GEM Mortgage

Saturday, May 19th

Welcome to our Site

Welcome to our website!

We have worked hard to make it easy for you to apply online, or gather information on mortgages. Using the tools on this website, you can calculate how much you can afford, find out what mortgage is best for you, or follow the average national interest rates.

To get started, simply click Apply Online above or use one of the mortgage wizards.

FHA Loans

In 1934 the government set up the Federal Housing Authority (FHA) to help stimulate an economy in crisis. FHA programs were designed to help people buy their houses rather than rent. FHA programs allow more flexibility than is available for borrowers seeking conventional loans (Fannie Mae criteria). However, the FHA does not actually make the loans; they insure them.

Working with approved lenders, the FHA serves to lower the risk for the lender, thus making loans more readily available. If the borrower defaults, FHA pays the lender. Even though the insurance cost is passed down to the home owner, after paying down the loan, the borrower may drop the insurance. The equity that has been built up serves as the security the lender needs to feel comfortable with the loan. With an FHA loan, if the borrower experiences unforeseen hardships, FHA has options to help keep the home out of foreclosure. The lender must follow FHA's servicing guidelines; therefore, an FHA insured loan offers the borrower protection as well as the lender.

FHA programs do have some loan requirements, but they are not as strict as conventional loans. They generally require less down, less stringent credit, and the ability to finance a higher percentage of the value of the house. For instance, FHA only requires a minimum 3% down payment—which is low by industry standards. Also, while they do look at credit history, they are more flexible than conventional loans, looking more at the borrower's ability to repay than at any problems in the past.

Although the requirements are less strict than conventional loans, by law, the FHA can only insure loans up to a maximum amount depending on where the home is. The FHA Maximum Mortgage Limits site will let you look up the limits for the areas of choice. Likewise, the loan size is restricted to a maximum amount of the value of the home. However, it is a very high amount (often up to 97% of the value). So the regulations governing FHA loans are very liberal.

In the long run, FHA loans are much like any other except that they are generally easier to qualify for, and the borrower has more insurance against foreclosure. FHA programs also offer more than just home purchasing plans. They offer refinancing in order to lower interest rates or payment amounts; they offer remodeling money; they even offer cash out or debt consolidation loans. Whatever your needs are, FHA may be a valid option to pursue.

Mortgage FAQ

What are my options if I have no down payment or only a small down payment?

Some loans will do 100% financing. Another similar loan option is called a piggy-back loan where you get approved for the first and second mortgage at the same time. FHA loans require only 3% down. No matter which of these types of loans you obtain, the payment will be larger. Your interest rate will probably be higher, and you will be required to buy private mortgage insurance (PMI).

What is private mortgage insurance (PMI)? Do I have to pay it?

If the bank or mortgage company determines that your loan is a risk they may require private mortgage insurance. This insurance serves to insulate the lender in the event that you default on your loan. It is possible that the fair market value of your house will not cover the full amount of money owed to the bank or mortgage company if you default. In such cases, private mortgage insurance reimburses the lender for the difference. Private mortgage insurance is usually required for borrowers that make a down payment of less than 20% or with poor credit scores.

What kinds of government loans are available to buyers?

HUD (US Department of Housing and Urban Development) is committed to increasing home ownership for minorities and low-income Americans. It oversees the FHA (Federal Housing Commission), offering a variety of programs including 203(K) loans to purchase a home that needs fixing up, financing for FHA-insured homes that have been acquired through foreclosure, and other FHA-insured loans. HUD has many programs to help in housing needs.

FHA loans (offered by the Federal Housing Commission) are the most popular. They don't actually make the loan; they guarantee loans requiring only a 3% down payment, and they do not have as strict credit policies as many conventional loans.

VA (Veteran's Administration) loans are really guarantees for loans obtained by certain qualified veterans or other qualifying home buyers or refinancers such as unmarried surviving spouses.

Can I get government loans?

The two primary Federal government financing programs for mortgages are VA loans and FHA loans. VA loans are not actually loans, but a guarantee from the federal government that should you default, the US Department of Veterans Affairs will pay the lender a certain amount of the defaulted loan. These loans are available to current members of the military and veterans with honorable discharges. FHA loans are available through the Department of Housing and Urban Development. These loans, like VA loans, guarantee that the Federal Housing Authority will pay the lender 100% of the insured amount of your mortgage should you default. You must meet certain criteria to qualify for an FHA loan.

What is the difference between a fixed rate mortgage (FRM) and an adjustable rate mortgage (ARM)?

A fixed rate mortgage has a set interest rate for the life of the loan. An adjustable rate mortgage has a specified adjusting period where the rate can be adjusted along with the payment.

Should I go with a fixed rate or an adjustable rate mortgage?

If current mortgage rates are low, it makes sense to opt for a fixed rate mortgage. Odds are, rates are going to increase at some point during the next 30 years. Securing a low rate now can insulate you from rate increases over the life of your mortgage. If current mortgage rates are high, an adjustable rate mortgage (ARM) may prove a better option should rates drop. Keep in mind, if you find in a few years that you could benefit from changes in mortgage rates, the option to refinance is available.

What is included in closing costs?

Closing costs will be about 3%-6% of your mortgage loan and commonly include:

Generally paid with application:

Application Fee: a generally non-refundable fee to process the loan information
Appraisal Fee: fee for an independent appraisal of the house (required by the lender) to establish market value to factor into the determination of the loan amount
Credit Report Fee: a fee for the lender to obtain your credit report from one of the three recognized credit reporting bureaus (Equifax, TransUnion, and Experian). This report gives your credit history and a credit score which is used to determine qualifications and loan limits.

Generally paid at closing:

Survey Fee: (may be required) a survey to verify property boundaries
Flood Certification Fee: (may be required) a minimal fee to verify that the property is not in a flood zone
Title Search Fee: a fee to obtain a history of the property to establish if there are any legal claims on the property
Title Insurance: a lender's title insurance policy is required to protect the lender in getting the balance of the loan repaid; an owner's title insurance is also optional, protecting the buyer's investment
Attorney Costs: paid for review of all documents needed to close your loan
Recording and transfer charges: a small fee to record the purchase of your home
Origination points: a percentage-of-the-loan amount charged as a fee for the lender's preparation of the loan
Discount points: an optional percentage-of-the-loan amount paid to obtain a lower interest rate
Escrow Accounts: (generally required) escrows for future fees that will be due related to the house, such as: Private Mortgage Insurance (required for loans financed at over 80% of value), Homeowner's Insurance (often called "Hazard" or "Fire Insurance"), property taxes, and sometimes, interest.

Is there any way to speed up the loan approval process?

Become either pre-qualified (a preliminary analysis of your debt-to-income ratio) or pre-approved (NOT a loan guarantee, but rather an analysis of your credit report and income and a correlating maximum loan amount and interest options). Pre-qualifications indicate that you are a more solid buyer. However, only a loan commitment is a guarantee that you will get the loan.
Obtain a loan commitment (guaranteed under pre-set conditions) which will help speed up the loan process.
Get your paperwork ready in advance.

Check your credit score and clean up any old items. Have explanations for any remaining questions on your credit report.
Gather any needed documentation such as personal identification, income verification and tax returns, employment history, and insurance commitments.

Most important, when the loan officer asks for any information, always respond promptly.

What is the difference between a mortgage broker, a lender, and a loan officer?

A mortgage broker covers a broad basis, linking buyers with appropriate lenders, counseling borrowers, and even processing loans.

A lender is the institution or agency that will actually loan the money.

A loan officer is an employee of either a lender or a mortgage broker, generally finding borrowers, counseling, taking applications, and often, being involved in the loan processing.

What documents will be required to close a loan?

Each lender requires slightly different financial records, depending on the type and amount of the loan for which you are applying. However, there are some basic records all lenders will request. These include income records such as pay stubs for the previous 30 days, the last two years tax returns, 2 to 3 months of bank records for each bank account you own, and other documents that prove your income. You will also need to furnish information about your current debts such as account numbers and monthly payment information.

Is it more expensive to rent or to own?

Owning a home is often considered the better deal, but keep these considerations in mind:

Many home buyers do not build any equity in the first few years; the bank takes it all in interest, and many move before they begin building equity.
Purchasers costs often increase due to mortgage interest adjustments, payment adjustments, increased property taxes, insurance premium increases, and maintenance costs.
The tax break for owning a home only kicks in if the deductible expenses (such as interest) are higher than the standard deduction.
There are other reasons that may make renting a better option:
- Many maintenance and repair costs belong to the landlord.
- Often relocation for job opportunities is easier without having the cost and hassle of reselling your home.
- Renting can often provide convenient access to transportation, employment, retail, entertainment, and other common facilities.

Why do I need to check my credit prior to buying a house?

The lender will obtain a credit report. If you look at it prior to a loan application, you have a chance to clean up detrimental items before you have to explain them to the lender. Also, if your score is low, you can do specific things to increase your score such as paying down debt, increasing cash in the bank, and making payments consistently on time, over a period of time.

What is the difference between conforming and non-conforming loans?

Conforming loans are mortgage loans that meet specific, uniform national standards (most commonly referred to as Fannie Mae and Freddie Mac requirements) that deal with document specs, debt-to-income ratio limits, maximum loan amounts, and interest rates.

Non-conforming loans are loans that do not meet banking qualifications generally due to borrower's financial status or property that does not meet required criteria. These types of loans are funded by private money and usually have a much higher interest rate than conforming loans. Loans that exceed Fannie Mae limits are called "Jumbo" loans.

Where do the names Fannie Mae and Freddie Mac (loan regulating entities) originate?

The Fannie Mae entity was created in 1938 under President Franklin D. Roosevelt to help the home buying economy which was floundering at that time. In 1968, Freddie Mac was chartered to provide competition. These are not government funded entities, only government sponsored with the idea of creating national standards and guidelines to ensure a long-term healthy housing market.

They operate by borrowing foreign, low-interest money that, in turn, allows them to provide local banks with money to offer affordable housing loans. Together these two entities control about 90% of the secondary mortgage market.

They were dubbed these names from the acronyms of their respective government sponsored entities:

Federal National Mortgage Association (FNMA): Fannie Mae
Federal Home Loan Mortgage Corporation (FHLMC): Freddie Mac

What are points?

Points are a fee that is expressed as a percentage of the loan amount: one point is 1% of the loan amount.

Origination points are charged as a fee for some of the costs of the loan processing.

Discount points are basically a prepaid interest, or a fee to reduce the interest rate, known as a rate "buy down."

RHS Loans

Rural Housing Services (RHS) loans are administered by the USDA's Rural Development staff. The Housing and Community Facilities Programs (HCFP) is part of the USDA's Rural Development. Their mission is to improve the quality of life in rural areas. Part of fulfilling that mission is providing loans and grants for housing and community facilities. Loans can be obtained for building, repairing, renovating, relocating, purchasing, and even preparing sites for construction.

They have a variety of programs. Among these are the Section 502 housing programs which are either guaranteed or direct. The Section 502 loans are designed to help rural residents that are without adequate housing and cannot obtain credit elsewhere. They must have an acceptable credit history and must be able to make the mortgage payment (estimated at 22-26% of income).

The guaranteed loans are made by the private sector but guaranteed by RHS. They help rural residents with low-to-moderate income (up to 115% of Area Median Family Income) obtain housing. Section 502 direct loans are made directly by the government. They target low and very low income families (50-80% AMI and under 50%). The terms of the loans are generally long—30-33 years, sometimes, based on need, stretched up to 38 years.

While the Rural Housing Services are committed to helping rural residents obtain affordable housing, they do have requirements that the homes be modest in size, design and costs. As with any loan, the borrower must determine which loan program will best match their needs. RHS loans are an excellent way to obtain housing that fits within your means when other loans programs will not work.

Refinancing Loans

Why refinance?

Often, home owners that already have a mortgage, choose to take out a second mortgage that pays off the first one. Typically, refinancing is done to tap in on equity or to take advantage of lower interest rates available because of improved credit, better loan options, or an improved economy.

There are several reasons why you may want to consider refinancing. These might include:

You have built up some equity and would like to borrow against it.
Your Adjustable Rate Mortgage has just passed the initial low-interest phase, so your payment is increasing in size.
You have incurred an unexpected large expense that is not covered by your current cash flow.
Your initial loan structure no longer meets your current needs.
Due to improved credit or an improved economy, better loan options are now available.
You want to consolidate several debts into one.
On your original loan you did not have enough money to make a down payment, so you were required to purchase Private Mortgage Insurance (PMI), but now that you have paid the loan down, you could avoid PMI by refinancing.

Refinancing is one way of solving these problems, but you need to know some information to make sure that the benefits (possible lower interest rate and/or payment or extra cash) will outweigh the disadvantages (increased debt load or length of time before being debt free, or refinancing costs). You don't want to be surprised at the loan closing with costs you are not prepared for.

Potential problems associated with refinancing

Remember that refinancing will use current appraisal values, so the current real estate market will determine whether that is higher or lower than the amount at which the home was originally valued. Although this may go in your favor, in an economy slump, it may decrease the amount of money you can borrow and/or increase your interest rate. When the economy is down, your credit score may likewise go down because it is harder to make payments on time.

The length of time that you have owned your home will also influence your refinancing options. Your payment history, the new loan guidelines defining the length of time you must have owned before refinancing, and the amount of equity you currently have in your home will all come into play as you pursue your options.

Some of the costs that you may incur when refinancing

The costs assiciated with refinancing may vary depending on the conditions of the original loan and the specific details of the refinanced loan. However, these are some industry standards that you should keep in mind:

the same type of loan fees as in your original loan (such as appraisal costs, attorney and inspection fees, application fees, and title search fees)
early payment penalties (from your original loan)
long term costs (such as higher interest rates for no cost financing)

As with any financing, you should weigh all the factors relevant to your loan.

FHA FAQ

Question: I believe that I may have experienced discrimination when I was looking for housing. How can I file a complaint?

Answer: You can file a complaint right on-line. Use HUD's Housing Discrimination web page. Or you can call the Housing Discrimination Hotline, toll free at (800) 669-9777.

Question: I read about a loan that enables you to both finance the purchase and rehabilitation of a home through a single mortgage. Does HUD offer such a loan and how can I get one?

Answer: FHA's 203(k) purchase and rehabilitation loan offers home buyers a single mortgage which provides money for home purchase, repairs and improvements. Information is available on HUD's Web site. You may also ask your approved FHA lender for information.

Question: What is RESPA?

Answer: RESPA stands for the Real Estate Settlement Procedures Act. RESPA covers conventional mortgage loans on one-to-four family properties, as well as government insured and guaranteed loans. It requires lenders to provide borrowers certain settlement cost and loan information throughout the loan process (i.e., the Good Faith Estimate, Settlement Cost Booklet, HUD-1). RESPA also sets forth certain requirements for loan servicing and escrow accounts. The statute further protects borrowers by prohibiting kickbacks and referral fees which may increase costs in the settlement process. Further information can be found on HUD's web site. You may also call HUD's Customer Service Center for a copy of the helpful brochure "Buying Your Home." The number is (800) 767-7468.

Question: How can I find out about my credit history?

Answer: To find out about your credit standing you may wish to contact the three major credit reporting companies. Experian 1-800-682-7654 Equifax (800) 685-1111 Trans Union (800) 916-8800 A charge ranging from $5 to $20 dollars may be assessed for each copy of your report.

Question: What is an Energy Efficient Mortgage (EEM)?

Answer: FHA's Energy Efficient Mortgage program allows homebuyers to build the cost of energy efficient improvements into their FHA mortgage. The Energy Efficient Mortgage is a great way for homebuyers to save money on future utility bills.

Question: Why do I need a home inspection? Aren't the physical deficiencies noted in the appraisal?

Answer: Appraisals are prepared for lenders; home inspections are for you, the buyer. Home inspections give you detailed information on the physical condition of your new home. For more information and a helpful brochure on home inspection call (800) 569-4287, or check out HUD's Home Buyers information on the web.

Question: Can the mortgage insurance premium be discontinued on an FHA loan?

Answer: If you have an FHA-insured mortgage, your mortgage insurance is a legal agreement between FHA and your lender. As of January 2001, newly FHA-insured mortgages may have premium-discontinuance options that you will want to understand. Carefully read FHA Mortgagee Letters 00-38 and 00-46 so that you are aware of these options when you ask your lender to discontinue the mortgage insurance.

Question: What is a Title I loan? What is the difference between a Title I and a Title II loan?

Answer: A Title I loan is a FHA-insured home improvement loan which can be used for the alteration, repair, or improvement of an existing single family structure; preservation of an historic residential structure listed or eligible to be listed on the National Register of Historic places; or alteration, repair or improvement of an existing manufactured home and/or mobile home classified as personal property or real estate. A Title I loan can also be used to finance the purchase of a new or used manufactured home on an installment contract. Title I home improvement loans are typically offered as 2nd mortgage loans and are available up to $25,000. Loans for purchase of a manufactured home are available up to $69,679 for the home only and $92,904 for the home and lot combined.

A title II loan is a FHA-insured 1st mortgage loan that a borrower can use to help purchase a home as a primary residence. Title II loans are available under a number of programs, including the popular Section 203(b) program which many first-time buyers use to buy a new or existing one-to-four-family home; the Section 203(k) program which allows borrowers to purchase or refinance and rehabilitate their residence if the home is a least one year old; and the Section 234(c) program for borrowers interested in purchasing a condominium residence. For more information contact an FHA approved lender or call the Customer Service/Distribution Center at (800) 767-7468 for written materials such as "Guide to Single Family Home Mortgage Insurance."

Question: How do I register a complaint about the M & M contractor?

Answer: Contact the nearest Homeownership Center. Or call (888) 827-5605.

Question: What is a "SuperNOFA"?

Answer: The "SuperNOFA" is a new streamlined way HUD notifies the public and distributes funding available through its competitive grant programs. Instead of more than 40 disparate, hard to track Notices of Funding Availability (NOFAs), HUD has consolidated information on HUD's competitive programs into three "SuperNOFAs". For more information visit HUD's website or contact your local HUD office.

Question: How do I apply for public housing or Section 8 certificates?

Answer: To apply for public housing or Section 8 certificates or vouchers, you must go to your local housing authority. Each housing authority has a system for accepting applications. For more information on public housing and Section 8 certificates visit HUD's webpage or contact your local HUD office.

Question: What is the "Officer Next Door" program? Can you tell me about the "Teacher Next Door" or the "Firefighter/Emergency Medical Technician Next Door" initiative?

Answer: HUD wants to strengthen America's communities. The "Officer Next Door" program offers HUD-owned, single family homes to law enforcement officers at a discount. It helps to prevent crime and promotes neighborhood safety and security by encouraging law enforcement officers to become resident homeowners in economically-distressed communities. The "Teacher Next Door" (TND) initiative offers HUD-owned, single family homes to public and private school teachers at a 50% discount if certain requirements are met. The TND program recognizes teachers for the value they bring to community and family life, and provides them with increased homeownership opportunities so that they can serve our most needy communities outside the classroom. The most recent addition, "Firefighter/Emergency Medical Technician Next Door" program recognizes these professionals with a discount on a HUD home too.

Question: What is the telephone number for HUD handbooks and forms?

Answer: The telephone number for HUD handbooks and forms is (800) 767-7468. The information may also be located on the HUDclips website.

Question: I'm interested in renting and I don't have much money. Can HUD help me?

Answer: HUD doesn't operate and rent housing directly. But HUD does fund three kinds of local housing assistance that might help you:

Public housing, which is low-income housing operated by your local housing authority:
Section 8 in which the housing authority gives the tenant a certificate or voucher that says the government will subsidize your rent payments. You must find your own housing; and
Privately owned subsidized housing, where the government provides subsidies directly to the owner who then applies those subsidies to the rents he/she charges low-income tenants.

Contact your local public housing agency for more information about public housing and Section 8 certificates and vouchers and how you to apply for these programs. If you're interested in privately-owned subsidized housing, you will need to check directly with the management office of rental agencies, which can be found in the classified section of your local newspaper.

Loan Process

Where should I start?

It is hard to know where to begin! There are so many options that it can be very confusing to find the right type of loan. You must first ask yourself many questions:

How much can I afford to pay each month?
Do I plan on keeping this house for only a few years or for a long period of time?
Is a small payment a higher priority than paying the loan down quickly?
Am I able to make a down payment?
Over how many years do I want to pay a mortgage?
Am I trying to find a mortgage or refinance an existing mortgage?
Is my income stable? Will it be rising in the future?

The answer to these questions will help you know which loan will be best for you. There are a wide variety of loan options, so it will be useful to know some of the basic tendencies. In general:

The larger the down payment, the better your options are for payment size, interest rate, and length of time to pay back the loan.
A fixed-interest rate will tend to be higher than an adjustable rate.
The longer the term of payback, the smaller the payment will be.
The smaller your payment, the larger the amount that is going to interest.
The more that you pay to interest, the slower that you are building equity.

It is also useful to understand the essential differences in types of loans. There are really only three basic types of loans:

Fixed Interest Mortgages (FRM)
Adjustable Rate Mortgages (ARM)
A Hybrid ( some combination of the two)

Loans are also classified as either government loans or conventional loans.

Conventional loans are further broken down into either conforming or non-conforming loans. To qualify as a conforming loan (or an A paper loan), it must fall under the guidelines established by Fannie Mae and Freddie Mac, corporations that have established industry standards and guidelines that govern credit requirements, down payment amounts, and maximum loan amounts.

Borrowers that do not meet those requirements, due to flawed credit, can often still obtain what is known as a non-conforming loan (B, C, or D paper loans).

Once you have these general types down, you will still have to look at the individual features of specific loan types to determine which one will best meet your needs.

Your loan options can be limited by poor credit. A credit score is a system of points earned based on your credit history. This three-digit number (raging from 300 to 900) is influenced by such factors, among others, as:

Late payments
Debt to credit ratio
Total debt amount
Age of accounts (the older the better)

There are three major credit bureaus (Experian, Equifax and TansUnion) that produce comparable credit scores using some version of FICO, the industry standard developed originally by Fair Isaac and Company. Because this credit score is used by most lenders to determine your qualifications for a loan, you may want to see what you can do to increase your credit score before you apply for a mortgage.

So, the bottom line: Start with your credit score; end with the specific loan type that is most appropriate to your needs.

Fixed Rate Mortgage

This loan gets its name from the fact that the interest rate is locked in at the time of the loan. The payments are set (the same amount each month) at an amount that will amortize (pay down) the loan. Where some other loan types have an "interest only" payment, the payment for a fixed rate mortgage is calculated at an amount that will pay the loan off at the end of its term. Over the life of the loan, as you pay down the balance, more and more of your payment goes toward the principal, and less goes toward interest. But the payment doesn't vary. The interest rate is generally higher than other types of loans because the lender is taking the risk that the economy could change.

Other types of loans have an adjustable interest rate (Adjustable Rate Mortgages ARM) that changes in some way during the life of the loan. As a result, they payments can fluctuate, too. Some loans, such as a hybrid loan, have some combination of the fixed and adjustable loan characteristics.

A fixed rate mortgage generally has a higher interest rate than an adjustable rate mortgage, but the rate stays the same throughout the life of the loan. As a result, your payments are also fixed. This can be reassuring because it adds financial stability to your life in several ways:

You know exactly where you stand-the loan is straightforward
Your loan is paid down consistently-the equity grows at a steady rate with each payment
You can budget easier because your payment does not fluctuate
The ups and downs of the economy do not affect your interest and payment

Fixed Rate Mortgages are most commonly set up as 15 or 30 year loans. The shorter the term, the higher your payment will be. This has trade-offs. For a shorter term loan, you must pay more each month, but your equity builds quicker, and overall, you pay less interest. A longer term loan often gives you a lower payment that is easier to handle. Some fixed rate mortgages allow you to pay off early without a penalty; some do not. This should be addressed at the time of the loan set up. If prepayment, or early payment, is allowed, you can always pay a loan off quicker if your current financial situation improves.

Loan amounts may vary according to:

the value of the house
how much (what percentage) the lender will loan
your credit

The bottom line is that your particular situation, along with the type of loan that you choose, affects the size of payment that you will make. A Fixed Rate Mortgage simply sets the conditions of the loan so that they do not fluctuate over the life of the loan.

"I thought I had good credit! What went wrong?"

Sound familiar? Have you ever been turned down on a loan and left shaking your head in disbelief and disappointment? Have you ever simply wondered what you could do to be eligible for a loan? Creating good credit is not just luck. You can have good credit. How?

From a lender's point of view, "low risk" is the key. What clues tell them that you are a high risk? They look at your history (your "credit" history) to paint a picture of you, the borrower, who they really do not know. But that history can tell them quite a bit. Take a look:

Good Credit Risk	Poor Credit Risk
Reliable: all prior debts paid as agreed Lender: "My loan is likely to be paid."
	Unreliable: debts left unpaid or settled out Customer: "But I negotiatged a settlement!"
Dependable: all payments made on time Lender: "I won't have to worry about this borrower making his payments."
	Undependable: late payment history Customer: "But I did pay all the payments; I just couldn't quite make the due date sometimes."
Financially stable: builds credit slowly and consistently Lender: "This borrower is not borrowing because of stress, but rather is a good money manager."
	Unstable: takes anything, too many, too fast Customer: "But they sent me offers in the mail." Customer: "I didn't know what else to do." Unstable: not prepared for life's curve balls Customer: "It was an emergency, and I didn't have any savings put away."
Responsible: meticulous, keeps credit cleaned up, specific about details Lender: "My loan will be important also."
	Irresponsible: not concerned enough, never looks back Customer: "But I settled that out long ago."

So which person would you loan to? However, the good news is that if you have poor credit there are things you can do to improve it. You're not stuck! It just takes effort and time. Not only do you have to create good credit, you have to create the "history." That means that you prove yourself over time. How long? Sometimes it takes as little as 6 months.

Here are some tips:

Obviously, start making payments on time—every time!
Keep balances low, showing that you can manage your credit.
Don't open a lot of accounts in a short time period—this hints at desperation.
Manage your credit. If you pay off a collection, it is not automatically removed. Many times you must follow through on finalized transactions to have them removed from your report.
Save money! Don't just keep up on your payments; begin to build a cushion. This not only helps if you get into temporary trouble, it sends the message that you can manage your money and that you are not desperate or requesting a loan because you are in trouble.

You have the power to build and manage good credit. It helps to understand how your actions influence credit ratings. Over-time, even credit gone bad can be restored.

Privacy Policy Disclosure

(Protection of the Privacy of Personal Non-Public Information)

Respecting and protecting customer privacy is vital to us. By explaining our privacy policy to you, we trust that you will better understand how we keep our customer information private and secure while using it to serve you better. Keeping customer information secure is a top priority, and we are disclosing our polices to help you understand how we handle the personal information that we collect and disclose. This notice explains how you can limit certain information from being disclosed.

The Privacy Policy explains the following:

Protecting the confidentiality of our customer information
Who is covered by our Privacy Policy
How we gather information
The types of information we share, why and with whom
Opting out−how to instruct us not to share certain information about you or not to contact you

We take our responsibility to protect the privacy and confidentiality of customer information very seriously. We maintain physical, electronic and procedural safeguards that comply with federal standards to store and secure information about you from unauthorized access, alteration and destruction. Our control policies, for example, authorize access to customer information only by individuals who need access to do their work.

From time to time, we enter into agreements with other companies to provide services to us or make products and services available to you. Under these agreements, the companies may receive information about you, but they must safeguard this information and they may not use it for any other purposes.

Who is covered by the Privacy Policy

We provide our Privacy Policy to customers when they conduct business with our company. If we change our privacy policies to permit us to share additional information we have about you, as described below, or to permit disclosures to additional types of parties, you will be notified in advance. This Privacy Policy applies to consumers who are current customers or former customers.

How we gather information

As part of providing you with financial products or services, we may obtain information about you from the following sources:

Applications, forms, and other information that you provide us, whether in writing, in person, by telephone, electronically, or by any other means. This information may include your name, address, employment information, income, and credit references.
Your transaction with us, our affiliates, or others. This information may include your account balances, payment history and account usage.
Consumer reporting agencies. This information may include account information and information about your credit worthiness.
Public sources. This information may include real estate records, employment records, telephone numbers, etc.

Information We Share

We may disclose information we have about you as permitted by law. We are required to or we may provide information about you to third-parties without your consent, as permitted by law, such as:

To regulatory authorities and law enforcement officials
To protect against or prevent actual fraud, unauthorized transactions, claims, or other liability
To report account activity to credit bureaus
To consumer reporting agencies
To respond to a subpoena or court order, judicial process, or regulatory authorities
In connection with a proposed or actual sale, merger or transfer of all or a portion of a business operating unit, etc.

In addition, we may provide information about you to our service providers to help us process your application or service your accounts. Our service providers may include billing service providers, mail and telephone service companies, lenders, investors, title and escrow companies, appraisals, etc.

We also may provide information about you to our service providers to help us perform marketing services. This information may include the categories of information described above under "How we gather information," limited to only that which we deem appropriate for these service providers to carry out their functions.

We do not provide non-public information about you to any company whose products and services are being marketed unless you authorize us to do so. These companies are not allowed to use your information for purposes beyond your specific authorization.

Opting Out

We also may share information about you within our corporate family of offices. We may share all of the categories of information we gather about you, including identification information (such as your name and address), credit reports, (such as your credit history), application information (such as your income or credit references), your account transactions and experiences with us (such as your payment history), and information from other third parties (such as your employment history).

By sharing this information we can better understand your financial needs. We can then send you notification of new products and special promotional offers that you may not otherwise know about. For example, if you originally obtained a mortgage loan with us, we know you are a homeowner and may be interested in hearing how a home equity line of credit may be a better option than an auto loan to finance the purchase of a new car. You may prohibit the sharing of application and third-party credit related information within our company or any third-party company at anytime. If you would like to limit disclosures of personal information about you as described in this notice, please print this page, check the appropriate box or boxes to indicate your privacy choices, and mail or fax to us at the address or fax number listed under the "Contact Us" tab.

O Please do not share personal information about me with non-affiliated third-parties.

O Please do not share personal information about me with any of your affiliates except as necessary to effect, administer, process, service or enforce a transaction requested or authorized by myself.

O Please do contact me with offers or products or services by telephone.

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Signature

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Loan Checklist

Documents required vary from loan to loan, but generally the following are required, often for up to two years back:

Statements of income such as W-2's, pay stubs, and financial statements
Bank statements
A list of any assets that you own
Rental or mortgage history
Employment history and current information
Personal identification, including Green Card if applicable
Purchase contract
Other pertinent items such as: Bankruptcy Discharge Notice or Divorce Decree
Loan application

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Qualifying for a Home Loan

Qualifying for a home loan begins long before you apply with a lender. The first step to home ownership is developing a plan for your down payment and taking a critical look at your credit history as well as your debt to income ratio. You should have enough money saved for your down payment prior to shopping for a home or selecting a lender. Experts recommend saving anywhere from 20 to 25% of the total purchase price of the home you plan to buy. This provides the average 5 to 20% down payment, plus additional funds should you require a larger down payment or need to cover additional associated closing costs.

In terms of your credit history, knowing what shows on your credit report and taking care of any outstanding debts or errors on your report prior to initiating the mortgage process helps ensure a smoother qualifying process. Taking steps to ensure that your credit score is as high as possible will also have a positive effect on the types of mortgages for which you qualify and the interest rate you receive. Lenders use your credit score, among other factors, to determine what home financing package or loan type, if any, to offer you.

Your debt to income ratio is also going to be an important factor in qualifying for a home loan. If you carry a lot of credit card debt, student loans, new or high balance car loans, or other forms of debt, it is advisable to pay these balances down as far as possible. Lenders look at how much money you make each month and compare that to how much debt you have when determining the mortgage for which you qualify. Experts recommend that you spend no more than 28% of your monthly income on housing. However, if other debt leaves you less than 28% to spend on housing costs, you may find it difficult to qualify for a mortgage.

Ask your real estate agent or mortgage loan officer about other funding options for which you may qualify. A Veterans Administration loan or buying a home owned by the Department of Housing and Urban Development (HUD) may make the process of qualifying for a mortgage easier. The Federal Housing Authority (FHA) also provides funding options for homes and homebuyers that meet certain criteria. Additionally, first-time homebuyers often qualify for tax benefits, special mortgage programs, and other funding options that can offer great benefits.

Repairing Your Credit

It is estimated that there are at least 30 million people in the United States with credit scores under 620. Many have blemishes on their credit report that can hamper their ability to qualify for a mortgage, while others have issues that result in higher interest rates. Even if your credit score is 620 or higher, improving your credit improves the mortgage options available to you. If you are one of the unfortunate 30 million Americans with credit blemishes, there are steps you can take to improve your credit score and thereby improve your ability to qualify for a loan with a lower interest rate.

Before you can improve your credit rating, you first need to know where your credit stands. You should get a copy of your credit report from all three major credit reporting agencies. Once you have copies of your credit report, then you will know what steps to take to start improving your credit score. One of the first items on your "To Do" list, in terms of repairing your credit, should be to pay down any debt you currently have. Paying down revolving accounts will do more to improve your score than paying down installment loans, although paying down all debt is important.

In addition to paying down your balances, other factors, such as paying your bills on time and using revolving accounts in moderation, also improve your credit score. Naturally, ensuring you pay your debts in a timely manner is the hallmark of a good credit rating. However, the way you use revolving credit accounts says as much to lenders about your financial responsibility as your payment timeliness. Even if you pay your cards off in full each month, experts recommend that you never charge more than 30% of the credit limit for each card. This shows financial restraint and credit responsibility.

Talk to your current lenders about the blemishes that show on your credit report in terms of your accounts with them. If you've been a long-time customer, and usually pay your debts on time, your lender or credit card company may be willing to erase a delinquent payment showing on your report. Such "goodwill adjustments" must be requested in writing. Likewise, they may be willing to re-age your account after making on-time payments consistently for one year. These can help your current debts to show a more positive payment history, thus improving your credit score.

Adjustable Rate Mortgage

The structure of an Adjustable Rate Mortgage (ARM) is more complex than a Fixed Rate Mortgage (FRM). In general, the ARM has periodic times when the interest rate and payment are adjusted. Usually, ARMs offer lower initial interest rates than a FRM, but there is a risk of higher payments in the future when the index (see below) changes.

ARMs have an adjusting time period built into the loan such as one month, one quarter, one year, three years, or five years. A 1-year ARM would adjust every year, whereas a 3-year ARM would adjust every three years. When the loan is adjusted at each adjusting period, the loan payment will likely change—often for the worse. However, there are some limits built into the system to help protect the borrower (see caps below).

Besides the adjustable characteristic of an ARM, the interest itself is more complex. There are two levels of determining factors that affect how the ARM interest is adjusted. First, the ARM is tied to an index which measures interest fluctuations over time. Second, there is an interest margin that the lender adds on to the index amount. This margin generally stays constant through the life of the loan, but the index changes according to the particular index used. Make sure you know both which index is being used and what the interest margin is when you choose an ARM. Find out how stable the index has been over the past years. You may have to find an ARM with a more secure history.