Learning Center

Frequently Asked Questions

Can I purchase a home with bad credit or a Bankruptcy?
YES! There are many non-conforming loan programs available these days to help you buy a home.

Can you help me understand and clean up my credit history?
Yes! To start with, I have resources available online to assist you in understanding the basics of credit scoring and repair.

Understanding Credit Scoring - Booklet

Where appropriate, I have established the relationships necessary to refer my valued clients to a reputable nation-wide credit repair and clean up agencies for a FREE consultation.

Can I purchase a home if I am self-employed?
YES!! There are many non-conforming loan programs available these days to help you buy a home. "Stated income" and "alt-doc" programs are most readily used for self-employed borrowers.

What is the difference between pre-approval and pre-qualification?
Pre-qualification includes a brief conversation with me to identify debt ratios, buying power and potential lender programs. At that point I am able to issue a pre-qualification letter, based on the information you have given me. I have not yet collected supporting documentation, run credit or submitted your file to a lender. A pre-approval includes submission of your file to a lender by either manual or automated underwriting. Having a lender pre-approval in hand while you search for your dream home can put you in a better negotiating position while making an offer, much like a cash buyer.

What is a conforming loan and a non-conforming loan?
Conforming loans are eligible for purchase by the two major Federal agencies that buy mortgages, Fannie Mae and Freddie Mac. There are sets of guidelines for both agencies that the borrowers, home and loan programs must fall into. The current loan limit for conforming deals is $359,950 for a single-family residence.

Non-conforming loans fall anywhere outside of those guidelines listed above. This can mean a higher loan limit, exhausted debt ratios, credit challenged borrowers, etc. In today’s market, most borrowers have something in the file that indicates we have more options available to us other then just that of which is offered by conforming lenders.

What do I mean when I use the terms "full-doc?" "Alt-doc?" "Stated Income?"
Full Doc: Both income and assets are disclosed and verified. Formal verification requires the borrower's employer to verify employment and the borrower's bank to verify deposits.
Alt Doc: Alternative documentation, designed to save time, accepts copies of the borrower's original bank statements, W-2s and paycheck stubs.
Stated income/verified assets: Income is disclosed and the source of the income is verified, but the amount is not verified. Assets are verified, and must meet an adequacy standard such as, for example, 6 months of stated income and 2 months of expected monthly housing expense.
Stated income/stated assets: Both income and assets are disclosed but not verified. However, the source of the borrower's income is verified.
No ratio: Income is disclosed and verified but not used in qualifying the borrower. The standard rule that the borrower's housing expense cannot exceed some specified percent of income is ignored. Assets are disclosed and verified.
No income: Income is not disclosed, but assets are disclosed and verified, and must meet an adequacy standard.
Stated Assets or No asset verification: Assets are disclosed but not verified; income is disclosed, verified and used to qualify the applicant.
No asset: Assets are not disclosed, but income is disclosed, verified and used to qualify the applicant.
No income/no assets: Neither income nor assets are disclosed.

When does it make sense to refinance?
Usually people refinance to save money, either by lowering the rate & term of their existing loan or consolidating other consumer debt. Refinancing is also a great way to convert an adjustable loan to a fixed rate or to consolidate your 100% split purchase to one streamlined loan. The decision to refinance can be difficult, since there are several reasons to refinance. However, if you are looking to save money, try this calculation:

This is the "break even" time. If you plan to own your home longer than this, you will save money by refinancing. Contact me directly for more assistance.

What is a good faith estimate and when should I request one?
Also referred to as "GFE", it is used to itemize all settlement charges that the lender is obliged to provide the borrower. You should receive your GFE within three business days of completing your loan application. If you have not, feel free to request it.

What are points and when should I pay them?
One (1) point = 1% of the loan amount. "Points" are used to express the upfront cash payment/cost of the loan. The best way to decide whether you should pay points or not is to perform a break-even analysis. This is done as follows:

1. Calculate the cost of the points. Example: 2 points on a $100,000 loan is $2,000.
2. Calculate the monthly savings on the loan as a result of obtaining a lower interest rate. Example: $50 per month
3. Divide the cost of the points by the monthly savings to come up with the number of months to break even. In the above example, this number is 40 months. If you plan to keep the house for longer than the break-even number of months, then it makes sense to pay points; otherwise it does not.
4. The above calculation does not take into account the tax advantages of points. When you are buying a house the points you pay are tax-deductible, so you realize some savings immediately. On the other hand, when you get a lower payment, your tax deduction reduces! This makes it a little difficult to calculate the break-even time taking taxes into account. In the case of a purchase, taxes definitely reduce the break-even time. However, in the case of a refinance, the points are not tax-deductible, but have to be amortized over the life of the loan. This results in few tax benefits or none at all, so there is little or no effect on the time to break even.

If none of the above makes sense, use this simple rule of thumb: If you plan to stay in the house for less than 3 years, do not pay points. If you plan to stay in the house for more than 5 years, pay 1 to 2 points. If you plan to stay in the house for between 3 and 5 years, it does not make a significant difference whether you pay points or not!

What is a rate lock?
A rate lock is a contractual agreement between the lender and buyer. There are four components to a rate lock: loan program, interest rate, duration of lock period and costs.

HOW DO I GET STARTED?
CALL Chantel directly at 916-849-2679 to get your pre-approval and referral to a trusted REALTOR partner, who will suit your buying needs and shopping personality!

What documentation will I need to provide?
All borrowers should provide:

Income verification

Asset verification

Copy of your ID (driver’s license and/or social security card)

If you are applying for a Home Equity Loan you will need to, in addition to the above documents, provide a copy of your first mortgage note and deed of trust. These items will normally be found in your mortgage closing documents.

If you are refinancing to consolidate debt, you will also need to provide copies of your most recent statements to be paid off.