ADR BLOG

Before deciding on what terms lenders will offer you on a loan (which they base on the "risk" to them), they want to know two things about you: your ability to pay back the loan, and your willingness to pay back the loan. For the first, they look at your income-to-debt obligation ratio. For your willingness to pay back the loan, they consult your credit score.

The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. (and they're named after their inventor!). Your FICO score is between 350 (high risk) and 850 (low risk).

Credit scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. In fact, the fact they don't consider demographic factors is why they were invented in the first place. "Profiling" was as dirty a word when FICO scores were invented as it is now. Credit scoring was developed as a way to consider only what was relevant to somebody's willingness to repay a loan.

Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Different portions of your credit history are given different weights. Thirty-five percent of your FICO score is based on your specific payment history. Thirty percent is your current level of indebtedness. Fifteen percent each is the time your open credit has been in use (ten year old accounts are good, six month old ones aren't as good) and types of credit available to you (installment loans such as student loans, car loans, etc. versus revolving and debit accounts like credit cards). Finally, five percent is pursuit of new credit -- credit scores requested.

Your credit report must contain at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage. ADRMortgage.com is owned by Andy May Group, LLC and is a state licensed mortgage company in North Carolina and Virginia since 2005 (NMLS #88010, MLO #103418). Since 2005 the company has received Zero BBB complaints and treats customers as family. Family owned and operated from Raleigh, North Carolina the company serves military (VA mortgages), Jumbo, conventional, FHA, USDA and other families looking to obtain the lowest financing costs available. ADRMortgage.com competes on rate and service and is located at 8522 Six Forks Road, Suite 201, Raleigh, North Carolina 27615. Andy May may be reached at 919 771 3379.


Posted in:Credit Scores
Posted by Andrew Walter May on June 27th, 2018 10:54 AM

Your credit report is a record of your credit activities. It lists all of your credit card accounts and loans, the balances as well as your payment history. It also shows if any action has been taken against you because of unpaid bills such as a lawsuit or bankruptcy filing. Because businesses use this information to evaluate your applications for credit, insurance and employment, it’s important that the information in your report is complete and accurate, especially if you plan to make a big purchase like a home.


The Fair Credit Reporting Act (FCRA), enforced by the Federal Trade Commission (FTC), is designed to promote accuracy and ensure the privacy of the information used in consumer reports. Under the FCRA, both the credit reporting agency (CRA) and the organization that provided the information to the CRA (usually the credit card company) must correct any errors or incomplete information in your report.


If you do encounter a mistake on your credit report, several steps need to be taken to correct the matter. But before we give you the steps, first we'd like to tell you a customer story. One customer had an incorrect collection on their credit report. We worked with the customer and removed that one item. We raised the customer's score from the 650s to 795. Why does that matter? We saved him approximately $35,000 as a result of this effort. Call us and let us work our green-machine for you! Go ADR! Go Customers! Go with speed. Now, onto the things you can do to correct credit reports (other than get advise from a seasoned ADR loan professional)......

1. The first thing to do is get a copy of your credit report from each of the three major CRAs: Equifax, http://www.equifax.com; Experian, http://www.experian.com; and TransUnion, http://www.tuc.com.

2 In a written letter, tell the CRA what information you believe to be inaccurate. Include copies (not originals) of documents that support your position. Provide your complete name and address, identify each item in your report you dispute, and request deletion or correction. Be sure to make copies of your dispute letter and enclosures.

3. Send your letter by certified mail, return receipt requested, so you can document what the CRA received.

4. The FCRA mandates that all CRAs reinvestigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all relevant data you provide about the dispute to the credit card company. After the credit card company receives notice of a dispute from the CRA, it must investigate, review all relevant information and report the results to the CRA.

5. If the disputed information is found to be inaccurate, the credit card company must notify all nationwide CRAs so they can correct this information in your file. Disputed information that cannot be verified must be deleted from your file.

6. When the reinvestigation is complete, the CRA must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the CRA cannot put the disputed information back in your file unless the credit card company verifies its accuracy and completeness, and the CRA gives you a written notice that includes the name, address, and phone number of the credit card company.

7. In addition to the CRA, you should also write to the credit card company about the error. Again, include copies of documents that support your dispute. If you are correct — meaning the information you disputed is found inaccurate — the credit card company cannot use it again. Further, at your request, the CRA must send notices of corrections to anyone who received your report in the past six months.

ADRMortgage.com is owned by Andy May Group, LLC and is a state licensed mortgage company in North Carolina and Virginia since 2005 (NMLS #88010, MLO #103418). Since 2005 the company has received Zero BBB complaints and treats customers as family. Family owned and operated from Raleigh, North Carolina the company serves military (VA mortgages), Jumbo, conventional, FHA, USDA and other families looking to obtain the lowest financing costs available. ADRMortgage.com competes on rate and service and is located at 8522 Six Forks Road, Suite 201, Raleigh, North Carolina


Posted in:Credit Scores
Posted by Andrew Walter May on June 25th, 2018 10:49 AM

Deciding how much house you can afford is a personal decision.Many factors come into play.How much can I borrow?  How much can I put toward my down payment? What size monthly payment can I afford?

There are no black and white answers to these questions.  It’s a matter of give and take. If you plan on a 30 year mortgage, you can probably make a lower down payment (or perhaps no down payment at all) and still manage the monthly payments.  If, on the other hand, you plan on a 15 year mortgage, you’ll probably want to make a larger down payment to keep your monthly payments in line with what you can afford.

How large a down payment can I make?

Many buyers look at their cash on hand as their only source for their down payment.  This simply is not the case. One way to fund or partially fund a down payment is by using a gift.   Parents, grandparents and other family members are often eager to help by making a cash gift toward the purchase of your home.

There are also down payment assistance charities that can help you.  And, of course, if you are selling a home, the equity you’ve built up can be applied to your down payment.

But these are not your only options.  We can help you explore all your down payment options, including low down payment and 100% mortgage financing options that might be right for you.

What size monthly payment can I afford?

When determining what size monthly payment you can afford, you’ll want to consider what other monthly expenses you have.   Tangible expenses such as car payments, day care and utility bills, all play a role in how large a monthly payment you can afford.

There are also the intangible expenses or lifestyle expenses that you’ll want to consider.  Things such as dining out, travel and when you buy your next car can affect how much you can afford.  Are you willing to curtail or delay some of these expenses in order to afford a larger monthly payment?

How much can I borrow?

This is a question you’ll want to get answered before you begin your home search.   This is something that we're here to help you with. Our mortgage calculators will help you see how your down payment, monthly payment and the amount you borrow are all interrelated.

We can answer any questions you may have about the mortgage process.  But the best way we can help is by getting you pre-qualified for a mortgage loan.  To get started, simply complete the form below to let us know a good time to contact you.  We look forward to


Posted by Andrew Walter May on June 22nd, 2018 3:25 PM

In today's increasingly automated society, it should come as no surprise that when you apply for a mortgage, your ability to pay can be reduced to a single number. All the years you've been paying your mortgage, car payments, and credit card bills can be analyzed, sliced, diced, spindled and mutilated into a single indicator of whether you're likely to meet your future obligations.

All three of the major credit reporting agencies (Equifax, Experian and TransUnion) use a slightly different system to arrive at a score. The best known is called the FICO score, based on a model developed by Fair Isaac and Company (hence the name) and used by Experian. Equifax's model is called BEACON, while TransUnion uses EMPIRICA. While each of the models considers a range of data available in your credit report, the primary factors are:

  • Credit History - How long have you had credit?

  • Payment History - Do you pay your bills on time?

  • Credit Card Balances - How much do you owe on how many accounts?

  • Credit Inquiries - How many times have you had your credit checked?

Each of these, and other items, are assigned a value and a weight. The results are added up and distilled into a single number. FICO scores range from 300 to 850, with higher being better. Typical home buyers likely find their scores falling between 600 and 850.

FICO scores are used for more than just determining whether or not you qualify for a mortgage. Higher scores indicate you are a better credit risk, and thus may qualify for a better mortgage rate.

What can you do about your FICO score? Unfortunately, not much. Since the score is based on a lifetime of credit history, it is difficult to make a significant change in the number with quick fixes. The most important thing is to know your FICO score and to ensure that your credit history is correct. For a reasonable fee, you can quickly get your FICO score from all three reporting agencies, along with your credit report. Also available is some helpful information and tools that help you analyze what actions might have the greatest impact on your FICO score.

Armed with this information, you will be a more informed consumer and better positioned to obtain the most favorable mortgage available to you.


ADRMortgage.com is owned by Andy May Group, LLC and is a state licensed mortgage company in North Carolina and Virginia since 2005 (NMLS #88010, MLO #103418). Since 2005 the company has received Zero BBB complaints and treats customers as family. Family owned and operated from Raleigh, North Carolina the company serves military (VA mortgages), Jumbo, conventional, FHA, USDA and other families looking to obtain the lowest financing costs available. ADRMortgage.com competes on rate and service and is located at 8522 Six Forks Road, Suite 201, Raleigh, North Carolina
Posted in:General
Posted by Andrew Walter May on June 20th, 2018 2:13 PM

Debt to Income Ratio

Your debt to income ratio is simply a way of determining how much money is available for your monthly mortgage payment after all your other recurring debt obligations are met.

 

Debt limit

There is generally a debt limit associated with each type of loan, such as a 36% qualifying ratio for a conventional mortgage loan. These qualifying ratios are guidelines. An excellent credit history can help you qualify for a mortgage loan even if your debt load is over and above the limit. Call your ADR mortgage professional to select a loan documentation program that is best for you.

Understanding the qualifying ratio

Typically conventional loans have a qualifying ratio that max's out at 38%. Usually an FHA loan will allow for a higher debt load, reflected in a higher (29/41) qualifying ratio. FHA loans are another type of subprime loan and require a significantly higher mortgage insurance charge (similar to the 3.5% x mortgage balance hit you take on a VA loan). YIKES! And you wonder why VA loans even exist? We can get you one if you like, but often times we can eliminate that nasty 3.5% "government benefit". Call your ADR mortgage professional to select the right program for you. We have saved people $7,000 on a VA loan before (on a $200,000 loan). So, don't think all lenders are created equal. We usually win and save you enough to purchase a new 42 inch plasma. So, save some money. Go Green. Go ADR!

Simply guidelines

Remember these are just guidelines. We’d be happy to pre-qualify you to determine how large a mortgage loan you can afford.  We look forward to helping you buy your dream home.


ADRMortgage.com is owned by Andy May Group, LLC and is a state licensed mortgage company in North Carolina and Virginia since 2005 (NMLS #88010, MLO #103418). Since 2005 the company has received Zero BBB complaints and treats customers as family. Family owned and operated from Raleigh, North Carolina the company serves military (VA mortgages), Jumbo, conventional, FHA, USDA and other families looking to obtain the lowest financing costs available. ADRMortgage.com competes on rate and service and is located at 8522 Six Forks Road, Suite 201, Raleigh, North Carolina 27615. Andy May may be reached at 919 771 3379.
Posted in:General
Posted by Andrew Walter May on June 18th, 2018 10:50 AM

Anything you submit over our website is 100 percent, fully secure. And we never, ever share it with anyone except by permission -- that is, if you're giving us information you want us to use to get you the best loan, we use that information to tell mortgage lenders about you and convince them to loan you money. In turn, those mortgage lenders are bound by federal law to keep your information secure. We work for you, the borrower, to find the best loan program from thousands of loan programs (banks usually just offer bank products). We shop the lenders for you and find you the best deal we can.

Here is a list of the information mortgage lenders will use to consider your loan application.

 

For All Loans:

  1. Social Security Number, for borrower and co-borrower if any

  2. Employment History

  3. For the last two years, employment dates, addresses, salary.

  4. Current pay stubs or W-2 forms.

  5. Check and Savings Accounts and Certificates of Deposit

  6. Location of bank accounts, account numbers and balances;

  7. Address of bank if out of town

  8. Last 3 months' statements

  9. Stocks, Bonds, and Investment Accounts

  10. Broker's name and address, description of stocks, bonds, etc.

  11. Last 3 months' statements or copies of stock certificates

  12. Life Insurance Policies

  13. Insurance company, policy number, face amount, cash value, if any

  14. Retirement Plan

  15. Approximate vested interest value

  16. Copy of latest statement

  17. Automobiles

  18. Make and model of automobiles, their resale value

  19. Other Assets

  20. Market value of personal and household property

  21. Liabilities and Other Non-Mortgage Debt

  22. Creditors names, addresses, account numbers

  23. Monthly payments and balances

Other income information you may need

If you're self-employed:

  • Two years tax returns, profit and loss statements, both company and personal if separate.

  • Current balance sheet and profit and loss statement if more than two months into the new fiscal year, signed by CPA.

If you have income from:

  • Commission

  • Overtime

  • Bonus

  • Partnership

  • Rental Property

  • Trust

  • Notes Receivable

  • Interest/Dividends

You'll need two years' personal federal tax returns

If employed in family business

  • Personal federal income tax returns and all schedules for the past two years

If divorced or separated

  • Complete executed divorce decree and settlement agreement

  • Payment history of alimony/child support over the past 12 months, if it is a financial obligation.

  • If you choose to have this be considered as part of your income (you don't have to), be prepared to provide 12 months canceled checks or bank statements reflecting income deposits.

If you own real estate

  • Name and address of all mortgage lenders for the past 24 months

    • account numbers

    • monthly payments

    • balances

If you've sold your home but not closed:

  • A copy of the sales contract

If you've sold your home, closed, and you will use the proceeds for your new down payment:

  • A copy of the HUD-1 Uniform Settlement Statement

 

If you rent

  • Name, address and phone number of landlords for the past 24 months

If you’re buying a home

  • Purchase sales contract or offer to purchase and all addenda

  • Furnish contract with original signatures of buyer and seller

If a source of your down payment is a gift:

  • Name, address and relationship of donor.

  • Gift funds will be verified in both the donor and recipient accounts.

Note: Not all loan programs allow gifts to be part of your down payment.

For FHA Financing

  • Evidence of Social Security Number and photo identification

For VA Financing

  • DD214 and Certificate of Eligibility

For Construction/Perm Loan

  • Signed construction with cost breakdown, builder plan and specifications

Posted in:General
Posted by Andrew Walter May on June 15th, 2018 3:01 PM

A rate lock or a rate commitment is a lender's promise to hold a certain interest rate and a certain number of points for you for a specified period of time while your application is processed. This prevents you from going through your whole application process and at the end of it finding out the interest rate has gone up.

A rate lock period can vary in length, and longer ones usually cost more. A lender will agree to "hold" your interest rate and points for a longer period, say 60 days, but in exchange the rate and maybe points are higher than with a shorter rate lock period, for example.

There are many ways besides opting for a shorter rate lock period to get a lower rate, though. A larger down payment will result in a lower interest rate than a smaller one, because you're starting out with more equity. You can pay points to lower your rate over the life of the loan, but that means you pay more up front. For many people, this makes sense and is a good deal.

Closing costs are fees paid by the lender, which the lender in turn charges you to close the loan. Many people pay closing costs when they sign on the dotted line, but a person can also finance their closing costs. Paying closing costs when the loan closes will reduce your interest rate.

Finally, the interest rate a lender is willing to offer you depends on your credit score and your debt-to-income ratio. If you have good credit and your income far exceeds your debt obligations, you will qualify for a lower rate.

If you have questions about how your rate lock period will impact your mortgage rate, give American Dream Residential a call at 919-771-3379. With nearly 25 years of experience in the finance industry and a perfect track record of 0 Better Business Bureau complaints, our team makes sure you are comfortable with the mortgage process and happy with your experience. 

Posted in:General
Posted by Andrew Walter May on May 30th, 2018 10:13 AM

Down payment requirements vary by government program. Nearly 100% of all 30 year fixed mortgages are provided by the US government. The consumer's goal should be to get the lowest cost method for getting a 30 year fixed government subsidized mortgage, and that's where http://www.adrmortgage.com comes in. At ADRMortgage.com mortgages are delivered to the above government agencies for a lot less. These lower costs are passed on to the consumer, often times saving tens of thousands of dollars depending on which bank ADRMortgage.com is compared.

Here, ADRMortgage.com shows a simple spreadsheet (click on this spreadsheet on the right) that shows the following: Fannie Mae loans require a minimum of 3% down payment; FHA loans require a minimum of 3.5% down payment; VA loans require %0 and USDA require 0%.

In fact, with the USDA mortgage there is no seller concession limit (meaning the seller can pay for all the consumer's closing costs and escrow requirements). There is no better loan program on the planet. And yes, these are the same people that inspect our meat (well, ok, not exactly the same people - but the same government - USA!). 

If the consumer has a 640 credit score and qualifies (ADRMortgage.com is where to go to get qualified), and the property qualifies (typically can't purchase in the central business district - needs to be further outside of urban areas), this is the best loan program the consumer will find. 

Imagine that the consumer can purchase a dream home and it doesn't cost any money out of pocket. The consumer simply starts making payments about six weeks after moving into a new home. 

Check out the grid that is attached for more information on Fannie Mae down payments, FHA, VA and USDA. Also, remember, the seller can pay at least 3% of closing costs (that's $3k per hundred thousand of debt) towards the buyer's closing costs and prepaids (prepaids generally are 1% of the purchase price and need to fund what's known as an escrow account). 

Lastly, with a USDA mortgage a consumer will still need at least 2 payments in liquid assets (proven by 60 days of checking account statements) as well as about $900 in home inspection and appraisal costs (which may be refunded to the consumer at closing depending on the purchase and sales contract). Each transaction is different but one customer of ADRMortgage.com stated, "I had no idea I needed so little money to purchase a home". That same customer was required to pay $0 to get that dream home, after closing. As stated above, 2 months of payments and $900 or so is required to qualify - but that money can stay with the consumer if the consumer is qualified to close on the purchase.

ADRMortgage.com is owned by Andy May Group, LLC and is a state licensed mortgage company in North Carolina and Virginia since 2005 (NMLS #88010, MLO #103418). Since 2005 the company has received Zero BBB complaints and treats customers as family. Family owned and operated from Raleigh, North Carolina the company serves military (VA mortgages), Jumbo, conventional, FHA, USDA and other families looking to obtain the lowest financing costs available. ADRMortgage.com competes on rate and service and is located at 8522 Six Forks Road, Suite 201, Raleigh, North Carolina 27615. Andy May may be reached at 919 771 3379.

Posted in:General
Posted by Andrew Walter May on May 30th, 2018 10:10 AM
http://www.adrmortgage.com (ADRMortgage.com) provides residential mortgages to the military (VA), conforming (Fannie/Freddie) and jumbo borrowers, as well as FHA and USDA residential borrowers. For 13 years, since inception, the company has been trusted to be transparent, be extraordinary in rates and costs, and most importantly, to be the consumer's fiduciary throughout the mortgage process.

This month ADRMortgage.com begins its' 14th year of serving the North Carolina and Virginia markets without a single BBB complaint. In the mortgage industry, this is unheard of. How does ADRMortgage.com do it? According to Andy May, owner and licensed loan officer, "We simply do the right thing every single time. If it costs us more, that's fine. We respect our customers by not wasting their time and by telling our customers exactly what to expect every step of the way". 

A small family mortgage business can run with this intensity, trust, values and transparency. Afterall, all 30 year fixed mortgages go to the US Government. The consumer needs the best cost proposition, which often times is not the bank or in-house unlicensed loan officer. Larger companies somehow lose the respect for the customer that is required, don't educate the people that work for them, and avoid the state laws and regulations by not getting a mortgage license in the state in which the entity operates. 

For a simple and easy discussion with no obligation ADRMortgage.com is happy to discuss financing needs and explain the process in transparent terms. Most clients spend under 10 minutes on the phone with ADRMortgage.com and come away feeling a breath of fresh air, and 30+ years of mortgage experience for company loan officers. Trust, integrity, transparency, and most importantly, 13+ years of no BBB complaints making sure the consumer is happy with the process. That's what ADRMortgage.com stands for. 

If the Real Estate Agent recommends an in-house person, give us a call and within minutes the consumer will see clearly why ADRMortgage.com has the best price and service. "At ADRMortgage.com we don't have clandestine deals with Realtors that cost the consumer a heck of a lot more".

ADRMortgage.com is owned by Andy May Group, LLC and is a state licensed mortgage company in North Carolina and Virginia since 2005 (NMLS #88010, MLO #103418). Since 2005 the company has received Zero BBB complaints and treats customers as family. Family owned and operated from Raleigh, North Carolina the company serves military (VA mortgages), Jumbo, conventional, FHA, USDA and other families looking to obtain the lowest financing costs available. ADRMortgage.com competes on rate and service and is located at 8522 Six Forks Road, Suite 201, Raleigh, North Carolina 27615. Andy May may be reached at 919 771 3379.
Posted in:General
Posted by Andrew Walter May on May 22nd, 2018 9:56 AM
HELOCs, home equity lines of credit, have lost the position of being a low-cost, tax deductible method for securing college education funding, car purchases, and other short term cash needs. https://www.irs.gov/publications/p936 [The IRS Publication 937  title Exhibit A explains all mortgage interest deduction changes from 2017 forward.] explains how mortgage interest deductions have changed.

The top three reasons for helocs no longer holding sway with savvy consumers include: First, heloc rates are now near or over 5% (as of the writing of this article). That's about a full percentage point higher than a standard 30 year fixed mortgage and more than a full percentage point higher than adjustable rate mortgages. There's little reason to pay more, when a consumer can simply refinance out of this high cost method of obtaining mortgage debt into a first lien mortgage that's fixed.

Secondly, helocs are no longer 100% deductible. There are a number of factors that disqualify heloc tax deductibility all together. Click on the IRS link above to determine if any of your heloc interest is tax deductible - at most $100k may be, but at worst it's no longer tax deductible at all (depending on use).

Lastly, heloc debt is very likely uncapped with respect to interest rate. Why would a consumer put such a large liability in a floating (north) rate interest rate? In this interest rate environment that's the last thing a consumer should do. Instead lock in a near 4% interest rate and get rid of that pesky heloc debt.

HELOCs may come back into fashion when the interest rate market changes, but for now savvy investors and home owners will be wise to stay away from this debt and replace it with first lien mortgages that are fixed in rate and term.

ADRMortgage.com is owned by Andy May Group, LLC and is a state licensed mortgage company in North Carolina and Virginia since 2005 (NMLS #88010, MLO #103418). Since 2005 the company has received Zero BBB complaints and treats customers as family. Family owned and operated from Raleigh, North Carolina the company serves military (VA mortgages), Jumbo, conventional, FHA, USDA and other families looking to obtain the lowest financing costs available. ADRMortgage.com competes on rate and service and is located at 8522 Six Forks Road, Suite 201, Raleigh, North Carolina 27615. Andy May may be reached at 919 771 3379.
Posted in:General
Posted by Andrew Walter May on May 21st, 2018 12:28 PM

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