MANNCO REALTY, LLC
LINCOLN COUNTY, NC
Shopping for a Mortgage FAQs
Ready to buy a house? Shop around for mortgage loans by getting details and terms from several lenders or mortgage brokers. Use our Mortgage Shopping Worksheet to help you compare loans and prepare to negotiate for the best deal.
Know the Mortgage Basics
What’s a mortgage?
A mortgage is a loan that helps you buy a home. It’s actually a contract between you (the borrower) and a lender (like a bank, mortgage company, or credit union) to lend you money to buy a home. You repay the money based on the agreement you sign. But if you default (that is, if you don’t pay off the loan or, in some situations, if you don’t make your payments on time), the lender may have the right to take the property.
Not all mortgage loans are the same. This article from the CFPB explains the pros and cons of different types of mortgage loans.
What should I do first to get a mortgage?
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Figure out the down payment you can afford. The amount of your down payment can determine the details of the loan you qualify for. The CFPB has tips about how to figure out a down payment that works for you.
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Get your free annual credit reports. Go to AnnualCreditReport.com. Review your reports and fix any errors on them. This video tells you how. If you find errors, dispute them with the credit bureau involved. And tell the lender about the dispute, if it’s not resolved before you apply for a mortgage.
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Get quotes from several lenders or brokers and compare their rates and fees. Find out all of the costs of the loan. Knowing just the amount of the monthly payment or the interest rate isn’t enough. Even more important is knowing the APR — the total cost you pay for credit, as a yearly rate. The interest rate is a very big factor in calculating the APR, but the APR also includes costs like points and other credit costs like mortgage insurance. Knowing the APR makes it easier to compare “apples to apples” when you’re choosing a mortgage offer. Use the FTC’s Mortgage Shopping Worksheet to keep track of and compare the costs for each loan quote.
How do mortgage brokers work?
A mortgage broker is someone who can help you find a deal with a lender and work out the details of the loan. It might not always be clear if you’re dealing with a lender or a broker, so if you’re not sure, ask. Consider contacting more than one broker before deciding who to work with — or whether to work with a broker at all. Check with the National Multistate Licensing System to see if there have been any disciplinary actions against a broker you’re thinking about working with.
A broker can have access to several lenders, so they might be able to give you a wider selection of loan products and terms. Brokers also can save you time by managing the loan approval process. But don’t assume they’re getting you the best deal. Compare the terms and conditions of loan offers yourself.
You often pay brokers in addition to the lender’s fees. Brokers are often paid in “points” that you’ll pay either at closing, as an add-on to your interest rate, or both. When researching brokers, ask each one how they’re paid so you can compare offers and negotiate with them.
Can I negotiate some of the terms of the mortgage?
Yes. Ask lenders or brokers if they can give you better terms than the original ones they quoted, or whether they can beat another lender’s offer. For example, you might
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ask the lender or broker to waive or lower one or more of its fees, or agree to a lower rate or fewer points
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make sure that the lender or broker isn’t agreeing to lower one fee while raising another — or to lower the rate while adding points
How To Recognize Deceptive Mortgage Loan Ads and Offers
Should I choose the lender advertising or offering the lowest rates?
Maybe not. When you’re shopping around, you may see ads or get offers with rates that are very low or say they’re fixed. But they may not tell you the true terms of the deal as the law requires. The ads may feature buzz words that are signs that you’ll want to dig a little deeper. For example:
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Low or fixed rate. A loan’s interest rate might be fixed or low only for a short introductory period — sometimes as short as 30 days. Then your rate and payment could increase dramatically. Look for the APR: under federal law if the interest rate is in the ad, the APR also should be there. Although the APR should be clearly stated, check the fine print to see if instead it’s buried there, or has been placed deep within the website.
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Very low payment. This might seem like a good deal, but it could mean you would pay only the interest on the money you borrowed (called the principal). Eventually, though, you would have to pay the principal. That means you would have higher monthly payments (because now payments include both interest and an additional amount to pay off the principal) or a “balloon” payment — a one-time payment that is usually much larger than your usual payment.
You also might find lenders that offer to let you make monthly payments where you pay only a portion of the interest you owe each month. So, the unpaid interest is added to the principal that you owe. That means your loan balance will increase over time. Instead of paying off your loan, you end up borrowing more. This is known as negative amortization. It can be risky because you can end up owing more on your home than what you could get if you sold it.
How do I decide which offer is the best one?
Find out your total payment. While the interest rate determines how much interest you owe each month, you also want to know what you’d pay for your total mortgage payment each month. The calculation of your total monthly mortgage payment takes into account these factors, sometimes called PITI:
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principal (money you borrowed)
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interest (what you pay the lender to borrow the money)
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taxes
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homeowners insurance
PITI sometimes includes private mortgage insurance (PMI) but not always. If you have to pay PMI, ask if it is included in the PITI you’re offered. FHA mortgage insurance is typically required on an FHA loan, including a premium due upfront and monthly premiums.
Having Problems Getting a Mortgage?
I’ve had some credit problems. Will I have to pay more for my mortgage loan?
You might, but not necessarily. Prepare to compare and negotiate, whether or not you’ve had credit problems. Things like illness or temporary loss of income don’t necessarily limit your choices to only high-cost lenders. If your credit report has negative information that’s accurate, but there are good reasons for a lender to trust you’ll be able to repay a loan, explain your situation to the lender or broker.
But, if you can’t explain your credit problems or show that there are good reasons to trust your ability to pay your mortgage, you will probably have to pay more — including a higher APR — than borrowers with fewer problems in their credit histories.
What will help my chances of getting a mortgage?
Give the lender information that supports your application. For example, steady employment is important to many lenders. If you’ve recently changed jobs but have been steadily employed in the same field for several years, include that information on your application. Or if you’ve had problems paying bills in the past because of a job layoff or high medical expenses, write a letter to the lender explaining the causes of your past credit problems. If you ask lenders to consider this information, they must do so.
What if I think I was discriminated against?
Fair lending is required by law. A lender may not refuse you a loan, charge you more, or offer you less-favorable terms based on your
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race
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color
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religion
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national origin (where your ancestors are from)
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sex
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marital status
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age
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whether all or part of your income comes from a public assistance program
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whether you have in good faith acted on one of your rights under the federal credit laws. This could include, for instance, your right to dispute errors in your credit report, under the Fair Credit Reporting Act.
FTC.gov
For Buyers, First Time Home Buyers, Move-Up Buyers
What You Should Know About Closing Costs
Before you buy a home, it’s important to plan ahead. While most buyers consider how much they need to save for a down payment, many are surprised by the closing costs they have to pay. To ensure you aren’t caught off guard when it’s time to close on your home, you need to understand what closing costs are and how much you should budget for.
What Are Closing Costs?
People are sometimes surprised by closing costs because they don’t know what they are. According to Bankrate:
“Closing costs are the fees and expenses you must pay before becoming the legal owner of a house, condo or townhome . . . Closing costs vary depending on the purchase price of the home and how it’s being financed . . .”
In other words, your closing costs are a collection of fees and payments involved with your transaction. According to Freddie Mac, while they can vary by location and situation, closing costs typically include:
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Government recording costs
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Appraisal fees
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Credit report fees
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Lender origination fees
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Title services
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Tax service fees
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Survey fees
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Attorney fees
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Underwriting Fees
How Much Will You Need To Budget for Closing Costs?
Understanding what closing costs include is important, but knowing what you’ll need to budget to cover them is critical, too. According to the Freddie Mac article mentioned above, the costs to close are typically between 2% and 5% of the total purchase price of your home. With that in mind, here’s how you can get an idea of what you’ll need to cover your closing costs.
Let’s say you find a home you want to purchase for the median price of $366,900. Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $7,500 and $18,500.
Keep in mind, if you’re in the market for a home above or below this price range, your closing costs will be higher or lower.
What’s the Best Way To Make Sure You’re Prepared at Closing Time?
Freddie Mac provides great advice for homebuyers, saying:
“As you start your homebuying journey, take the time to get a sense of all costs involved – from your down payment to closing costs.”
Work with a team of trusted real estate professionals to understand exactly how much you’ll need to budget for closing costs. An agent can help connect you with a lender, and together your expert team can answer any questions you might have.
Bottom Line
It’s important to plan for the fees and payments you’ll be responsible for at closing. Work with a local real estate professional who can help you feel confident throughout the process.
Understanding Your Credit
We hear a lot about credit — credit reports, credit scores, credit freezes, credit monitoring. What does it all mean for you? Your credit matters because it affects your ability to get a loan, a job, housing, insurance, and more. It’s important to understand what your credit is and how to protect it.
What’s Your Credit, and Why Does It Matter?
When people talk about your credit, they mean your credit history. Your credit history describes how you use money. For example:
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How many credit cards do you have?
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How many loans do you have?
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Do you pay your bills on time?
How you handled your money and bills in the past will help lenders decide if they want to do business with you. Your credit history also helps them determine what interest rate to charge you.
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If lenders see that you always pay your bills on time and never take on more debt than you can pay back, they’ll generally feel more confident doing business with you.
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If they see that you’re late on your payments or owe more on credit cards or loans than you can repay, they might not trust that you will pay them back.
Who cares about your credit history?
Lenders, landlords, insurance companies, and potential employers are a few examples of who might look at your credit history. Your credit history can make a big difference when you
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apply for a loan or credit card
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look for a job
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try to rent an apartment
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try to buy or lease a car
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try to get rental or home insurance
Because these lenders, landlords, and others care how you handle your bills and other financial decisions, you might want to care about your credit, too.
How Do You Know If Your Credit Is Good?
“Good” or “bad” credit is based on your credit history. You can find out what your credit history looks like by checking your credit report.
What’s in your credit report?
Your credit report is a summary of your credit history. The three nationwide credit bureaus — TransUnion, Equifax, and Experian — collect credit and other information about you. In your credit report, you’ll find information like
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your name, address, and Social Security number
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your credit cards
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your loans
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how much money you owe
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if you pay your bills on time or late
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if you filed for bankruptcy
Businesses pay the credit bureaus to use that information to check your credit. They run a credit check, for example, before they decide whether to lend you money, give you a credit card, or rent you an apartment.
TIP: The credit bureaus must make sure that the information they collect about you is accurate. The Fair Credit Reporting Act (FCRA), a federal law, requires this. But you want to check your credit report regularly to be very sure the right information is there. If you find mistakes, you can dispute them.
How to get your credit report
You have the right to get a free copy of your credit report every year from the three nationwide credit bureaus: TransUnion, Equifax, and Experian. Some financial advisors suggest staggering your requests over a 12-month period to help keep an eye on your reports and make sure they have accurate information. The best way to get your free credit report is to
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go to AnnualCreditReport.com or
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call Annual Credit Report at 1-877-322-8228
Through December 2023, everyone in the U.S. can get a free credit report each week from all three nationwide credit bureaus (Equifax, Experian, and TransUnion) at AnnualCreditReport.com.
And everyone in the U.S. can get six free credit reports per year through 2026 by visiting the Equifax website or by calling 1-866-349-5191. That’s in addition to the one free Equifax report (plus your Experian and TransUnion reports) you can get at AnnualCreditReport.com.
What’s a credit score?
A credit score is a number that’s calculated based on the information in your credit report. It helps businesses predict how likely you are to repay a loan and make the payments when they’re due. You’ll see lots of different scoring systems, but most lenders use the FICO score.
To calculate your credit score, companies first pull information from your credit report, like
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how much money you owe
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whether you’ve paid on time or late
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how long you’ve had credit
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how much new credit you have
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whether you asked for new credit recently
Then, using a statistical program, companies compare this information to the credit behavior of people with similar profiles. Based on this comparison, the statistical program assigns you a score. Usually, credit scores fall between 300 and 850. A higher score means that you have “good” credit: businesses think you’re less of a risk, which means you’re more likely to get credit or insurance — or pay less for it. A low score means you have what businesses see as “bad” credit, which means it will be harder for you to get a loan or a credit card — and you’re more likely to pay higher interest rates on credit you do get.
How to get your credit score
Unlike your free annual credit report, there is no free annual credit score. Some companies you do business with might give you free credit scores. Other companies may give you a free credit score if you sign up for their paid credit monitoring service. This kind of service checks your credit report for you. Sometimes it’s not always clear that you’ll be charged for the credit monitoring. So if you see an offer for free credit scores, check closely to see if you’re being charged for credit monitoring.
TIP: Before you pay to get your credit score, ask yourself if you need to see it. Your credit score is based on what’s in your credit history — if you know your credit history is good, your credit score will be good. It might be interesting to know your score, but you can decide if you want to pay to get it. For more on credit scores, see the article Credit Scores.
How Can You Protect Your Credit?
Freezing your credit
A credit freeze (or security freeze) is a free way to limit who can see your credit report. If you’re worried about someone using your credit without permission — like an identity thief or a hacker after a data breach you might want to place a freeze on your credit report. A freeze makes it harder for someone else to open new accounts in your name. It also means you’ll need to temporarily lift the freeze if you apply for credit, since many banks and lenders do a credit check before approving new accounts.
Some things to keep in mind about credit freezes:
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A credit freeze does not affect your credit score.
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With a credit freeze in place, you can still
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get your free annual credit report
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open a new account. To open one, just lift the freeze temporarily. It's free to lift the freeze. You can place it again when you no longer need lenders to see your credit.
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apply for a job, rent an apartment, or buy insurance. The freeze doesn't apply to these actions, so you don't need to lift it.
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TIP: Even with a credit freeze, a thief can make charges on your existing accounts. You still need to monitor your bank, credit card, and insurance statements for charges or changes you didn’t authorize.
To place a free credit freeze on your credit report, contact each of the three nationwide credit bureaus:
Equifax
Equifax.com/personal/credit-report-services
1-800-685-1111
Experian
1-888-EXPERIAN (888-397-3742)
Transunion
1-888-909-8872
If you ask for a freeze online or by phone, the credit bureaus must place the freeze within one business day. They also have to lift the freeze within one hour. If you make the request by mail, the credit bureau must place or lift the freeze within three business days. Remember that you have to contact all three bureaus. For more on credit freezes, read What To Know About Credit Freezes and Fraud Alerts.
Monitor your credit report
Because your credit report affects your ability to get loans, jobs, apartments, and more, you want to make sure there aren’t mistakes, and that no one has been misusing your personal information. You can do this in several ways:
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Monitor your credit report yourself for free. Request your free credit report and review it to make sure there are no problems or mistakes. Look for things like
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someone else’s information in your report
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information about you from a long time ago (especially more than seven years ago)
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information about your payment history or accounts that’s wrong
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accounts that you didn’t open yourself — a sign that someone may have stolen your identity
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If you find something on your credit report that shouldn’t be there, take steps to fix it. See the section below, “Fixing mistakes in your credit report."
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Accept free credit monitoring offered to you after a data breach. If your information was exposed by a data breach, many companies will offer you free credit monitoring. Take advantage of it. This is an opportunity to get free help watching your credit report and making sure nobody is misusing your personal information. For more information on what to do if your information was exposed in a data breach, go to IdentityTheft.gov/DataBreach.
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Active duty military and members of the National Guard can get free electronic credit monitoring. To sign up, contact the credit bureaus.
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Pay for a credit monitoring service. These services usually charge a monthly or annual fee. They keep an eye on your credit report for you and let you know if they see anything suspicious. Before you consider paying for these services, remember that you can monitor your own credit by obtaining your free credit reports and you have the right to freeze your credit for free.
TIP: Whether you monitor your credit yourself, get free credit monitoring, or pay a company to do it for you, it’s important to check in regularly to avoid any surprises. Find out more about credit monitoring in What To Know About Identity Theft.
Fixing mistakes in your credit report
The information in your credit report affects your ability to get a loan, an apartment, and many other important things in your life. You want to make sure that what’s on your report is right. If you find mistakes on your credit report, both the credit bureau and the person, company, or organization that put the wrong information there are responsible for correcting it. But there are steps you need to take first:
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If your credit report has mistakes, but you haven’t experienced identity theft: First, tell the credit bureau, in writing, what information you think is inaccurate. Include copies of documents that support your position. The credit bureau must investigate your claim. It also has to contact the business that put the information on your report. (For example, if that wrong information has to do with your cell phone bill, the credit bureau will contact your phone company.) If that company finds that the information was, in fact, inaccurate, it must tell all three credit bureaus to correct your file.
Second, contact the company that reported the wrong information to the credit bureau. Do this in writing. Tell them that you’re disputing an item in your credit report. Get more information and sample dispute letters.
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If your credit report has errors due to identity theft: You can block those charges from appearing on your credit report. Start at IdentityTheft.gov, an FTC website that will give you a personal recovery plan that walks through each step. It will also give you an Identity Theft Report that you can use to show that debts coming from identity theft are not yours.
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FTC.gov