Purchase

Q: How is my credit and what are my credit scores?

A: Your credit history is one of the most important factors in determining your ability to get approved for a mortgage. We obtain your credit history from the three major credit bureaus…

A complete history of your credit accounts will appear on your credit report. Any public records such as liens, judgments or bankruptcies will also be listed. The percentage of revolving debt, the number of late payments, any accounts in collection and/or any negative public records can lower your credit score. Your credit score is a snap shot at any given time that shows your credit worthiness on the ability and willingness to repay your debt.

Q: Do mortgage companies use my gross or net income?

A: Mortgage companies will approve you using your gross monthly income.

Q: What is my debt-to-income ratio?

A: Your debt-to-income ratio (DTI) is calculated by adding your total monthly expenses that appear on your credit report and then dividing it by your gross monthly income. Please note that your living expenses such as utilities, car/ health insurance etc. are not included in your DTI. Your debt-to-income ratio plus your new monthly mortgage payment should not exceed 50% of gross monthly income. There are some exceptions for ratio's higher than 50%, but as a rule it is best not to exceed this limit.

Q: How much documentation do I need to provide?

A: We have many different loan options for you. Depending on what loan program that you select will dictate the amount of required documentation.

Q: How much can I afford as a down payment?

A: Depending on your debt-to-income ratio (DTI), credit history and credit score, you may have the option to put nothing (zero) down as a down payment. However, a down payment will help you get a better interest rate. Please consult with one of our Lending Advisors to explain the different options available to you.

Q: How much money do I need in savings?

A: Savings or assets can help in the mortgage approval process. Most mortgage companies like to see reserves or assets equal to at least two to three months worth of mortgage payments. However, with the many different programs available today most borrowers can still get approved with very little assets/savings.

Q: What mortgage product is right for me?

A: Depending on how long you think that you will be living in the house or what you would like your monthly payment to be will help determine the best mortgage product for you. You have the option to apply for a Fixed Rate Mortgage, ARM or Interest Only Mortgage.

Q: What is homeowner's or hazard insurance?

A: Homeowner's insurance or hazard insurance protects you against certain losses such as fire, windstorm, or other unforeseen factors. All mortgage companies require you have an active policy by the time of closing.

Q: What is an escrow/ impound account? Do I need one?

A: With an escrow account your taxes and insurance are paid on a monthly basis and added into your mortgage payment. If you do not escrow, you will be responsible for paying one large lump sum at the end of the year. No, you do not have to escrow if your first mortgage is under 80% of the purchase price.

Q: Why is the Annual Percentage Rate (APR) different than the interest rate?

A: Generally the Annual Percentage Rate (APR) is higher than the interest rate. The APR is a measurement of the full cost of a loan including interest and loan fees expressed as a yearly percentage rate. Because all lenders apply the same rules in calculating the annual percentage rate, it provides consumers with a good basis for comparing the cost of loans.

Q: When and why should I lock my interest rate?

A: At aasent you can lock your loan once you have selected the property you wish to purchase and have submitted a loan application. The reason you would want to lock your loan is to guarantee you a specific rate in the future. Most locks are good for 30 days.

Q: What is Mortgage Insurance and will I be required to pay this?

A: Mortgage Insurance guarantees the lender payment of the loan due to default by the borrower. If your mortgage is over 80% of your property value, mortgage insurance is required. There are numerous ways to avoid mortgage insurance. Please consult your Lending Advisor for details.

Q: What does my monthly payment consist of?

A: Your monthly payment consists of the sum of four factors commonly referred to as "PITI"

• * Principal: The amount of payment applied to the loan balance.
• * Interest: The charge for borrowing money.
• * Taxes: Property taxes due to the state on a monthly basis.
• * Insurance: Home owner's insurance on your property calculated on a monthly basis. Please note that taxes and insurance can be paid separately by not escrowing.