normally accepted as the national average; however, 13% of the population has scores that range between 500-590.
 
Credit scores only consider the information contained in your credit profile. They do not consider your income, savings/investments, down payment amount or demographic factors like gender, race, nationality or marital status. 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 in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your scores. Different portions of your credit file are given different weights. They are as follows:
  • 35% - Previous credit performance (specfic to you payment history)
  • 30% - Current level of indebtedness (current balance compared to high credit)
  • 15% - Time credit has been in use (opening date)
  • 15% - Types of credit available (installment loans, revolving & debit accounts)
  •   5% - Pursuit of new credit (number of inquiries)

Identity theft can cost you thousands of dollars if it goes unnoticed, not to mention dozens of hours cleaning up your credit report and clearing debts owed. To save time and money, it makes good sense to guard -- or at least watch -- your credit reports.

That said protections come in several flavors. Some won't do much, other than alert you to unusual activities on your credit report. Others will prevent anyone from accessing your credit report, including other credit bureaus. It all depends on how much you care about convenience versus safety.

Each preventative measure carries its own set of benefits and caveats, so to help you decide, we highlighted the key differences between credit freezes, fraud alerts and various types of credit monitoring.

Fraud Alerts
Advantages Disadvantages
They are free.
Let lenders know a thief might have stolen consumer's identity.
No charge to remove them.
Consumer can continue to obtain new credit.
Alerts are automatically sent to all credit bureaus after consumer places fraud alert with one.
Free credit report provided from each of the three credit bureaus after placing initial alert.
Remove consumer from prescreened insurance and credit-offer lists for two years.
Credit monitoring services
Advantages Disadvantages
Daily or weekly e-mail alerts report significant changes on your credit report with a particular credit bureau (unless the service monitors all three reports).
Depending on plan, may receive full access to the credit report on file with the agency.
Swift notification of fraudulent credit activity.
Swift notification of new inaccuracies in your reports.
Do not prevent an imposter from obtaining credit in your name.
They are expensive. They can cost anywhere from $50 to nearly $200 for year-round service, depending on the add-ons you choose and how many reports you want to monitor. Compare credit monitoring services at Experian, Equifax and TransUnion.
Generally, you keep getting billed for the services until you cancel.
Do-it-yourself credit monitoring
Advantages Disadvantages
Checking credit reports annually with each credit bureau costs nothing if obtained through annualcreditreport.com.

After the first request, one report costs around $10 each time or in the $30 range for a compilation of all three reports from the three, major nationwide credit reporting agencies Equifax, Experian and TransUnion.

It's up to the consumer to check credit reports.
Must buy new credit reports after first free one.
Checking too often could end up costing more than paying for credit monitoring.
No e-mail notifications of changes on your credit report.
Bank credit monitoring services
Advantages Disadvantages
Convenient, in that the bank manages all the details.
Daily or weekly e-mail alerts report significant changes on your credit report with a particular credit bureau (unless the service monitors all three reports).
Can receive full access to the credit report on file with the credit bureau the bank's service monitors.
Swift awareness of fraudulent credit activity.
Swift awareness of new inaccuracies in your reports.
Cost about as much as credit monitoring services offered by credit bureaus Experian, Equifax and TransUnion.
Do not prevent an imposter from obtaining credit in your name.
Generally, you keep getting billed for the service until you cancel.
Not available at every bank.
Only available to customers of the respective banks.
Must have suspicion of identity theft to place fraud alert.
Don't require the lender to contact you if someone applies for new credit in your name.
Don't stop lenders from granting credit to an imposter. Fraud alerts merely ask that lenders take extra steps to verify the identity of the person applying for new credit or contact you for permission to extend credit.
An initial alert only lasts 90 days, after which it must be renewed or a request for extended alert, which lasts seven years, must be made.

 

 
Q : Common myths about credit:  Take the Credit Test!
A : Seven questions to test your credit knowledge.  True or False? (answers below)

1. Paying my debts will make my credit report instantly pristine?

2. Canceling credit cards does not boost your scores?

3. Too many inquiries hurt my score?

4. Credit scores are locked in for 30 days?

5. Negative accounts disappear in seven years?

6. Checking my own credit report does not harm my standing?

7. There is no need to check my credit report if I pay my bills on time?

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Answers:

1. Paying my debts will make my credit report instantly pristine? FALSE

A credit report is a history of your payments, not just a snapshot of where you are at the moment, says Maxine Sweet, vice president of public affairs for Experian, one of the three major credit reporting agencies. As the author of the popular Web column "Ask Max," she continuously reminds people that you can't change the past

2. Canceling credit cards does not boost your credit scores? TRUE

Experts agree that most creditors want to see at least two or three pieces of active credit to prove you can manage debt responsibly.  The majority of consumers do not understand that those unused cards collecting dust are not hurting your scores.  The reality is that paying your bills on time and not being overextended is more important than having $5,000-$10,000 worth of available credit on a card not in use. Conversely, extremes never look good. Opening one charge account occasionally to take advantage of a 10 percent offer is negligible. Going wild and signing up for five cards during the holiday season would induce a lower score.

3. Too many inquiries hurt my scores? FALSE

Once upon a time, this statement was true, but these are different times.  Now, credit agencies recognize a shopping mind-set when they see one. If a batch of mortgage or car loan inquiries arrives within 30 days, it doesn't impact you.  Outside that 30-day period, if we locate a mortgage or car inquiry that occurred 180 days ago, and then see more mortgage or auto-related hits in the accompanying 14-day window, we err on the consumer's side and assume they are still shopping.

4. Credit scores are locked in for 30 days? FALSE

Fair Isaac Corp.'s models are dynamic, meaning that your FICO score changes as soon as data on your credit report changes.  In other words, your FICO score is recalculated each time your credit is researched.

5. Negative accounts disappear in seven years? FALSE

This depends. Chapter 13 (reorganization of debt) disappears seven years from the filing date. But if you filed Chapter 7 bankruptcy (exoneration of all debt), the window is 10 years from the filing date.  On the positive side, accounts in bankruptcy can be deleted seven years after the date of your first missed payment, so those individual pieces may disappear before the word "bankruptcy" on your report. If you pay off or close an account that had no delinquencies or problems, it, too, remains on the record for 10 years rather than the previous seven, say Experian experts. Again, this means positive information hangs around longer, as a consumer benefit.

6. Checking my own credit report does not harm my standing? TRUE

The reporting agencies distinguish between soft and hard pulls. When TARGET calls to check before issuing its line of credit, the agencies chalk that up as a hard pull and it counts against your score. Personal requests and credit counselors -- if they do it correctly, so insist on this as part of your agreement terms -- fall under soft pulls, which do not reflect negatively on the evaluation. Using a company that promises credit reports as a perk can turn this myth into a self-fulfilling prophecy; because they are merchants in disguise, their free service costs your credit score. Consumers must go directly to the three bureaus if they want a soft pull. The same is true for FICO. Pulling your credit scores can be quite empowering. You have a choice: You can either be very aggressive with your credit management and pull your score with some regularity or take a more passive approach once a year to see how all those credit cards are actually doing.

7. There is no need to check my credit if I pay my bills on time? FALSE

When the Consumer Federation of America and the National Credit Reporting Association analyzed credit scores in the summer of 2004, they discovered that 78 percent of the files were missing a revolving account in good standing, while 33 percent of files lacked a mortgage account that had never been late. Twenty-nine percent contained conflicting information on how many times the consumer had been 60 days late on payment.  There is usually a lot of action taking place that people have zero clues about. Approximately, 75% of all reports have erroneous information ranging from a wrong birth dates, accounts you never applied for,  incorrect balances, and old paid accounts that still show open.

 

 
Q : What to look for in a LENDER?
A : It is imperative that your mortgage lender is always available to assist you throughout the loan process and are committed to making the loan process easy and hassle-free.  We have experts available to help you choose the right product.  At Second Generation Mortgage Group we are committed to only hiring the best talent in mortgage originations.  Our originators are knowledgeable in every product and are trained in new products as the market changes. It is MANDATORY that our loan experts be available whenever it is convenient for you since everyone is on the run in todays fast pace world.

Sometimes it's hard to get the person you need on the phone;  we assure you that this won't happen at Second Generation Mortgage Group.  You have continued dialogue with us throughout the process as we listen to your needs and ask you detailed questions about your current and desired situation.  We bring integrity, honesty, preciseness and professionalism to the process as we deliver a tailored-made loan proposal. 

 
Q : How do I know the best type of mortgage product for me?
A : This is the most common question customers inquire about besides "what is my rate?"  Most customers are of the traditional approach and believe a fixed rate loan is their best and only viable option.  The main reason for this belief is that this is all they have been exposed to; however, the mortgage industry, like the world we live in, has changed dramatically since our parents and grandparents era. 

Historically, home buyers only had one mortgage choice, a fixed rate loan.  People paid off their first and only mortgage as it was rare to relocate or change jobs during their tenure in their home.

That is not the case in the world we live in today.  The prices of homes have escalated. People have second or equity loans, credit card debt, auto loans, student loans, college tuition, home improvements, medical bills, etc.  A fixed rate loan MAY be the best choice for your situation; however, we just want to show you all the options available.  Please go to our "Products" section--as we outline the upsides and downsides of all products and try to match up common scenarios.

The second question that needs answering is how much of a payment can you afford comfortably without stress, taking into account anticipated and unanticipated future expenses.  Once you determine how long you intend to be in your home and how much you can afford on a monthly basis, we will assist you in the perfect mortgage program.  There are many programs and creative loans—it’s important to make sure you are dealing with experts who will accurately explain all the positives and negatives on all the loan programs. 

 

 
Q : What is your rate?
A :

It’s a question that every customer knows to ask, but there's more to the story.  Before we supply you with an accurate quote we need to understand what are you trying to accomplish.  Our job becomes simple once you tell us your objectives.  Once we know your needs, our expert staff will present you with different options and explain the upsides and downsides so that you can make an educated decision.  Once you decide the option best for your situation, we strive to deliver the best possible rate based on your qualifications.

 

At Second Generation Mortgage Group we strive for satisfied customers.  With this in mind, we vow never to quote you a low-ball, unrealistic rate initially as is so common in our industry.  When this does transpire, customers quickly sign up, only to have their deals ultimately "switched up" and their costs drastically increased from the original Good Faith Estimate. We do not play this game!  Alternatively, we promise to underwrite your loan accurately from the beginning, with rate and costs that are pre-approved and signed off on by management.  At Second Generation Mortgage Group you will never have a closing horror story.

 
Q : What Influences Mortgage Rates?
A :

Many factors influence mortgage rates.   

Mortgage rates are influenced on a daily basis more by market perception than particular numbers or data.  Rates can change daily and sometimes even during the course of a day based on economic events that are occurring.  Generally speaking, if government agency or industry economic data is released that indicates a weaker economy, mortgage rates will improve.  Conversely, if commentary hints toward a strengthening economy, mortgage rates can increase.

Here are a few of the most important economic indicators that are released each month:

Consumer Price Index- A measure of the average price level paid by consumers on over 200 goods and services.

Retail Sales- A measure of total receipts of retail stores, adjusted for seasonal variations. 

Chicago PMI- Opinion surveys of over 200 Chicago purchasing managers regarding the manufacturing industry.

Employment Report- Measures of jobless claims, continuing unemployment claims, hourly earnings and job creation.

So why do these indicators influence mortgage rates? 

Mortgages are backed by mortgage bonds.  Bonds are secure investments in difficult economic times because they offer investors a safe, predictable rate of return.  When the economy is weak, investors tend to put their money in bonds and pull it out of riskier investments such as stocks.  As the demand for bonds goes up, bond issuers do not have to pay as high of a yield to attract investors, hence bond yields fall.  Since mortgage rates are tied to mortgage-backed bonds, mortgage rates therefore fall. 

The opposite is true when the economy is hot.  Investors are flocking to the stock market and other riskier investments in an attempt to make a greater return on their money.  Therefore, bond issuers must offer higher yields in order to attract investors to their lower-yield alternative.  Hence, mortgage rates rise.

It is also important to understand how inflation influences mortgage rates.  Inflation erodes the value of the dollar, and thus, erodes the value of a long-term investment relative to today's dollars.  Mortgage companies must charge higher interest rates in order to offset the long-term economic effect of the erosion of the value of their investment which is backed by mortgage bondsTherefore, when inflation is higher than "normal," mortgage rates tend to go up.

One common misconception is that when the Federal Reserve Board raises rates, mortgage rates correspondingly go up.  This is a myth and is simply not true.  When the Federal Reserve raises rates, they are raising the Federal Funds Rate- the interest rate on overnight loans between banks.  The Federal Funds Rate is not tied to mortgage rates.  More important is the commentary of the Federal Reserve and the market perception of their stance on the economy.  The mortgage world watches closely when Ben Bernanke speaks.

Please always be aware that your credit scores, your equity and your income will all play a critical role in what rate you will qualify for in any market.

 
Q : Fixed rate loans vs. adjustable rate loans?
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 Adjustable Rate Mortgage. Normally the interest rate that you qualify for is a combination of the index 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).  Simply stated, your margin is fixed and your index is variable.  There is one loan product/index that we feel out performs all of these and we will be happy to depict a litany of reasons why we feel this way when you speak to a loan consultant at Second Generation Mortgage Group.
 
Q : Types of Income Requirements
A : Full Documentation-Must document two years W2's and recent pay stubs.  Self employed borrowers must show two years complete personal and business returns, in some cases a profit and loss statement may be required. 

Stated Income-Borrowers must have two years employment history in the same line of work.  Salaried borrowers will need a verification of employment performed.  Self employed borrowers will need an accountant letter stating a minimum two year's employment.  Stated income be in line with the profession

No Income-Minimum employment in the same line of work for two years.  Must be verified.  We do not state your income on the application as you are qualified solely on your credit and Loan to Value ratio.

Limited Documentation-Bank statements will be used to verify your income.  Generally, 100% of your average DEPOSITS per month for personal bank statements and 50% of the average deposits will be utilized.  Usually an average of 6-12 months will be used.

No Documentation-Nothing is verified.  Generally, you must have better than average credit to qualify for this type of loan.

Keep in mind, the less you document, the higher your interest rate may be.   If you have good to excellent credit, the rates are usually the same or just slightly higher than a full doc loan.  Everything is risk assessed based on credit, equity and income type.

 
Q : Pay Option Loans
A : Please read about this on our "product" section.  The majority of these are adjustable loan products which are usually based on the following: LIBOR, MTA, COFI, CODI and COSI indexes (learn more about the different indexes by consulting your mortgage expert at Second Generation Mortgage Group).  It is important to realize you are taking these loans for the payment flexibility and/or if you feel you will not be staying in your home long enough to benefit from a fixed rate loan.

These loans provide payment options:  minimum payment (1 %+), interest only payment, 30 year payment (principle and interest) and a 15 year payment.   Every month you have the choice of which to pay.  Keep in mind, if you only choose the minimum payment, your balance will increase and you would be incurring "deferred interest or negative amortization."  Many customers take these loans and don't mind their balances going up--they know you can always pay extra and bring the balance down or they realize that the normal appreciation of their homes go up and more than outweigh any "neg am."  For example--you save $12,000 a year compared to the 30 fixed payment you could have opted for, your loan balance goes up $7,000 and your home went up in value $15,000, in this scenario, you still gained equity in your home more than you had the previous year and you have paid less each month on your payments. Other customers pay the minimums and then pay a larger payment once or twice a year to knock the balance of their loan down or send extra money each month when their budget dictates.

As long as you are educated on how this loans work and the possible downsides, you can be comfortable in this type of loan for years and budget and plan for you and your family's future better than with a higher fixed payment.  It's important if seriously considering these loans to contact your mortgage experts at Second Generation Mortgage Group who will breakdown all the pros and cons for you unlike other companies who just tell you what you want to hear.

 
Q : How do I know how much house I can afford?
A :

Generally, you can purchase a home with a value of two or three times your annual household income.  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.

Please give us a call, and we can help you determine exactly how much you can afford.  We have 100% financing available for qualified applicants.  The basic rule of thumb is as follows: the more cash you can put down on your home, the better your pricing.  The more money you put down the more options will be accessible.  We can structure loans that can help if you have little money to put down.

 

 
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.
  •  
    Q : Recent Study on Mortgage Needs
    A :

    December 14, 2006

    By MortgageDaily.com staff

     

    Final mortgage approvals that take longer than one week are likely to create an unhappy mortgage prospect, according to a new study which cited several sources of borrower dissatisfaction. The importance of interest rates, office location and the internet was also analyzed.

    Overall satisfaction with the mortgage borrowing process increased 7 percent from 2005 and was most impacted by improvements in the closing process, according to J.D. Power and Associates 2006 Primary Mortgage Origination Study released today.

    The study, fielded recently between October and November, was based on responses from 4,115 borrowers who obtained a new mortgage in the previous nine months, J.D. Power reported.  The three primary factor areas that drive customer satisfaction with lenders are the application/approval process, loan officer/representative or mortgage broker and closing.

    "In a cooling housing market where we see decreases in purchase mortgage and refinance volumes, greater stability exists in the industry, allowing lenders to better focus on the needs of their customers and smooth out any wrinkles in their operations," said Rocky Clancy, J.D. executive director of banking and mortgage practice.

    Despite improvements, the study found that 28% of borrowers experienced some problem during the mortgage origination process, including errors in closing documents, miscommunication of loan terms and unavailable or unresponsive loan consultants or brokers, the marketing information firm said. On average, two out of five borrowers with problems indicate their loans closed late due to problems which played a major impact on overall satisfaction scores.

    "One of the biggest drivers of dissatisfaction in mortgage origination is not keeping commitments," Clancy added. "Top-performing lenders differentiate themselves first and foremost by framing expectations and executing well within the boundaries they establish. The bottom line for many customers in terms of how well their lender satisfies them is whether the loan closes on schedule and includes accurate closing costs, payments and payoffs."

    The speed at which lenders give borrowers final approval on their loans is a critical influence on overall satisfaction. While two-thirds of customers said they received final approval less than one week after completing an application, satisfaction dropped nearly 100 points, on a 1,000 point scale, among those who waited seven or more days, J.D. reported.

    Asking borrowers to provide additional information and documentation after they submit an application reportedly significantly decreases satisfaction as well. In the study, 56% of respondents complained that they were asked to produce additional information more than once -- further impairing satisfaction.

    The driving reason for selecting a lender revolves around decisions regarding interest rates, fees, and closing costs, as 28% of respondents indicated this, and 17% said a previous or existing relationship with the lender was a strong motivator, the firm reported.

    While customer satisfaction is highest when dealing with lenders in person, the research showed borrowers managing the process online were more satisfied than those who interacted with a person over the phone. Furthermore, the Internet played a role in two out of five borrowers using a lender's site or online third-party service to gather information on mortgages, according to the announcement.

     

     
    Q : Glossary
    A : Annual Percentage Rate (APR)
    A term used in the Truth-in-Lending Act to represent the percentage relationship of the total finance charge to the amount of the loan. The APR reflects the cost of your mortgage loan as a yearly rate. It will be higher than the interest rate stated on the note because it includes, in addition to the interest rate, loan discount points, fees and mortgage insurance.

    Adjustable-Rate Mortgage (ARM)
    A mortgage in which the interest rate is adjusted periodically based on a pre-selected index. Also known as the variable rate mortgage. (ie, with a 5 year ARM, your rate is fixed for 60 month then the rate can adjust up or down 2% each year.)

    Appraisal
    A written analysis of the estimated value of a property prepared by a qualified appraiser. Standard single family appraisals cost approximately $295.

    Biweekly Payment Mortgage
    A plan to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one half of the monthly payment required if the loan were a standard 30-year fixed rate mortgage. The result for the borrower is a substantial savings in term and interest.
     

    Commitment (Loan)
    A binding pledge made by the lender to the borrower to make a loan, usually at a stated interest rate within a given period of time for a given purpose, subject to the compliance of the borrower to stated conditions.

    Commitment Fee (Loan)
    Any fee paid by a potential borrower to a lender for the lender's promise to lend money at a specified rate and within a given time period.

    Commitment Letter
    A formal offer by a lender stating the terms under which it agrees to loan money to a home buyer.

    Conforming Loan
    Conventional home mortgages eligible for sale and delivery to either the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC). These agencies generally purchase first mortgages up to loan amounts mandated by Congressional directive.

    Conventional Mortgage
    A mortgage not obtained under a government insured program (such as FHA or VA).

    Debt-to-Income Ratio                                                                                                The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long term debts is divided by his or her gross monthly income. See housing expenses-to-income ratio

    Equal Credit Opportunity Act (ECOA)
    A Federal law requiring lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, sex, age, marital status, receipt of income from public assistance programs or past exercising of rights under the Consumer Credit Protection Act.
     

    Escrow
    The account in which a mortgage servicer holds the borrower’s payments prior to paying property expenses (such as taxes and insurance).

    Fair Credit Reporting Act (FCRA)
    A federal law which requires a lender who is rejecting a loan request because of adverse credit information to inform the borrower of the source of such information. This law also requires consumer reporting agencies to exercise fairness, confidentiality and accuracy in preparing and disclosing credit information.

    Federal Home Loan Mortgage Corporation - FHLMC (FREDDIE MAC)
    A quasi-governmental agency that purchases conventional mortgages in the secondary mortgage market from insured depository institutions and HUD-approved mortgage bankers. It sells participation sales certificates secured by pools of conventional mortgage loans, their principal, and interest guaranteed by the federal government through the FHLMC. It also sells Government National Mortgage Association bonds to raise funds to finance the purchase of mortgages. Popularly known as Freddie Mac.

    Federal National Mortgage Association - FNMA (FANNIE MAE)
    A taxpaying corporation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by the Federal Housing Administration (FHA) or guaranteed by the Veterans Administration (VA) as well as conventional home mortgages.

    FICO
    FICO means "Fair Isaac & Company Credit." A FICO score is a method of determining the likelihood that consumers pay their bills. Commonly referred to as a "credit score," FICO attempts to condense a consumer's credit history into a single number.
     

    Good Faith Estimate
    An estimate of charges that a borrower is likely to incur in connection with a settlement.

    HUD
    The HUD-1 Statement A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing
     
    Loan to Value Ratio (LTV)
    The ratio of the amount of your loan to the appraised value of the home. The LTV will affect programs available to the borrower and generally, the lower the LTV the more favorable the terms of the programs offered by lenders.
     
    Non-Conforming Loan
    Conventional home mortgages not eligible for sale and delivery to either FNMA or FHLMC because of various reasons, including loan amount, loan characteristics or underwriting guidelines
     
    Private Mortgage Insurance (PMI)
    Insurance provided by non-government insures that protects lenders against loss if a borrower defaults. Fannie Mae generally requires private mortgage insurance for loans with loan-to-value (LTV) percentages greater than 80%.
     
    Points
    Charges levied by the mortgage lender or broker and usually payable at closing. One point represents 1% of the face value of the mortgage loan. (Ex: Mortgage Loan $200,000, 1% Point = $2,000 charged to you.)
     

    Real Estate Settlement Procedures Act (RESPA)
    A federal law requiring lenders to provide home mortgage borrowers with information on known or estimated settlement costs. It also establishes guidelines for escrow account balances.

    Title Insurance Policy
    A contract in which an insurer, usually a title insurance company, agrees to pay the insured party a specific amount for any loss caused by defects of title on real estate in which the insured has an interest as purchaser, mortgagee, or otherwise.

    Title Search
    An examination of public records to disclose the past and current facts regarding the ownership of a given piece of real estate.

    Truth-in-Lending Act
    A Federal law requiring full disclosure of credit terms using a standard format. This is intended to facilitate comparisons between the lending terms and financial institutions.

     

     

    Please contact us directly at

    732-741-1933   

     or

    1-800-254-8200

    We are a local New Jersey based company

    788 Shrewsbury Avenue Tinton Falls, NJ 07724

    New Jersey Licensed Mortgage Bankers, NJ Department of Banking and Insurance

     

    NMLS 231019