Mortgage 101

Here we will cover many of the questions we have heard in the past from our customers. Do you have a question you would like us to answer? E-mail us. We will post a new question and answer every week, so check back often and enlighten yourself!

Consult the Online Mortgage and Property Terms Glossary if you are unsure of any terms, you can also call us toll free at 1-888-879-9800.

1. What information do I need when I apply for my loan?

The lender will want to see the following items. Please keep in mind that we can give you an approval if you do not have these items at the time of application, but the sooner we have everything, the smoother your file will go.

1. 2 recent pay stubs
2. Last 2 years tax returns with the W-2 forms
3. Last 2 bank statements/401K statement/Mutual fund statement
4. Divorce decree (if applicable)
5. Bankruptcy papers (if applicable)

If this is a "no-doc" loan, tax returns may not be required. If this is a purchase loan, a fully executed copy of the contract will also be needed. If a refinance, information on your current mortgage(s) will be required.

2. I am only putting 5% down on a Conventional Loan. Is there any way to avoid PMI?

Yes, you can! There is now a product available - the 75/20 that means you pay NO PMI! The bank gives you 2 loans, a first mortgage to cover 75% of the purchase price and a second mortgage to cover 20% of the purchase price. You can forget about the PMI & save hundreds of dollars a year on taxes! You can even put the second mortgage on a 15 year term to help you build your equity faster!

3. Can I qualify if I have had late payments on my credit?

Generally speaking, yes, we can qualify you for a purchase, refinance or second mortgage even if you've had late payments! However, your credit must be looked at before an exact answer can be given. The lender may request more down payment in some circumstances to make up for their risk. Of course, we can give you an answer in as little as 30 minutes if you call 630-627-9580!

4. I am self-employed and have a lot of deductions, so I don't show a lot of income on my tax returns. Can I get approved?

There are many options available today for the self-employed borrower or for the borrower who gets paid cash. "No doc", "lite-doc" and "limited doc" loans give our borrowers more flexibility than some banks can only dream of!

5. What's the difference between you and going to my local bank? Don't you all do the same thing?

Believe it or not, no, we don't. Banks have limited programs available. We deal with over 25 different banks and lending institutions and actually have OVER 75 different programs. Many banks will charge you an application fee upfront. If they can't approve you, you lose that money! We get customers approved all the time that were turned down by another bank or mortgage broker/banker. Experience plays a key part.

6. I've heard that if you go through a mortgage broker your loan will be sold more often. Is this true?

The selling of mortgage loan servicing is a given with modern banking. Most fixed - rate mortgages will be sold. This DOES NOT mean that your payments change. They do not. The only thing that can ever change is the name you write on your check and the address you send it to.

7. Why are second mortgage/home equity debt-consolidation loans and home improvement loans so popular?

For one reason, tax - deductibility. In most cases, you can deduct 100% of the interest on second mortgage/home equity loans that cover up to 100% of your house's value. Of course, you should always check with your accountant to make sure.