Mortgage FAQs

• What is PITI ?
• What is an "Interest Rate Lock" ?
• What are Mortgage Discount Points" ?
• What is Private Mortgage Insurance ?
• What is a "Pre-Qualification" ?
• Can I get a mortgage loan without credit ?
• Can I qualify for a mortgage even though I had problems in the past ?
• Will a past personal bankruptcy affect my ability to buy a home ?
• I'm self-employed. What documentation do I need to get a mortgage ?
• What do we do if our mortgage loan application is rejected ?
• What is a "Truth-in-Lending" Statement?"
• What service providers are used for the mortgage process ?

What is PITI ?

PITI is a term commonly used in the mortgage industry that stands for principal, interest, taxes, and insurance. These are the components that make up your monthly mortgage payment to the lender.  PITI is part of the financial analysis to determine your ability to repay the mortgage along with your income and other expenses.

What is an Interest Rate Lock ?

This is a process where the sarasot area mortgage lender guarantees a certain interest rate for a period of time thus eliminating market fluctuations.

What are Discount Points ?

Discount points are front end fees paid to the lender to reduce the interest rate.  A discount point is equal to 1% of the loan amount.

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What is Private Mortgage Insurance ?

Private Mortgage Insurance is a monthly insurance premium required by lenders for borrowers where the loan to value ratio exceeds 80%.

What is a Pre-Qualification" ?

Sarasota real estate pre-qualification is where the mortgage company estimates the loan amount an individual may qualify for based on your financial information.  This is a helpful tool when dealing with Sarasota Realtors& reg; who are interested in the credit worthiness of their buyers.

Can I get a mortgage loan in Sarasota without much "credit" ?

It is possible; but you have to prove credit-worthiness. Some "proofs" of good credit are: The fact you currently pay rent on time, credit letters from utility companies, rental agencies (such as furniture or appliance rentals), and references from cars purchased and paid for on time. Any company or person who gave you credit can substantiate your good credit.

Can I qualify for a mortgage even though I had problems in the past ?

Yes, you can qualify - because bad credit in the past means that you fixed the financial problem and that demonstrates responsibility. Past credit problems don't necessarily mean you're a bad credit risk today. However, credit problems you've had will be considered in determining whether to give you a mortgage now and the interest rate and terms offered on any Sarasota real estate purchase.

Will my spouse's poor credit history affect me ?

Yes. If possible and your income is sufficient, you may want to get a mortgage under your name alone. Be certain, however, that your spouse is happy with this arrangement, as he or she will have to sign documents at closing. Also, consult with your Sarasota area attorney or title company to be sure you've complied with all Florida state laws.

Will a past personal bankruptcy affect my ability to buy Sarasota FL real estate ?

Bankruptcy itself will not keep you from being approved for a Sarasota real estate mortgage. You may be able to buy a home sooner than you expect, because a Sarasota area lender will check your credit history before the bankruptcy, the cause of your bankruptcy, and how you handled your responsibilities since bankruptcy.

Recognize, of course, that with a fairly recent bankruptcy on your record, Sarasota mortgage lenders aren't likely to offer their best interest rates and terms so if possible, avoid a bankruptcy.

What should I do if my mortgage loan application is rejected ?

It's not common that a Sarasota mortgage loan application is rejected outright. Rather, you're told that a loan is "not possible at this time." Those last three words are crucial. You can "work at getting approved." Ask the lender who rejected your application for the rejection reasonn. Then work at removing that reason. In a few months, you can re-apply and be approved.

Once you full=y uinderstand the reasons for your current rejection, simply ask the lender politely: "Will I be approved if I resolve all of those concerns ?" He may say, "yes." Banks and mortgage companies are in the business of providing mortgage loans. They make no money by turning them down. They are just assessing their risk and acting accordingly based on the information at hand at the moment.

I am self-employed. What documentation do I need to get a mortgage ?

You will need to show a lot of documentation. You will surely be asked for two years of personal income tax returns, two years business income tax returns (if you are incorporated), a current balance sheet, a current profit and loss statement, a business credit report, and a personal credit report. Some lenders may ask for a longer list of documents. Understand that it is far more difficult to understand your credit worthiness when the mortgage provider cannot simply request payroll documents from an employer you've worked for for a number of years.br>

What is a "Truth-in-Lending" Statement?"

The federal was originally enacted by Congress in 1968 as a part of the Consumer Protection Act. It was subsequently The law was simplified and reformed as a part the Depository Institutions Deregulations and Monetary Control Act in 1980. The law is designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs.

The "Truth in Lending" statement gives you the entire list of all costs you will be required to pay (loan origination fee, discount fees, and prepaid interest and all other items of cost to you), along with the actual figures of the carrying the loan during its lifetime. All of these items are entered into a computer to calculate the true "Annual Percentage Rate (APR). The end result is a statement that shows you the true cost amortized over the term of the mortgage. It is this number that you should use to compare mortgage offerings. One mortgage provider may offer a lower interest rate but higher up-front costs or vice versa. The "Truth in Lending" statement is your valid way to honestly compare the offerings.

What service providers are used for the mortgage process ?

Appraisers, title companies, underwriters, lenders and in case cases, atoorneys are all key participants in today's mortgage process. You will get to know all of them by the time your mortgage is approved and you close on your new home purchase.