Answers to Mortgage Questions

Whether Refinancing or Buying, We
Deliver Good Answers to Great Questions!

I need a mortgage. Why should I do business with you?

We love the fact you've recognized you need a mortgage. 1st Continental Mortgage is a 14 year old company licensed to lend in 17 states, to include; Alaska, California, Colorado, Florida, Montana, Indiana, Louisiana, Maryland, Minnesota, Mississippi, New Mexico, North Carolina, North Dakota, Pennsylvania, South Carolina, South Dakota, Tennessee and Texas.

So really, why work with us just because you believe "I need a mortgage"? Within every financial institution, the quality of the service and counsel you receive is directly related to the quality of the individual you work with. This fact remains whether you're working with a big box lender, or a small town broker. With us, we don't want to just give you a mortgage because you believe you need a home loan. We want to evaluate your needs and see if a new Mortgage really is the right decision for you.

We operate branches in multiple cities throughout multiple states. We consistently provide a local small town relationship based service that is combined with real, big business capabilities. Finally, we work hard to ensure each of our representatives is well qualified and well trained to understand the home loan requirements of every searcher that types "I need a mortgage".

Interested in learning more? We are to! Lets learn about one another together. Give us a call today at 1-800-570-0448 or just use our fast and easy quick application to find out more.

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What is a Home Loan?

A home loan is a loan that is secured by a residence. This includes property that is owner occupied and investment property. What property types are included? We're glad you asked! Property types that can be associated with a home loan include single family homes, condominiums, townhomes, duplex units, tri-plex units (three apartments) and four-plex units (four apartments). We do hope this answer thoroughly addressed your original question of "What is a home loan".

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What is a Mortgage?

While this question has multiple answers, for the purpose of answering the "What is a mortgage" question illustrated here, a mortgage is basically a pledge of your home made to a mortgage lender in the form of a lien which is filed with the local county. Basically, you sign home loan documents which pledge the home as collateral for meeting the repayment terms as outlined in the loan documents. These documents are registered as a lien (mortgage) with the county.

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What is Refinancing?

Refinancing a home is the process by which a borrowers seeks out a lender who will meet the terms and conditions (rate, length of time, loan type) required by the borrower. The borrower signs new home loan documents which then satisfies the existing home loan and mortgage. The new documents create a new home loan which is secured by a new mortgage. This is all a refinance represents. The creation of a new loan and mortgage which settles an existing loan and mortgage.

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What is FHA?

FHA is a acronym for Federal Housing Administration. The FHA was created by the U.S. Federal Government to be responsible for insuring loans made by FHA approved lenders on single family homes, multi-family homes and manufactured homes. FHA does not make loans or lending decisions, rather, they only manage the mortgage insurance premiums paid by borrowers of FHA insured properties. Only FHA approved lenders can make loans insured by FHA.

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What is HUD?

HUD is the acronym for the U.S. Department of Housing and Urban Development. A branch of the Federal Government, HUD is responsible for increasing homeownership, community development and access to affordable housing throughout the United States. Part of those responsibilities include the management of the FHA housing program in addition to regulating lending practices, rental practices, housing discrimination etc.

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What is Sub Prime?

Sub Prime is the term used to describe higher risk, non-conforming lending practices that are not utilized within the traditional Freddie/Fannie conventional lending market. The underwriting of Sub Prime borrowers can include combinations of traditionally unacceptable borrower traits such as; Loan Amounts, Housing Ratios, Debt Ratios, Bad Credit Issues, Employment History, Cash Reserves, Credit Scores, Bankruptcies, Foreclosures, and Legal Status. A non-traditional borrower can have any combination of issues which would prevent them from qualifying today for a conventional low interest rate mortgage. Sub Prime loans involve higher risks to both the borrower and the investor. As a result, these loans charge much higher than traditional Interest rates typically tied to an adjustable interest rate. In the secondary mortgage investment market, these were an attractive buy due to the return on investment. The loan products, while still available in a more limited capacity today, are not the ideal vehicle to owning or refinancing a home.

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What is a Lender? Do I need a Lender?

A Lender is a mortgage company which can lend its own money. The typical lender makes lending decisions based upon the underwriting requirements of the buyer of a loan. Establishing rates and terms based upon what the investor will pay for the loan to create the profit the lender requires to keep their doors open. In answer to question of do you need a lender, Yes. A borrower will always need a Mortgage Lender to actually fund a loan. Mortgage brokers cannot make loans, only lenders can.

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What is a Broker? Should I use a Mortgage Broker?

A mortgage broker is licensed with the state. The broker license give an individual or broker business the authority to place loans with lenders in a given state. A mortgage broker must always have their mortgage broker license placed with a mortgage broker business. Neither a mortgage broker nor a mortgage broker business can make a loan in any state. A mortgage broker acts as a facilitator working with multiple lenders to negotiate loan terms that meet the financial requirements of a borrower. Only a mortgage lender can approve a loan and lend the funds necessary to create mortgage, the broker simply acts as conduit. Many of todays mortgage lenders act as both a Lender and Broker. Should you use a mortgage broker? As mortgage lender we're biased and say "No" you shouldn't.

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What is a Mortgage Originator?

A mortgage originator is another term used to describe an individual who helps a borrower to prepare for and complete a mortgage application. As part of the duties of a mortgage originator, they will counsel you on what loan products are appropriate based upon your credit quality, debt ratios, and housing ratios. Mortgage originators put together specific loan offerings, can lock interest rates, and traditionally manage the signing of specific loan documents among other duties. They are also known as loan officers, loan associates, and mortgage brokers.

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What is a Mortgage Loan Processor?

After your initial application is reviewed by a mortgage originator and you have selected a specific loan product, a loan processor is traditionally responsible for organizing a loan file and gathering required loan documents necessary for an underwriter to review and approve your loan file. This process is also called "File Stacking". Typically upon initial review of a properly prepared and stacked file, and underwriter will have what are call "Stips" that are additional documentation and information required to approve a mortgage loan. The loan processor is traditionally responsible for ensuring all outstanding stips are met and cleared by the underwriter.

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What is a Mortgage Underwriter?

A mortgage underwriter is a person who reviews a borrowers file to ensure the documentation necessary for approval matches the stipulations and parameters established for a particular loan product. Traditionally, when there are areas in which the underwriter requires clarification, they will seek additional documentation from a borrower in which they use to create a paper trail that will support their underwriting decision.

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What is a Pre-Approval Letter?

A preapproval letter is a document which a home buyer can receive from a mortgage broker or lender that tells them that, based upon the information provided at the time of application, they have a probability of being approved for a particular loan product. Home Buyers use these letters to reassure home sellers of their ability to receive the financing and funding necessary to close on the purchase of property. Pre-Approval letters are non-binding and are not legal documents. Rather, they are a professional assessment of a borrowers potential financial capability.

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What is a Mortgage Commitment?

A mortgage commitment letter is used by lenders to confirm to a borrower they are approved for funding of a loan under very specific terms and conditions. Difficult to get, a mortgage commitment letter is a legally binding document that commits a lender to make a specific loan under very specific conditions. The only way to void a mortgage commitment is for it to either expire, or the borrowers financial situation changes to such an extent that the borrower no longer meets the program guidelines used to issue the original mortgage commitment letter.

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What do I need to apply for a mortgage?

When applying for a mortgage, you will want to gather up all of financial documents that will support your application. Typical things each borrower will be required to have copies of include;

• Driver License and Social Security Card
• 90 days of bank statement for all checking and savings accounts
• For any financial accounts that report quarterly (401k etc) your last quarterly statement
• 30 days of your most recent pay stub
• Your last two years of tax returns including all W2's or 1099's

These are the core fundamental documents you'll need to have, and when making copies, all pages include even blank pages which are numbered. The balance of documents for those who need to apply for a mortgage will be based upon your individual circumstances. These added documents include things like bankruptcy paperwork, child support paperwork, social security benefits paperwork, existing mortgage paperwork, existing creditor statements etc.

If you need to apply for a mortgage, 1st Continental Mortgage would be thrilled with the opportunity to help you along! Just give us a call today at 1-800-570-0448 or use our quick application to learn more.

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What is the difference between a
fixed and adjustable rate mortgage?

The fundamental difference between a fixed rate mortgage and adjustable rate mortgage really are easily defined.

A fixed rate mortgage has an Interest rate that will never change throughout the term of the loan.

An adjustable rate mortgage has an Interest rate that comes with periodic changes based upon pre-defined criteria established within the original loan agreement.

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Can I buy a house using a FHA Loan?

Absolutely! As one of the largest FHA lenders in the states we do business, we would love the opportunity to assist you in buying a house using our FHA loan program! Give us a call today at 1-800-570-0448 or apply today using our hassle free no obligation quick application!

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How much mortgage do I qualify for
using an FHA Loan?

With flexible housing and debt ratios, the FHA insured loan program can actually allow a home buyer or homeowner to qualify for financing a larger loan amount than could be achieved through a comparable traditional conventional loan program. The front end housing ratio allowance can range anywhere from 1% to 5% above conventional financing based upon the income, credit quality and compensating factors of the borrower. To learn more, give us a call today at 1-800-570-0448 or use our quick application!

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Does the FHA loan impact how much
house I can qualify to buy?

Yes and No. The FHA insured loan program offers Loan Limits which are very comparable to those offered via traditional conventional financing. Unlike traditional financing, the FHA insured program does not offer "creative" financing programs that could potentially allow an unqualified borrower to purchase a home they really couldn't afford. The motto of the FHA insured program is "Disclosure" that not only covers that of a lender, but that of a borrower. If you cannot disclose your income, then you cannot qualify for an FHA loan. To learn more, call us today at 1-800-570-0448.

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How do I qualify for a home mortgage
using the FHA program?

Qualifying for a home mortgage using the FHA loan program is traditionally much easier than the qualification process involved in comparable conventional Freddie/Fannie loan or Sub-Prime loan product. The benefits of the FHA insured loan program are substantial and many, with the most important being the security offered to borrowers and the expanded opportunities of homeownership that home buyers will receive Versus that offered by any other product. To learn more about the FHA insured loan program, just give us a call today at 1-800-570-0448 or use our quick application to receive a no obligation consultation.

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What is the difference between a regular
mortgage and an FHA Loan?

Aside from who establishes the underwriting parameters for the loan, the differences can involve the maximum loan amount, the types of programs available and the loan being insured by the FHA, the biggest difference is that far more people will qualify for an FHA insured loan than will qualify for a comparable conventional mortgage. The program offers virtually the same rates of interest. To learn more, give us a call at 1-800-570-0448 or use our quick application to have a mortgage originator contact you at your earliest convenience.

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Do you have to improve your credit score
to get a better rate with FHA?

No. Under FHA guidelines, underwriters cannot use a credit score as a basis for qualifying whether a borrower can be approved or declined for an FHA loan.

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What is the importance of credit when
you apply for an FHA Loan?

The FHA loan program focuses on credit quality that is traditionally factored based upon the most recent 12 month period. Underwriters are not overly concerned about late payments which occurred 18, 24 or 36 months ago, though letters of explanation are required. They are concerned about whether the loan makes sense and you have addressed whatever issues may have arisen to create past credit problems.

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I heard the FHA loan is only for 1st time
buyers, is that true?

Absolutely not true. The FHA loan program is designed for everyone from single parents to individuals to multimillionaires. Your past home buying experience could consist of owning 20 investment properties, 5 primary residence or a single condominium. It doesn't matter. If it's your primary residence; and the loan meets the loan limits for your area; and the home meets the quality standards designed to protect home buyers; you can get approved without having to be a first time buyer.

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My mortgage company says I should not
consider the FHA program. Why should I
listen to you and not them?

While every situation is unique, most of the time when a mortgage company is telling a borrower not to look at an FHA loan, it's because they are not a HUD approved FHA Lender. If this is the case, you are strongly encouraged to speak with a 1st Continental Mortgage loan representative. Give us a call today at 1-800-570-0448 or use our quick application so we can give you an unbiased review of your situation. If you find the mortgage company is FHA approved, you can still call for a second opinion.

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I want to improve my mortgage term.
Can I refinance my FHA loan now?

The FHA loan program offers three types of Refinance options. The first is a cash out refinance which allows a borrower to take out a new loan of up to 85% Maximum LTV to consolidate debts, convert equity to cash, or consolidate a Second Mortgage less than 12 months old into a single mortgage loan payment. The second type of refinance allows up to 97% LTV and can consolidate older debts including HELOC's and Second Mortgages into a single note, that could create a lower mortgage payment. The last type of refinance is called a streamline refinance. The streamline refinance takes an existing FHA loan and creates a new FHA loan to reduce either the repayment terms or the monthly payment. Under a streamline loan, a borrower does not have to qualify for the loan provided the monthly payment is not increasing and the loan reduces the monthly mortgage payment by at least $50.00 per month. In this situation, the streamline loan does not require an appraisal of the home. Further, closing costs associated with a streamline refinance are typically much lower than those experienced with a traditional refinance. To learn more give us a call at 1-800-570-0448 or just use our quick application.

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How soon can I refinance to a new home loan?

If you find yourself in a position of being in the wrong home loan, in some instances you can refinance a loan within 1 to 6 months after the original closing. These early loan exits require extraordinary compensating factors that can include Sub-Prime loan placement within a high risk loan product when a borrower would have qualified for a low fixed rate loan, or a recent death where the deceased just purchased or refinance and you're now required to remove their name from the note and mortgage. If you're in a situation where you believe you need to refinance, give us a call today at 1-800-570-0448 or just complete a quick application to see if we can assist you in resolving your situation.

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How often can I refinance my home?

Traditionally, a qualified borrower can refinance their home every 12 months. The reality is, if you are finding yourself needing to refinance frequently, chances are high you're getting terrible financial advice. If you're in a position of needing repeated refinancing, give us a call today at 1-800-570-0448 or use our quick application to make contact with us. The typical borrower pays 12 to 20 thousand dollars a year in mortgage interest. That amount of interest will never go down unless you begin paying more towards your principle. Constant refinancing under the same 30 years term is like starting your loan all over again. A new loan each time that in many instances increases the original amount financed through additional closing costs. It's a ground hog day mortgage you don't want to repeat!

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How can I refinance my home when
I have credit problems?

Credit problems do not always prevent a homeowner from being approved for a new home loan. While they do represent obstacles, at 1st Continental Mortgage, we work hard to find the right program that can create either a short term or long term mortgage solution with almost any credit issues you have today. Give us a call at 1-800-570-0448 or apply using our quick application to learn more. Remember; Until a new home loan closes, never stop making a mortgage payment on an existing mortgage loan.

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Where can I refinance my home if I'm
late on my mortgage?

At 1st Continental Mortgage we offer several programs that can potentially assist homeowners who are facing financial difficulties that have resulted in late mortgage payments. Give us a call today at 1-800-570-0448 or use our quick application to learn more. Regardless of whether you do business with us, or another mortgage firm, never stop paying your mortgage payment during a refinance until you've closed on your new mortgage!

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