Q. What does FICO stand for?

A. FICO stands for Fair Isaac and Company, which originated in the mid-1980.s, and established the first forms of credit score.

Q. How important is my credit score?

A. Today, your credit shapes your financial future. Your credit score affects the interest rate you get on home mortgages, car loans, and even credit cards. Most employers check your credit because they feel your credit score is a reflection of the type of employee you could potentially be.

Q. What is the difference between pre-qualified and pre-approved?

A. Pre-qualified means that a borrower has qualified for a specific amount of funding through a lender, simply put, the borrower has taken an application and their credit has been checked. Pre-approved on the other hand, means that all documentation has been submitted and all the conditions for the loan have been met.

Q. What will a lender look at when I apply for a mortgage?

A. The most important thing a lender will look at when a borrower applies for a loan is their credit score, income, and job stability. From here the lender can assess what loan programs the borrower can qualify for.

Q. What are Debt-to-Income ratios?

A. Debt-to-Income (DTI) ratio is a borrower.s debt divided by their monthly gross income; this ratio helps the lender determine how much funding the borrower can qualify for.

Q. What is a truth in lending statement?

A. The truth in lending statement shows the borrower the Annual Percentage Rate (APR), and tells the borrower the total amount of interest and principal that will be paid over the life of the loan.

Q. What are Loan-to-Value ratios?

A. Loan-to-Value (LTV) ratios tell the borrower how much the total amount of the loan is, in comparison to how much the market value of the home is, for example; if the loan amount is $80,000 and value of the property is $100,000, then the LTV is 80%.

Q. What is the difference between stated loans and full doc loans?

A. The difference between stated loans and full doc loans is that full doc loans require full documentation of all financial, personal, and employment information to verify status of income, employment, and so forth. In stated loans, the borrower does not need to verify income or any other financial information, although, all stated information does need to be documented within reason.

Q. What are the pros and cons of home equity loans?

A. Home equity loans are typically interest only. One pro is that the homeowner can write off the interest on the loan through taxes. Also, the borrower has the option to take out however much they need or don.t need. One con is that home equity loans are usually adjustable, meaning the rates will continue to fluctuate. This loan can be seen as a secured credit card.

Q. What drives changes in mortgage rates?

A. The state of our economy always dictates changes in mortgage rates. Economic growth, supply, demand, inflation and employment rates have a large impact on changing mortgage rates.