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Alabama Mortgage Loan (and Other States) - Terms

During the process of searching for your Alabama mortgage loan you will hear a lot of mortgage terms. Unfortunately, many alabama mortgage professionals don't take the time to explain these terms. Knowing their meaning can help you better understand the process. Following are definitions of a number of terms you may hear to help you:

1. Credit Score – This is the most important element when requesting an alabama home mortgage. It is the middle score of the scores reported by the three credit bureaus. If you had only two scores (one of the bureaus thought you didn't’t have sufficient credit history to report) lenders use the lower of the two. One very important fact you should know is that a credit score you pull will be different (sometimes significantly) than your score when credit is pulled by a mortgage broker or lender. This is because mortgage credit scores are arrived at through a different model than regular consumer credit. As you can imagine, the scoring model puts more weight on mortgage payment history.

2. Loan to Value or LTV and CLTV – LTV is the allowed amount of your first mortgage as a percentage of the lower of the appraised value or purchase price of the home. CLTV is the allowed total mortgages (1st and 2nd) as a percentage of the lower of the appraised value or purchase price of the home. The difference in the two is the second mortgage amount allowed.

3. Debt to Income or DTI – The percentage calculated by dividing your total monthly debt payments by your income. The housing component in this includes 1/12th of your annual homeowners insurance and property taxes. Alimony and child support count as a debt if you owe these. They count as income if you receive them. Most lenders gross up income from Social Security by 25% in these calculations. Consult your Broker but most lenders allow this ratio to be no more than 50%. There are a few at 45% and at 55%. FHA DTI ratios are 31% for the housing component (mortgage payment, insurance, taxes and mortgage insurance) and 43% for these and all other debts.

4. Mortgage Insurance or PMI (Private Mortgage Insurance) – For a traditional Prime and government Alabama home mortgage this is a monthly fee calculated from your credit score and the percentage LTV of your Alabama Mortgage Loan above 80%. Nearly all sub-prime lenders do not charge this fee. It’s essentially built into their rates. The federal government recently made mortgage insurance tax deductible. Consult your tax adviser for the particulars. One more note on Mortgage Insurance. With the implosion of the Sub prime mortgage business, many Mortgage Insurance companies are not insuring up to 100% below certain credit scores except for the government programs where credit score is not a factor.

5. Appraisal Comps or Comparables – Short for comparable sales, this is recent sales in your area of similar homes that an Appraiser uses to calculate the value of your home. A lack of comps, such as in a rural setting can cause significant difficulties in obtaining financing. Keep in mind that how much other homes are for sale for is of little or no use to an appraiser. Also, how much other homes are listed for is not a consideration.

6. Pre-Approval – An Alabama mortgage loan broker will submit your application to a lender for a “Pre-Approval”. This does NOT guarantee you a loan. All Pre-Approvals have “stipulations” or conditions that must be met. These might include things such as a) Maintaining a certain credit score until a full package is submitted, 2) LTV/CLTV maximums, 3) DTI maximum amount, 4) X number of mortgage or rent lates during the last 12 months, and 5) Verification of Employment history and pay among others.

7. Underwriter/Underwriting – The process of evaluating the package submitted to the lender requesting a mortgage. Underwriters review documents and appraisals to insure you meet their requirements for a particular mortgage program. Government program underwriters have a lot more flexibility than Sub prime underwriters. They can accept letters of explanation so as to negate a derogatory item.

8. Adjustable Rate Mortgage or ARM – An Alabama mortgage loan where your rate can increase or decrease set ranges at certain times based on set financial data allowing you a lower rate initially. While there can be significant risk with ARMs, you can dramatically lower this risk by a) not buying the maximum house you qualify for b) Implementing your plan for increasing your score and c) Buying, maintaining and improving your home so that it goes up in value before your initial rate period expires creating a lower LTV when you refinance.

9. Pre-payment Penalty – A fee charged by some lenders (some states regulate this) if you payoff your mortgage (refinance or sell) before a certain period. This usually comes into play with ARMs. Many Alabama Morgage loan companies do not charge pre-payment penalties but some still do. Ask to be sure. Alabama FHA programs do not have prepayment penalties.

10. Late Payments – While an Alabama mortgage loan lender may charge you a late fee after a certain “grace period” (usually 15 days) from when the payment is due as well as call you requesting payment, for credit purposes a payment does not show as late on your credit until it is 30 days past the due date. This is true of other debt, although credit card companies will hike up your rate and charge fees at the first opportunity. Remember, the 30 days late is from the due date, not the grace period date.

11. Late Payment Fees - Typically an Alabama Mortgage loan lender will charge you a late fee of around 5% of the mortgage payment amount after the 15 day grace period.

12. Lack of Credit or No Credit – When there is insufficient information in your credit file for the 3 bureaus to assign you a score. I have had many people brag about “not owing anyone”, thinking that this would make getting a mortgage easier. Unfortunately, it can do just the opposite, depending on whether the bureaus have enough history to assign them a score and the lender’s rules regarding open lines of credit.

13. Appraised Value vs. Purchase Price – A lender bases your loan and allowed LTV as a percentage of the sales price, even if the appraised value is higher. The only exception to this is for Alabama USDA loans which will use the Appraisal so as to cover closing costs (no cash back). Certified Appraisers estimate the value of a home based on recent (usually within the last 6 months) sales in your area. What other homes are for sale for has no weight on the appraised value. Most brokers require you to pay for the appraisal up front, even if it's a no money down deal. In some cases, you might get a little money back at closing if a seller credit for closing costs exceeds the closing costs net of the appraisal fee you paid up front as well as any Ernest money. Lenders will not allow you to receive cash back at closing just because the appraised value is higher than the purchase price. For 100% financing, you may be able to get your Earnest money or Appraisal money back at closing.

14. Alabama Mobile Home and Modular Home Mortgages vs. Standard Alabama Mortgage Loan Programs – While modular homes are gaining value in the eyes of lenders, most avoid mobile and modular homes like the plague. Even though a mobile home may seem like a great way to get into your own home, they’re not. This is because they don’t appreciate in value like a standard home and are much more difficult and expensive to finance. Some modular homes, if setup nicely on a foundation look just like a regular site built home. If you are considering purchasing a modular home, I would strongly suggest you look at buying a modular home that doesn't look like a standard mobile home. Remember, to most people (lenders are made up of people) perception is reality.

15. Verification of Rent or VOR – This is where an Alabama mortgage loan program requires proof from a lender as to the timeliness of your recent (usually the last 12 months) payment timeliness history. Always pay your rent on time and by check so you have cancelled checks as proof of your payment history. A statement from an individual you are renting from as to your payment history is of no value to a lot of lenders, particularly if you are buying the home you are living in. If you are living in someone's home rent free, some lenders will allow a rent free letter to eliminate the need for a VOR. It just depends on the lender and program.

16. Verification of Employment or VOE – This is simply a form to be filled out and signed by your employer as to your pay and employment history. There is also a section as to how likely your future employment is. Even after this document is submitted, most lenders will do a verbal verification the day before or of closing.

17. Income Requirement – For an Alabama Mortgage Loan, this is expressed in terms of DTI (Debt to Income) covered earlier, except for minimum disposable income cover later in this section. FHA mortgage requirements allow a max DTI of 43%.

18. Income documentation - Many Alabama Mortgage Loan programs average your Year to Date pay. Be careful about counting on overtime in your pay. If you don't have a consistent history of overtime, they may not allow it.

19. RESPA Docs – Standard forms for the mortgage process required by the government. These are pretty much the same for an Alabama mortgage loan as other state's mortgages. Don’t be intimidated. Everyone has to sign these, no matter how good their credit or how large the loan. There are four things to remember here, 1) Go through them one by one with your broker and don’t be rushed, 2) Don’t be afraid to ask questions, 3) Be sure and go through the Good Faith Estimate line by line (tell your broker that you will be doing that so they will think twice about trying to sneak some additional fees in) and 4) Ask for a copy of the signed forms to take back with you. FHA loan requirements have additional forms needed.

20. Good Faith Estimate – This is one of the RESPA documents mentioned above that covers estimated closing costs and cash (hopefully zero or very little) you will need to bring to closing in the form of a certified check.

21. Full Doc – This is simply a mortgage industry term meaning you will income and assets can be verified. Rates for Full Doc loans are lower than for stated Income or Lite Doc loans. There are also No Doc loans. These carry the highest rates. For sub-prime loans, only income is verified except for money needed at closing which sometimes will be verified a few days before closing. Many Sub prime lenders have added programs where you can use bank statement deposits to support your income. They are also calling these Full Doc loans. FHA loan requirements are all Full Doc.

22. Collections and Charge-Offs – Alabama morgage loan lender who covers the sub prime market typically allow a certain amount (usually around $5,000) of these items shown on your credit report within the last 24 months not to include items included in a previous bankruptcy.

23. Stated Income and No Income Verification – This is where a self-employed individual can “state” (within reason for the type profession they are in) their income and not have to prove it with 2 years of tax returns. These type loans require higher scores for the same LTV as a “Full Doc” loan along with a higher interest rate. Due to the sub-prime implosion, these programs for over 90% have disappeared.

24. Income Documentation – Proof of your income. It can be a computer-generated pay-stub (within the last 30 days), W-2s, 1099s, tax returns (for self-employed) and VOE (Verification of Employment, usually rechecked the day of or before closing) or any combination.

25. Asset Verification – As covered earlier, rarely done for sub-prime loans except for funds needed to close. "A" (great credit, typically 680 and above mid score) loan lenders will verify assets. Most require reserves.

26. Seasoning – The time funds are required to have been in your bank or other account. You used to only see this in rare situations for sub-prime loans and for all Conforming loans, but now you see the requirement on most home loan purchases.

27. Seller Held 2nd – Where a portion of the purchase price of a home is taken by the seller in the form of a second mortgage. Some lenders allow these, some don't. Some lenders only allow these on lower LTVs.

28. Gift of Equity - Where a portion of the purchase price of a home is given up by the seller in the form of a gift. Only works in the case of relatives. This is a great way for buyers to get into a home with very poor credit due to the usually lower LTVs. i.e.. If a couple is buying a grandparents home for say $90,000 which includes a $5,000 credit for closing costs and prepaids and the appraised value is $112,500, then the borrowers only have to qualify for an LTV of 80%. many Sub prime lenders will do an 80% loan with a mid credit score of 500. Alabama FHA mortgages allow a cash gift from a close relative for a down payment.

29. Credit Repair – The process of improving a person’s credit score through correction and deletion of derogatory items on the report. If you are considering using a credit repair service, be very careful. I would only use one a trusted friend had used and recommends. The key here is you can do most anything they can do yourself. To see what the government says about this Click Here

30. Arm’s Length Transaction – A real estate transaction such a sale of a home between unrelated parties. Related parties would include a) Relatives, b) Employers, and c) Financially related parties such a landlords and tenants.

31. Primary Wage Earner – On Alabama mortgage loans involving more than one person, the primary wage earner make the most money. Their score is the primary score used to determine what loan program they qualify for, however there are some minimum requirements for the secondary wage earner such as a minimum credit score. For most Sub prime lenders, the co-borrower needs at least a 500 middle credit score. Be careful of counting overtime, if one of the borrowers has been in their current job less than 2 years. A lender may not count the overtime.

32. Rural Property – Usually property in a limited developed area as reflected on the appraisal. An Alabama Mortgage lender usually goes by the appraiser although I have seen a lender overrule an appraiser.

33. Disposable Income Requirements – A calculation of the remaining money left after deducting debt payments including the mortgage and property taxes and homeowners insurance from gross monthly income. Most lenders will adjust this by the number of family members. This minimum requirement is usually around $1,000. A few lenders will go to $600.

34. Child Support - Child support is counted just like any other debt unless the support ends in less than 10 months. The same is true for Child support Income. Child support is not grossed up. FHA mortgage requirements are that Child support be caught up or require documentation that the child support is on track to be caught up.

35. Discount Points - While a lender can charge points if acceptable by the customer, points are usually paid for the purpose of "buying down" the interest rate.

36. APR or Annualized Percentage Rate - This is the effective interest rate on a loan after adding in most of the closing costs. It is only a calculated rate.

37. Gift Money or Gift Funds - Primarily used in government loans (FHA, VA, USDA), this is money from a blood relative used as a down payment or partial down payment or to help cover closing costs. FHA loan requirements include a 3% gift for the down payment. It can be from a close relative or from the seller through one of the gift fund provider. The seller pays a fee for this of around $295. Some lenders are no longer allowing a Seller paid gift for the 3% FHA downpayment despite FHA loan requirements allowing this (for now).

38. First Payment Due Date - Normally the first payment on an Alabama Mortgage Loan is due the first of the month following the first full month after a closing. i.e.. if a loan closes the 17th of March, the first payment would be due May 1. The only exception would be if a loan closes in the first few days of a month, some lenders will give the customer the option of an "interest credit" for those days, resulting in the first payment being due the first of the following month.

39. Title Insurance - This is insurance to insure that you have a clear title to your property. While all lenders will require title insurance for their loan, most will give you this option. Take it.

40. No Closing Cost Loans - Be careful here. There are no free lunches. You are paying one way (through a higher interest rate) or another. Note the spread between your interest rate and the APR %. This is a good indicator of the amount of closing costs (the bigger the spread, the higher the closing costs). It is a good way to compare offers if you don't have an itemization of closing costs.

41. Job Change when applying for an Alabama Mortgage Loan - While this is not really a term, you need to understand how most lenders look at job changes. In summary, a job change when you are bettering yourself is not a problem with most lenders just as long as you are in the same line of work. Most programs require you to be at your new job one full month.

42. Self-employment - Documentation for self-employed individuals usually consists of tax returns for the last 2 years and sometimes a lender will request an interim statement for the current year. One way around low income reflected on a tax return for some lenders is Bank Statement deposits. FHA loan requirements do not allow bank statements to be used as income documentation.

43. Flipped houses - A lot of Alabama Mortgage Loan Companies are suspicious about flipped houses. Most want the owner to have owned it for at least a year. Some may require documentation of the enhancements and the original cost for reasonableness. I know it seems like it should not matter if the appraisal is OK but many lenders have been burnt on these transactions. So be careful if you are considering flipping houses. You may find yourself holding the house longer than normal due to difficulties of prospective buyers getting financing.

44. Child Support as Income - Child support is counted as income for an Alabama Mortgage Loan as long as it will continue at least 2 years, you have proof that you have been receiving it the last year or 2 (depends on the lender) and you have the divorce decree with the terms of the child support.

45. Social Security and Social Security Disability Income Calculation - Obviously, Social Security and Social Security income can be counted as income. The one thing many people don't know is that most lenders allow the income to be grossed up around 25% (depends on the program) in qualifying a home buyer for an Alabama Home Mortgage.

46. Fixed Incomes - If you receive a fixed income such as Social Security, an Adjustable rate is not a good idea no matter what a mortgage broker or lender says. Some will say, it will get you in the house at a much lower rate and you can refinance in a couple of years when your credit score goes up. While this is possible, it is not a sure thing. Also, there is typically only about 1/2 of 1% difference in rate. On a $100,000 mortgage this is only around $35 per month, depending on the rates. And don't forget about Murphy's Law. Anything can happen in two years. You could become ill and have huge medical bills you can't pay and Medicare doesn't pay, causing your credit score to drop. Also, if you get a 100% loan and the value of your house does not go up, you might not be able to get another loan.

47. Trade Lines - This is simply a liability you are paying on regularly. Most people have a number of trade lines that don't show up on credit (rent, utilities, etc.). Most Alabama Mortgage lenders want to underwrite a loan based on trade lines that show up on credit. However, FHA loan requirements allow these alternative trades to be used in qualifying for an FHA loan.

48. Homeowner's Insurance - All Alabama Mortgage loans require homeowners to be paid up for a year at closing. If you escrow, they will take a few months out at closing to fund your escrow account.

49. Seller credit for closing costs - For Sub prime and government Alabama Mortgage loan programs, the maximum credit toward closing costs and prepaids is 6%. Many conforming programs only allow 3%. Also, some lenders will not let the sales price to be above the multi list home price in order to capture more closing costs.

50. Alabama Mobile Home Mortgage Loans - Nearly all of the few remaining lenders who will finance a mobile home require it to be permanently attached to some type of foundation (no wheels). And I don't know of anyone who will finance a single wide.

51. Flood Plain - There are designated areas in every community who have historically experienced a flood. Every lender will check to be sure the home isn't in a flood plain. If it is and they will still do a mortgage, they will require flood insurance.

52. Investment Property Mortgages - Except for the government programs, nearly all lenders will do a mortgage on investment property. They also charge a higher rate than for an Owner Occupied home. Most will require an appraiser to do a rental market analysis to be sure the rent you are showing is in line with market rents. Many lenders are no longer doing 100% investment property loans.

53. 80/20 Alabama Mortgage Loan - This is two loans closed simultaneously for 100% financing. The first mortgage is for 80% of the purchase price or appraised values when refinancing and the second, which carries a much higher rate is for 20%. Some lenders will only do an 80/20 mortgage in order to lend 100% of the purchase price or appraised value. There are also 80/15 mortgages and 80/10 mortgages. These 100% mortgage programs are virtually gone.

54. Disputed Items on Credit - Items on a credit report that show as in dispute still need to be documented in order for them to not count against the borrower as to credit quality and/or Debt to Income.

55. Disputing Derogatory Items on Credit to Improve Credit Score - Many people are disputing items on credit (legitimate or not) in order for the derogatory items to be taken off. If a creditor does not respond in writing to the dispute within 30 days, the derogatory item must be taken off. For old or small negative items, many creditors don't have the staff to respond to these disputes. The result is derogatory items being pulled off and credit scores jumping up, sometimes significantly.

56. Debt Consolidation Refinancing - When you refinance an Alabama Mortgage Loan in order to pay off high interest debts, most lenders require the trade line to be completely paid off. Some will even require the borrower to close the account (Mostly applies to revolving credit like credit cards).

57. The Mortgage Process (for purchases) - The typical steps are 1) Complete an application, often over the phone or in the broker/lender's office, 2) Credit is pulled, 3) A preliminary review of your credit and income is made to see if you appear to qualify for the mortgage you are requesting (It is best if you know how much house you qualify for before you start looking), 4) You gather and submit income and other documents to the broker or lender, 5) You find a house you want to buy, 6) You negotiate a deal and submit the contract as part of your documentation, (A Broker/lender may issue you a conditional approval letter at this point but you are really NOT approved yet) 7) An appraisal is ordered to be sure the home is worth the purchase price (this protects you as a buyer as well as the lender), 8) Your application, documents and appraisal are submitted to underwriting, 9) Underwriting comes back with a denial or an approval typically contingent on a few additional documents to be sure all is OK, 10) After the last documents are submitted and approved a closing is scheduled where you sign all the necessary documents, bring any money necessary and take title to your new home.

58. Escrow Accounts – This is like a savings account that the lender holds for you with designated payments added to your regular payment. If you choose to have an escrow, it will mean you have to bring some money to closing to get these setup. Ask if you can set one up later. Most lenders will allow this so you won’t have to bring money to closing. All Alabama FHA mortgages require escrow.

59. Income Paid in Cash - Unfortunately, cash income cannot be counted as income for the purpose of qualifying for a mortgage. If you deposit this income into a bank account, you may be able to utilize a bank statement program with a Sub prime lender.

Alabama Mortgage Loan - FAQs

Please Note: Most lenders are no longer using FHA loan criteria exactly as the FHA loan requirements state and they are changing daily. So some of the notes on this website may have changed by some FHA lenders if not by all.

1. Does being behind on child support affect my ability to qualify for an Alabama Mortgage Loan? - In most cases, yes particularly for government loans. FHA loan criteria specify that Child support be caught up or show it is being caught up.

2. How long after a bankruptcy before I can get an Alabama Mortgage Loan? - FHA loan criteria says you need to be discharged 2 years from a Chapter 7 however that is not the case for a Chapter 13. You will however need to have paid the Chapter 13 perfectly on time. You will also need to meet their trade line requirements (4 trades with 0x30 days late for the last 12 months). Trade lines can be rent, utilities, debts, phone, insurance, etc.

3. Can I sell or refinance my home while in Chapter 13? - Yes, with the permission of the court. The court may however review (and possibly change) the payout percentage they set for paying your creditors. Also, if you put your Alabama Mortgage Loan or Alabama Mortgage Arrears into the Chapter 13 you are capped at 85% LTV.

4. What is the difference in a full doc and partial doc mortgage loan? - Partial or Lite doc mortgages are not available for the government loans (FHA, USDA, VA). Most "A" and Sub prime lenders offer such programs but they usually carry a higher interest rate similar to Stated Income and NO Doc mortgages. These programs have all but dissappeared. Many of the foreclosures in CA and other states came as a result of borrowers getting loans for more than they really could afford. A lot of CA loans were no doc loans or stated income loans.

5. Does a seller second mortgage show up on my credit? - While theoretically possible, I have never seen this happen? Pull your own credit (all 3 bureaus) to be sure. Each bureau will let you pull your credit free once a year. Not reporting this liability is fraud.

6. Can a friend help me with a down payment through a gift of equity? - Unfortunately, no. Gifts of Equity must come from a close relative.

7. What is the difference in LTV and CLTV? - These differ when you have a second mortgage. So if you received a first for 80% of the purchase price or appraised value for a refi and a second of 15% your LTV would be 80% and your CLTV would be 95%.

8. Why would a lender ask for cancelled rent checks for an FHA Loan? - This is because rent payments are the closest trade line to a mortgage and carry a lot of weight with an underwriter, particularly under FHA loan requirements.

9. What is the quickest way to raise my credit score? While there is no 'silver bullet' here, one of the best ways is to dispute old items on your report. A lender has 30 days to respond or they must take them off. With all the reductions in staff, many lenders do not have the people necessary to respond to these requests. Just remember to dispute the items with all the bureaus that are reporting them. If you are considering using a credit repair service, be very careful. I would only use one a trusted friend had used and recommends. The key here is you can do most anything they can do yourself, however I strongly recommend you at least research what to do. One of the best sources of "insider information" can be found HERE.

10. Will paying off an old collection raise my credit score? While it can vary, in many cases it will LOWER your score. Sounds crazy but it's true. It has to do with restarting the "clock" or DLA (Date of last activity).

11. Will a lender gross up my child support for calculating my income? Unfortunately unlike Social Security, Child Support is not grossed up except for FHA loans which may allow a small gross up depending on the borrower's income situation.

12. Can I use my spouses income but not their credit score? The rule is if you use one, you must use the other. Just remember that credit score is not a determining factor for FHA, VA and USDA, although they do review credit, however many lender's FHA loan criteria are now different than the FHA's loan criteria, requiring a minimum credit score of 580. Also, I know of one lender who will use the higher credit score of a couple as long as the lowest score is at least a 540.

13. Will an Alabama Mortgage lender use an appraisal that is only 6 months old? Usually not, particularly in the current slumping housing market. You may be able to get the original appraiser to update the appraisal for a very reasonable fee. Also, lenders are putting extra scrutiny on appraisals as a result of the Sub prime melt down.

14. How long does it take to close an Alabama Mortgage loan? This can vary widely. I have seen closing take only a few days where title and the appraisal are already done and I have seen some manual underwriting government loans take 30 days or more due to all the special circumstances needed to be addressed. Just remember one thing, you can help shorten the process by providing all documentation requested as soon as possible.

15. Does an underwriter pull credit? That varies by lender and program. Some will use the brokers credit and some will not, and therefore pull credit. Ask your broker if the lender he or she is using will also be pulling credit. Most conforming lenders pull their own credit.

16. Can I refinance my home to pay off my Chapter 13 Bankruptcy? Yes you can. You will however, need to have sufficient equity in your home, meet the required trade line requirements, have paid the Chapter 13 on time and get the Courts permission.

17. What is the minimum credit score for FHA loans? There is no minimum credit score requirement for FHA mortgages, whether it be in Alabama or other states.

18. Does FHA loan requirements allow mobile home loans? Yes, doublewides or modulars on permanent foundations on your property. However, many Alabama FHA lenders are limiting their Alabama FHA mortgage programs for Mobile and Modular Homes, in particular refinancings. Call for what Alabama Mobile Home Mortgage Loan programs are still available.

19. My ex-husband pays me child support but there is no formal agreement. Can I count this as income? You may be able to if you can provide one of two things, either a copy of 12 months timely cancelled checks or 12 months timely bank deposits.

20. Can I use my mom's income to help qualify for my FHA Alabama Mortgage Loan? Yes, but only if she is going to live with you.

21. How can I get an Alabama FHA mortgage loan? You first need to find a reputable Alabama FHA mortgage broker and have them review your credit history and needs. They will take it from there. I can help you in Alabama. We are an Alabama Mortgage Broker based in Birmingham, Alabama.

22. Can I do an Alabama FHA refinance? Yes up to 95% if you qualify.

23. What does FHA stand for? Federal Housing Administration.

24. Who makes Alabama FHA loans? There are a number of lenders who provide FHA loans. Ask your Alabama Mortgage Loan broker who is FHA approved. Call me to get pre-qualified.

25. Can I get an alabama FHA mortgage after a Chapter 7 bankruptcy? You can 2 years after your Chapter 7 was discharged. You need to have paid any debts you still have or incurred after the Chapter 7 on time (not 30 days late). Sometimes an Underwriter will make 1 or 2 exceptions with very good reasons.

26. If I am a 1099 employee, am I considered self-employed and will I have to use my income from my tax returns? Yes. There are however some programs with Sub prime lenders where you can use bank statements or a combination of 1099s and bank statements as income. The rate is much higher than conforming or government mortgages but it may mean the difference in whether you are able to get a mortgage at all.

27. Can I get an Alabama FHA mortgage for investment property? Unfortunately, No.

28. Can I get an Alabama FHA mortgage for 100%? At the present time, no. However, these programs allow the 3% down payment to come from one of the gift programs such as Ameridream so you can effectively get 100% if the seller agrees to use such a program. It appears that HUD is trying to do away with these type gift funds and only allow family gift funds for the 3% down payment.

29. Will being behind on my Child Support be a problem getting an Alabama Mortgage Loan? Unfortunately yes. There used to be some Sub prime lenders who overlooked this but I am not aware of any who still do.

30. Can I use a Cosigner to help me qualify for a home? Yes, under Alabama Mortgage Loan programs FHA guidelines you can. However, if the cosigner will not be living in the home the maximum LTV is 75% unless the non-occupying co borrower is a close relative. Also, a non-occupying co-borrower's credit will not negate the primary borrower's credit quality.

31. Will I have to pay Mortgage Insurance (MI) for the life of my Alabama mortgage loan? All FHA loans require up front MI and monthly MI regardless of LTV or credit score. This will be removed after 5 years if the LTV is 78% or less

32. Do FHA, VA and USDA loan requirements allow stated income? Unfortunately, No.

33. Do FHA loans take longer than other a conforming Alabama mortgage loan? If they are manually underwritten, yes they will take a little longer depending on the number of exceptions that are being addressed. You can help speed up the process by gathering supporting documents as soon as possible.

34. Do FHA loans have a prepayment penalty? I don't know if FHA loan requirements prohibit these but I have never seen one.

35. Are Alabama VA and USDA mortgages very different from Alabama FHA mortgages? They are very similar except USDA which goes off the appraised value instead of the purchase price.

36. Are there exceptions on DTI allowed for Alabama FHA mortgages? I have never seen one but there may be if there were large reserves available or other special situations.

37. Can I refi my 100% Sub prime loan with an Alabama FHA mortgage loan? Yes, if you meet the guidelines and the value is sufficient for a 95% mortgage.

38. Can I get an FHA mortgage after a Chapter 7 bankruptcy? Yes, after 2 years.

39. Are there any exceptions to the 2 year Chapter 7 wait for FHA in Alabama? Yes but rare. The only exception I have ever seen was for a catastrophic illness, ie. cancer victim.

40. I know I have a prepayment penalty on my Alabama Mortgage Loan but can't figure out how much it is? How much are most prepayment penalties? First, let me stress that you need to have someone read your closing documents to know exactly. An attorney or good mortgage broker can easily figure it out for you. Having said that, most Sub prime prepayment penalties are calculated at 6 months interest. So under this scenario, if your loan was $100,000 @ 9%, the prepayment penalty would be approximately $4,500 ($100,000 X 9% X 1/2 yr.)

41. I am in Alabama. My dad has great credit wants to help us with an Alabama Mortgage Loan. My credit isn't so good. Can he co-sign and how would it help? Generally, co-signors (Non occupying co-borrowers) are only allowed under the government programs (FHA, VA, USDA). Your dad can co-sign or really become a co-borrower on your Alabama Mortgage. His great credit won't help. Non-occupying co-borrowers won't offset poor credit. It will however help if you are having trouble qualifying with your income. He can also "gift" you money (need to document) for a down-payment which will also help.

42. My mortgage company went out of business. How does this effect my Alabama mortgage loan payment? None. You must still make your payment. Someone should be taking over the servicing of your loan. The one thing I would do differently if it were me is to send the payment in via a service (USPS, Fedex, etc.) where I can prove when the mortgage payment was made. All kinds of problems can occur in such a transition. Cover yourself.

43. Will I be required to get title insurance on my Alabama property to get a mortgage? Yes. The lender will require insurance for its protection. You have the option of getting an additional policy for your protection. I strongly recommend it. Also, many title companies give a discount to you since they have already done the required research for the lenders policy.

44. Will my spouse have to be on my alabama mortgage loan? No, not unless you need their income to qualify. Your spouse will however, under Alabama law be required to be on title if it is your personal residence.

45. Will I have to escrow my taxes and insurance for my alabama home mortgage? For government loans such as FHA. Yes. Under most Sub prime Alabama mortgage loan programs, no but ask your broker to check with the lender. For most Alabama conforming home mortgage loans, you will have a choice but may have to pay a fee or a slightly higher rate if you choose not to escrow.

46. Will I have to pay anything up front to an Alabama Mortgage Loan Broker? Some charge a small fee ($25 or so) to cover credit. Most will want you to pay the appraisal fee up front also. Beware of anything requested up front except these.

47. Can I get my Alabama Mortgage Loan lender to waive my pre-payment penalty so I can refinance? Some lenders are cutting deals with customers in the current environment.

48. Is Mortgage Insurance required on all Alabama FHA Loans? Yes.

49. Is Mortgage Insurance tax deductible? Consult your tax advisor but I believe the law recently changed to allow MI to be tax deductible.

50. Can the seller pay for my down payment to help me with my Alabama Mortgage Loan? Unfortunately, no except through a Gift Program like Ameridream for FHA, VA and USDA loans. HUD recently announced the discontinuance of the programs effective October 31, 2007. Congress is trying to override this.

51. Can I buy my grandparents home if they gave me a good deal on the price to help out? Yes, you can get credit for a gift of equity which will lower your initial Loan to Value to help you qualify.

52. Can my Alabama Mortgage Loan Lender sell my loan to another Lender? Yes. Some of the paperwork you signed allows this. It is standard on all Alabama mortgage Loans as well as other states.

53. I can't afford my new interest rate that increased when my ARM adjusted. Can I negotiate with my Alabama mortgage loan lender? It's up to the lender or in many cases the mortgage servicer but many are realizing working a better deal for a borrower so they can afford the payments is a better deal for the lender than a foreclosure in the current housing environment. Just ask.

54. My house is now worth more making my Alabama Mortgage Loan Balance less than 80% of the value. Will my Mortgage Insurance stop? No. You need to be proactive to eliminate your Mortgage Insurance. Contact your Alabama mortgage lender and request your mortgage insurance stop. You will need a current appraisal but contact your mortgage co. first. They may need to order the appraisal or approve your appraiser. FHA loan requirements do not allow this.

55. Can I get a late showing on my credit on my credit card removed? Sometimes. What I would suggest is call your lender and ask for a courtesy 1 time removal. Point out your good pay history and special circumstances that caused the late. If they say no, wait a while and call again and ask the next customer service rep. It's worth trying several times. You might also consider calling on a Friday afternoon when people tend to be in a better mood, looking for the weekend.

56. What if I have No credit? Can I get any kind of Alabama Mortgage Loan? Yes you can. A blank credit report can be a good thing as far as the government mortgage programs are concerned. What you will need is called Alternative Credit or Alternative trade lines. These are items you pay on a regular basis, preferably monthly. They include Rent, Electricity, Water, Cable, Day Care, Car insurance, etc. You will need letters from these entities documenting Zero 30 day lates in the last year.

57. I was 28 days late on my Alabama mortgage loan and my lender charged me a late fee of 5%. Will that show up on my credit? No, just as long as your 28 days are from the initial months due date, not from the grace period date (usually the 15th).

58. Are there any straight 100% loans out there with a decent interest rate? Yes, FNMAE and FMAC both have programs. They are more strict than FHA, VA and USDA for credit and they have income caps of around $55,000.

59. If I don't qualify for a FHA, VA or USDA loan, are there any sub prime loans? Yes, although their guidelines are considerably more strict and their rates are much higher, they are available.

60. Are lenders more strict on appraisals in the current mortgage environment? Yes. While lenders can't blame the appraisers on the current real estate environment, in some cases aggressive appraisals that went unchecked have contributed to the problem.

61. Is there any mortgage insurance up front in addition to the monthly MI on an Alabama FHA mortgage? Yes, generally 1.5%, which can be built into the loan. Most lenders are also going to score based ratings where they chargs up to 1% Point for low or no score.

62. Will my being late on a couple of my Chapter 13 payments be a problem with getting an Alabama FHA Mortgage to pay off my Chapter 13? Unfortunately, yes. If there was a very unusual circumstance that caused the lates, you might have a chance.

63. Will a tax lien keep me from getting an FHA Alabama Mortgage Loan? Possibly. You may be able to get an Alabama FHA Mortgage if you have set up a payment plan and have been making timely payments on the plan.

64. What is Title? A title is the evidence that a person has to document the right of ownership and possession of land. At times, someone other than the owner has evidence documenting her/his right to the land. This can result in the title being challenged with consequences of demands being made on the use of the land. There could be a loss of marketability or even the loss of the land itself.

65. What is Title Insurance? A title insurance policy provides protection against loss if a defect is found in the insured title. The Owner's Title Insurance Policy insures the owner of the property, while the Mortgagee Title Policy insures the mortgage lender.

66. What is an abstractor and title search? Before a title policy is issued, an abstractor conducts a detailed title search of the land. The abstractor may check historical records in the public land records, tax office, judicial proceedings, etc. The purpose of the search is to verify the owner's right to mortgage or to transfer ownership of the property and to disclose any liens or encumbrances filed against the property.

67. Are their foreclosure problems with Alabama FHA Mortgages like Alabama Sub prime Mortgages? No, not to my knowledge.

68. I don't think the value of my home has increased enough where a 95% loan would cover my closing costs and Alabama mortgage balance. Is there anything I can do? Hard to say as every situation is different, but here is what I would do. First, I would get a payoff from my lender (watch out for Pre-payment penalties) and an estimate of closing costs from my Alabama mortgage professional to see just how much value is needed. Then I would get a copy of my previous appraisal (ask whoever you got your current Alabama mortgage through) and call the appraiser. Ask him or her to walk through your appraisal and the comps to see if there is anything you have done or can do for small amounts of money to get the appraised value you need.

69. With all the Sub-prime mortgage mess right now, is now a bad time to look at buying a home? No. I don't think you chances are going to get any better for getting an Alabama mortgage as time goes on. They might get worse and there are a lot of anxious home sellers out there and a lot of homes that are a great value. My opinion is act now rather than be disappointed later.

70. My Alabama mortgage payment skyrocketed when my adjustable rate mortgage changed. I am now behind on my mortgage 30 days. Can I still get an FHA Mortgage? There's a good chance you can! A new law was recently passed to try to help people just like you qualify for an FHA Mortgage. Try not to let your mortgage go to 60 days and call an Alabama FHA Mortgage broker such as myself or one in your state ASAP! Don't wait till you get in too deep.

71. My Alabama Mortgage lender's customer service will not work with me on my new ARM's interest rate. What can I do? Go on your lender's website and see if you can find the number for their workout department and call this department directly.

72. Can I use an appraisal I paid for recently for an FHA mortgage? FHA only accepts appraisals done by FHA approved appraisers and usually less than 90 days old. If your appraiser happened to be FHA approved, he/she might just need to update the appraisal to FHA standards as well as for more current market conditions.

73. Can I get an Alabama Mortgage that includes money to fix up the home? Yes. If you qualify, you could get an FHA 203 (k) mortgage which includes rehabilitation money. There is a minimum rehabilitation amount of $5,000 and a maximum of $35,000.

74. Do my student loans count as debts for my mortgage? Yes, unless they are in deferment.

75. What are FHA and VA rates now? FHA interest rates along with VA rates are around 6.5% plus or minus for a 30 year fixed Alabama mortgage. They change every business day so it's best to call.

76. Will an FHA underwriter count my overtime to help me qualify for an Alabama FHA mortgage? Possibly. You would need to be in the job for 2 years and show some consistency in overtime pay.

77. Can I count my wife's income on an Alabama mortgage if she isn't on the loan due to previous credit problems? Unfortunately, no. You only count income for the borrowers. She will however be on title.

78. Can I get an FHA mortgage loan with a credit score under 500? Technically, yes as FHA has no score requirement, however most times when someone has a score under 500 the items causing the low score result in a turndown. I have a lady that came to me highly recommended that will work with you one on one to get your credit score up and your credit report cleaned. She is very legitimate. Call me to get her contact information.

79. Will I have to pay off a Judgement and collections to get an Alabama FHA loan? Judgements, yes although they might allow you to just be making regular payments if everyone agrees. The payments would count toward your DTI. Collections, generally no.

80. My Husband declared bankruptcy recently. Will that affect me getting an FHA mortgage? No, as long as he is not on the loan. You would need to qualify with your income alone.

81. Can I get an FHA mortgage for enough money to fix up a foreclosure? Yes, FHA has a special rehabilitation program. Call me to discuss the details.

82. How are VA mortgages different from FHA mortgages? Programs are very similar. The biggest difference is in DTI with FHA having strict ratios and VA guidelines look more at a calculated net income including maintenance and taxes.

83. I want to get an FHA mortgage to buy a foreclosed home in Birmingham, AL. What is the best way to go about this? I would get a good realtor as the seller will pay their commission and you need someone familiar with this process. It can be frustrating dealing with a bank or foreclosure management company without a good realtor. Go to my Programs section above toward the bottom and click on the realtor link. She is an expert in dealing with foreclosures.

84. Are CA FHA loans the same as all other states? Yes, except ffor regional loan cap amounts.

85. What are the FHA Loan limits? Most areas will have a new limit of $271,050, however there are a number of high cost areas such as CA, NY, etc. that have higher limits, some as high as $729,750. You can find your areas FHA loan limit at this gov't site. Click here to go there.

86. How can i calculate my monthly salary? 1) If you are paid weekly, take your base weekly pay and multiply by 52 and then divide by 12. 2) If you are paid bi-weekly, take your base bi-weekly pay and multiply by 26 and then divide by 12. 3) For hourly, take your base hourly pay and multiply by your base hours a week (usually 40), then multiply by 52 and divide by 12. For twice a month (usually the 1st and 15th, take your base pay and multiply by 2. For overtime to count in your income for mortgage, you need to have had a history of OT for the last 2 years.

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