Refinancing FAQ

Q. I've had credit problems in the past. How does this impact my
chances of getting a home loan?

A.Obtaining a home loan is possible even with extremely
poor credit. If you have had credit problems in the past, a lender will
consider you to be a risky borrower to lend to. To compensate for this
added risk, the lender will charge you a higher interest rate and usually
expect you to pay a higher down payment on your home purchase (typically
20-50% down). The worse your credit is, the more you can expect to pay for
an interest rate and a down payment. Not all lenders choose to lend to
risky borrowers, so you may have to contact several before finding one
that will.

Q. I've only been late a couple of times on my credit card bills. Does
this mean I will have to pay an extremely high interest
rate?

A.Not necessarily. If you have been late less
than three times in the past year, and the payments were no more than 30
days late, you probably have a pretty good chance at getting a home loan
at a competitive interest rate. Lender guidelines will vary, but most
lenders will excuse a couple of minor 'late-pays' as long as the borrower
can provide a reasonable excuse explaining them (i.e. job transition,
illness). If the late-pays were 60+ days late and cannot be explained, you
may have to settle for a higher interest rate.

Q. How can I tell who has the best deal on financing?

A. When comparison shopping among lenders,
remember that a lender can structure financing for a borrower several
different ways. A lender can charge higher fees and offer a low interest
rate while another may charge a slightly higher interest rate with lower
fees. In order to make an 'apples to apples' comparison between lenders,
ask each lender what their interest rate is for a zero discount point loan
(based on a 30 or 60 day lock period). Then ask each lender what they
charge for an origination fee, as well as any other fees they typically
charge for a loan, (i.e. broker, processing, underwriting). A reputable
lender will not hesitate in answering these questions.

Q. Should I choose the lender with the lowest interest rate and costs?

A. There are primarily two things to consider
when choosing one lender over another: the quality of service being
provided and the cost of services provided. Quality of service is
especially important to those who have never purchased a home. First-time
home buyers will likely have many questions regarding the financing
process and available loan options. When comparing lenders, ask each
lender several questions before you fill out any loan application. A good
lender should be able to get you through the financing process leaving you
confident that you made a sound financial decision. If after a few
questions you do not feel comfortable with the lender, simply call someone
else.

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