Mortgage Learning Center

A credit score attempts to give insight into a borrower’s credit history with a single number and helps lenders analyze the borrower’s ability to take on additional debt, such as a mortgage. Below are a few factors that contribute to your credit score:

• Length of time you’ve had a credit account open (Newer accounts are scored differently than established accounts with long payment history.)
• Payment history on your accounts. Have you paid everything on time?
• How you utilize your credit. Are you using all of your credit card’s limit or do you only use it when you need it?
• Negative credit events, such as bankruptcies, collections, etc.
• Inquiries into your credit. Credit bureaus use this to see if you are looking to establish new debt.
• The number of open, active accounts. Do you have one debt or twenty?
• Type of accounts open. Consumer finance company debts are scored differently than mortgage debts or auto loans.

You can improve your score over a period of time using the following guidelines:

• Do not apply for credit frequently. Every time you apply for credit, there an inquiry on your credit report, and a high number of inquiries can reduce your score.
• Reduce your credit card balances as much as possible.
• Make sure to pay your bills on time. Late payments and collections can have a serious impact on your score.

By federal law, you are entitled to receive a free credit report every 12 months from each bureau. You may obtain this free report from Annual Credit Report.  This website is authorized by the government to provide free credit reports. You may also contact one of the three bureaus.

Equifax (1-800-685-1111)

TransUnion (1-800-916-8800)

Experian (1-888-397-3742)

A loan pre-approval simplifies the home buying and mortgage process by allowing your lender to review a lot of your documentation up front. As a pre-approved buyer, your offer on a home will be taken more seriously because it shows that you are qualified to borrow up to a certain amount of money.

The lender will review your credit report and talk to you about your income, assets, and liabilities to determine which loan program(s) you may qualify for, the maximum amount you can borrow, and the interest rates you will be offered. They will review income, asset, and liability documentation during this phase as well. A mortgage pre-approval is generally valid for 60 to 90 days. Keep in mind that your mortgage pre-approval does not completely guarantee your loan will be approved. Your final loan approval is completed by a mortgage underwriter who will review the documentation you’ve supplied to your Loan Officer and determine if you are able to qualify for your loan.

When you grant a lender permission to pull your credit for a pre-approval it constitutes what is known as a hard inquiry. A hard inquiry could affect your credit score slightly. However, don’t let that stop you from shopping multiple lenders to compare and contrast rates and programs. The major credit bureaus see the value in comparison shopping and provide an exception for homebuyers. Rather than count every mortgage credit pull against you, credit bureaus treat all of the hard inquiries within a certain time period as one, big credit pull. The time frame depends on the scoring model the lender uses.

Fees vary according to the details of your loan. The average borrower will pay between 2% and 5% of the loan amount in various closing costs and prepaid expenses when they close on a mortgage. The fees you will pay are outlined in your Loan Estimate that your lender is required to provide within 3 days of your application. Be sure to review the loan estimate carefully and ask questions if there is something you do not understand.

Examples of typical closing costs and prepaid expenses include:

• Loan origination fee
• Discount points
• Credit report
• Flood certification
• Application/Commitment fee
• Appraisal
• Prepaid interest
• Homeowners insurance premium
• Mortgage insurance premium
• FHA, VA, and USDA premiums
• Attorney’s fees
• Title search fee
• Lender’s title insurance
• Owner’s title insurance
• Recording fees
• Home inspection
• Pest inspection
• Property survey
• Property taxes

APR takes certain loan costs into consideration as financing costs and displays a rate that includes these costs. Your APR is shown on your Loan Estimate.

Points (also called Discount Points) are fees that lenders charge to allow borrowers to reduce the interest rate on their mortgage over the life of the loan.  When you pay points you are offered rates lower than the market allows that day. So, you may be able to save a significant amount of money over the life of the loan if you consider this option, but choosing this option will increase your closing costs. One point equals one percent of the loan amount. On a $100,000 loan, one point is $1,000.

Both a home inspection and an appraisal are designed to protect you against potential issues with your new home. Because they have completely different purposes, you should rely on each of these reports uniquely to help confirm that you’ve found the perfect home.

The appraiser is generally looking at the marketability of your home. Is it similar in type, quality, square footage, condition to other homes in your market? Those factors will help your appraiser come up with a reasonable value of your home. During the appraisal inspection, your appraiser may also make note of obvious conditions that may affect the livability or marketability of the home such as broken windows, damaged flooring, roof leaks, unsafe decking, or foundation structural deficiencies.

However, appraisers are not construction experts and won’t find or report items that are not obvious. They won’t turn on every light switch, run every faucet, or inspect the attic or furnace. That’s where the home inspector comes in. Home inspectors perform a detailed inspection of your home from the attic to the crawl space. They can educate you about possible concerns or defects with the home so that you can make plans for any necessary repairs.

An appraisal determines the value of the property you are purchasing or refinancing. It helps ensure you are not buying a property for more than the typical market value.

An appraiser must be licensed by the state. Usually, the appraiser will inspect both the interior and exterior of the home. However, in some cases, only an exterior inspection will be necessary based on your financial strength and the location of the home.

After the appraiser inspects the property, he or she will compare the qualities of your home with other homes that have sold recently in the same neighborhood. These homes are called “comparables” and play a significant role in the appraisal process. Using industry guidelines, the appraiser will try to weigh the major components of these properties (i.e., design, square footage, number of rooms, lot size, age, etc.) to the components of your home to come up with an estimated value of your home. The appraiser adjusts the price of each comparable sale (up or down) depending on how it compares (better or worse) with your property.

Conventional and government-backed loans both provide great financing options for your manufactured home. Please reach out to one of our loan officers to find out more information.

To access the equity in your home you can obtain a home equity loan, home equity line of credit, or you can look into a “cash out” refinance mentioned below. These type of loans can be used for unexpected expenses, consolidating debt, home improvements, education expenses, and even vacation expenses.

There are many options to choose from. Contact one of our loan officers to help you decide which option is best for you.

Currently the Fidelity Bank, dba Right By You Mortgage doesn’t offer any down payment assistance options. However, there are many down payment assistance programs available through various state, city, and federal agencies.  You’ll want to talk to one of our loan officers to decide if these options make sense for your situation.

There are multiple options for 100% financing including VA loans, USDA loans, and our 100% Home Loan program.

A VA loan is guaranteed by the Veterans Administration and offers 100% financing to honorably discharged veterans, active duty personnel and their families.

A USDA loan is insured by the US Department of Agriculture and provides 100% financing on “rural” properties. This is not just for farm properties however. Many communities just outside of large markets are defined as “rural” by the USDA and qualify for this type of loan. Click here to see if your property is eligible. 

A 100% Home Loan is an adjustable-rate mortgage program that offers you flexibility when you are buying a home by allowing you to finance up to 100% of the purchase price.

Please note that while these programs both offer 100% financing, there are many factors that will determine your eligibility to qualify for these programs.  Please reach out to one of our loan officers for more details.

A primary residence is a home you will live in the majority of the year. This type of home qualifies for the lowest minimum down payment and mortgage rates because lenders view it as lower risk. The amount of down payment varies based on the loan program, but it can be as little as 0%. For example, a primary home worth $250,000 obtaining a 30-year fixed mortgage with 5% down at a note rate of 5.625% and an APR of 5.843% would have a monthly Principal and Interest payment of $1367.18.

A property is considered a second home when you live in the home only a portion of the year, it is located at least 50 miles away from your primary residence, and you do not plan on marketing the property for rent. Second homes have similar interest rates to primary residences, but require a larger minimum down payment of at least 10%. For example, a second home worth $250,000 obtaining a 30-year fixed mortgage with 10% down at a note rate of 5.625% and an APR of 5.997% would have a monthly Principal and Interest payment of $1151.31.

An investment property is a property you purchase with the intention of earning rental income. This property type has the highest interest rates and down payment requirements. With this type of home, a down payment of at least 15% is required. For example, an investment property worth $250,000 obtaining a 30-year fixed mortgage with 15% down at a note rate of 6.125% and an APR of 6.23% would have a monthly Principal and Interest payment of $1139.27.

_{Examples are based on rates effective August 19, 2022.}

A cash-out refinance is when you refinance your mortgage for more than you owe and convert the excess equity to cash. To be eligible to do a cash-out refinance, you usually need at least 20% equity in the home.

For example, if your home is worth $250,000 and you owe $150,000 on your mortgage, you could get up to $50,000 in cash if you refinance with a “cash out” refinance. The cash could be used for a renovation, debt consolidation, etc., but there are no lender restrictions on how you use the money you receive.

A home equity loan is a second mortgage. You receive the total amount of the loan up front and make fixed payments until the loan is paid in full. A home equity line of credit has flexible terms. You can access your money anytime and re-borrow up to your limit as it is paid back.

An ARM is a loan with an interest rate that is consistent for the first few years, then adjusts from time to time. Common ARM terms are 7/1 or 5/5, but others are often available. As an example, a 7/1 ARM offers the initially agreed upon rate for the first 7 years. Then, the interest can change every one year based on rates at that time.

Proof that you have obtained a homeowners insurance quote and a binder is required prior to closing. Homeowners insurance protects you against unexpected property damage.

Yes. We participate in the secondary mortgage market and have several investors we partner with. If your loan is sold, it will not change any of the terms of your original loan. So, while you may be paying a new lender, your payment, interest rate, and escrows will not change.