FAQs | Cederholm Mortgage Advisors

Yes, a mortgage broker can usually get you a better mortgage rate for less. Mortgage brokers go to several lenders on your behalf and find the one with the best terms and interest rates.

Much like a bank or retail lender loan officer, a mortgage broker will take care of everything on your home financing. A key distinction however is that a mortgage brokers’s role includes comparing loan terms across multiple lenders (we work with over 150) instead of just one (like a bank or retail lender that a loan officer represents) to find applicants the best options, programs, and rates, collecting paperwork the financial institution needs to analyze the application, and guiding the buyer through the underwriting and closing processes. Mortgage brokers can significantly simplify the home buying process.

Mortgage brokers work independently and act as a bridge between the client and the lender. They reach out to several lenders to form a network and build professional relationships with those they work with often. They use lenders who best meet a client’s rates and terms, and many lenders only do business through mortgage brokers.

We can often (depending on your situation) can have you Pre-Approved and home shopping the same day to within 24 hours once we have received the requested documentation needed to review for your application. We can move as fast if you work with us to get things to us quickly. Learn more about the loan process.

Our Shop with Confidence Pre-Approval gives you peace of mind to know your have the best chance of a final home loan approval on the home you find and get your offer accepted on. We work with your real estate agent on that too to help you win!

It really depends on your timeline, if selling your current home, or if you are renting, when your lease ends. The timeline may surprise you: The sweet spot time is usually 3-6 months before you need to make the move. But we can help you even if you need to make it happen in 10 days or 10 months.

You don’t have to rush into buying a home just because your started the process.  Some people move quickly, others need to take their time and could take months, but knowledge is power so having your pre-approval ready will make it so when you find that house that is “gotta have it” you are immediately ready to put in an offer without putting the “cart before the horse” so to speak.

Your Pre-Approval doesn’t necessarily “Expire” in a specific time period (however, credit reports are usually good for 120 days, (we have strategies for that too), we update your pre-approval as time goes on, should anything change with your situation, but the majority of the work is already out of the way so you’re prepared better. The key things is to not open up new credit lines, loans or inquiries during the mortgage loan process so it doesn’t affect your qualifying. Contact us for more info on the right strategy for your specific situation.

This is likely the biggest purchase you have made in your life so far, and having the right game plan in place for you, including knowing your ideal monthly payment range and what that will buy in the current market, the total financial investment  known as “total cash to close” and a clear understanding of the process and what is needed per regulations and guidelines is critical to having the best experience and maximizing your purchase opportunities. Should we need to do some work to put you in a better position to buy, we will build out a roadmap to guide you. Bottom line, the more time we have to work together the more buying power you are likely to have.

We can give you a solid feel for what price range works for your goals and connect with your real estate agent to set you up with a drip search so you get properties right as they hit the MLS (which can actually be faster than popular home search aggregator sites) giving you an edge. If you aren’t 100% sure that your credit is excellent, now is the perfect time to find out if anything may need to be addressed and build that road map to prepare you to be ready to buy a home. No matter your situation, we will take the mystery out and give you solid advice and transparent guidance.

Below is a list of loan documentation that may be required when you apply for a mortgage. However, every situation is unique and you may be required to provide additional documentation. So, if you are asked for more information, be cooperative and provide the information requested as soon as possible. It will help speed up the application process.

Your Property:

• Copy of signed sales contract including all riders
• Verification of the deposit you placed on the home
• Names, addresses and telephone numbers of all realtors, builders, insurance agents and attorneys involved
• Copy of Listing Sheet and legal description if available (if the property is a condominium please provide condominium declaration, by-laws, and most recent budget)

Your Income:

• Copies of your pay-stubs for the most recent 30-day period and year-to-date
• Copies of your W-2 forms for the past two years
• Names and addresses of all employers for the last two years
• Letter explaining any gaps in employment in the past 2 years
• Work visa or green card (copy front & back)

If self-employed or receive commission or bonus, interest/dividends, or rental income:

• Provide full tax returns for the last two years PLUS year-to-date Profit and Loss statement (please provide complete tax return including attached schedules and statements. If you have filed an extension, please supply a copy of the extension.)
• K-1’s for all partnerships and S-Corporations for the last two years (please double-check your return. Most K-1’s are not attached to the 1040.)
• Completed and signed Federal Partnership (1065) and/or Corporate Income Tax Returns (1120) including all schedules, statements, and addenda for the last two years. (Required only if your ownership position is 25% or greater.)

If you will use Alimony or Child Support to qualify:

• Provide divorce decree/court order stating amount, as well as, proof of receipt of funds for last year

If you receive Social Security income, Disability or VA benefits:

• Provide an award letter from agency or organization

Source of Funds and Down Payment

• Sale of your existing home – provide a copy of the signed sales contract on your current residence and statement or listing agreement if unsold (at closing, you must also provide a settlement/Closing Statement)
• Savings, checking or money market funds – provide copies of bank statements for the last 3 months
• Stocks and bonds – provide copies of your statement from your broker or copies of certificates
• Gifts – If part of your cash to close, provide Gift Affidavit and proof of receipt of funds
• Based on information appearing on your application and/or your credit report, you may be required to submit additional documentation

Debt or Obligations

• Prepare a list of all names, addresses, account numbers, balances, and monthly payments for all current debts with copies of the last three monthly statements
• Include all names, addresses, account numbers, balances, and monthly payments for mortgage holders and/or landlords for the last two years
• If you are paying alimony or child support, include marital settlement/court order stating the terms of the obligation
• Check to cover Application Fee(s)

What credit score do mortgage brokers use?
There are two credit scoring models in the United States: FICO and VantageScore. Mortgage lenders typically prefer to use FICO. However, each credit bureau uses a different version of the FICO score:

• • Experian uses FICO Score 2
  • Equifax uses FICO Score 5
  • TransUnion uses FICO Score 4

Credit scores are a system creditors use to help determine whether or not to give you credit. Information about you and your credit experiences, such as your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report. Using a statistical program, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points — a credit score — helps predict how creditworthy you are, that is, how likely it is that you will repay a loan and make the payments when due.

The most widely used credit scores are FICO scores, which were developed by Fair Isaac Company, Inc. Your score will fall between 350 (high risk) and 850 (low risk).

Because your credit report is an such an important part of many credit scoring systems, it is very important to make sure it’s accurate before you submit a credit application. To get copies of your report, contact the three major credit reporting agencies:

Equifax: +1 (800) 685-1111
Experian: +1 (888) 397-3742
Trans Union: +1 (800) 916-8800

You are entitled to receive one free credit report every 12 months from each of the nationwide consumer credit reporting companies – Equifax, Experian, and TransUnion. This free credit report may not contain your credit score and can be requested through the following website: https://www.annualcreditreport.com

Credit scoring models are complex and often vary among creditors and for different types of credit. If one-factor changes, your score may change — but improvement generally depends on how that factor relates to other factors considered by the model. Only the creditor can explain what might improve your score under the particular model used to evaluate your credit application.

Nevertheless, scoring models generally evaluate the following types of information in your credit report:

• Have you paid your bills on time? Payment history typically is a significant factor. Your score will likely be affected negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy if that history is reflected on your credit report.
• What is your outstanding debt? Many scoring models evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, that is likely to hurt your score.
• How long is your credit history? Generally, models consider the length of your credit track record. Insufficient credit history may affect your score, but that can be offset by other factors, such as timely payments and low balances.
• Have you applied for new credit recently? Many scoring models consider whether you have applied for credit recently by looking at “inquiries” on your credit report when you apply for credit. If you have applied for too many new accounts recently, that may negatively affect your score. However, not all inquiries are counted. Inquiries by creditors who are monitoring your account or looking at credit reports to make “prescreened” credit offers are not counted.
• How many and what types of credit accounts do you have? Although it is generally good to have established credit accounts, too many credit card accounts may hurt your score. Also, many models consider the type of credit accounts you have. For example, under some scoring models, loans from finance companies may negatively affect your credit score.

Scoring models may be based on more than just information in your credit report. For example, the model may consider information from your credit application as well: your job or occupation, length of employment, or whether you own a home.

To improve your credit score under most models, concentrate on paying your bills on time, paying down outstanding balances, and not taking on new debt. It’s likely to take some time to improve your score significantly.

When we review your credit, it’ll give us a snapshot in time of your scores as they sit today. It will also allow us to see what improvements can be made and what your potential scores could be to build out a roadmap to homeownership. We can run scenarios that will give you a very specific path of what you need to do to maximize your scores or if needed, get you in touch with one of our credit repair partners who are reliable and will act in your best interests to help you get things cleaned up on your credit.  Whatever your situation, we can help you improve your situation.

As a mortgage broker, we have access to a diverse portfolio of lenders for just about everything in the lending world available. Some of the many home loan types and options available are:

Traditional Mortgage Types: Conventional, FHA, VA, Jumbo, USDA, VA (for veterans, active duty, retired, national guard, and reservists), DPA (Down Payment Assistance) Programs, 2nd Mortgages, HELOCs (home equity line of credit), New Build Construction, Construction to Perm, and Reverse Mortgages (also known as HECMs).

Non-Traditional Mortgage Types (Non-QM): Bank Statement loans, Asset-based loans, Asset Depletion loans, Alternative Documentation, Investors, DSCR (debt service coverage ratio investor rental property loans), Minimal/Limited Documentation, Foreign Nationals, and Bridge Loans to name a few.

Home Types including but not limited to: Single Family Dwellings, Townhome, Condo, Manufactured Homes, 2-4 (Duplex, Triplex, FourPlex) Unit Homes for: Primary Residence, Second Home, Vacation Home, Rental Property, Short-term Rental, Investment Property, etc.

We specialize in thinking outside the box and have expertise in serving  the traditional or non-traditional borrower situation such as: (W2) self-employed (1099), retired, business owners, unique, variable, or irregular income, and unique situations for low credit scores, immigrants, ITIN Loans, Non-U.S. Citizens with a VISA, Non-Permanent Residents, Foreign Nationals, etc.

Commercial: We also have solutions for Commercial Real Estate Financing and 4+ Unit Buildings solutions!

Whether you are looking to buy a home, relocate to another state, refinance to a lower your rate, or pull some equity our of your home, we can help!

Mortgage rates can change from the day you apply for a loan to the day you close the transaction. If interest rates rise sharply during the application process it can increase the borrower’s mortgage payment unexpectedly. Therefore, a lender can allow the borrower to “lock-in” the loan’s interest rate guaranteeing that rate for a specified time, often 30-60 days, but can be locked longer, usually for a fee, like 180+ days.

A point is a percentage of the loan amount, or 1-point = 1% of the loan, so one point on a $100,000 loan is $1,000. Points are costs that need to be paid to a lender to get mortgage financing under specified terms. Discount points are fees used to lower the interest rate on a mortgage loan by paying some of this interest up-front. Lenders may refer to costs in terms of basic points in hundredths of a percent, 100 basis points = 1 point, or 1% of the loan amount.

On a conventional mortgage, when your down payment is less than 20% of the purchase price of the home mortgage lenders usually require you get Private Mortgage Insurance (PMI) to protect them in case you default on your mortgage. PMI is variable based on a number of risk factors such as your credit scores, how much you are putting down, and loan amount to name just a few.

Government Sponsored Loan Programs are done differently. 

FHA – Charges a Mortgage Insurance Premium (MIP), usually 1.75% of the base loan amount, that is typically (although not required) added to the make up the total loan amount.  FHA also has a monthly MI fee that is the same for all borrowers who qualify, regardless of credit score range. Recently in March of 2023 this was lowered from .85% to .55% which can be a significant savings to borrowers. FHA does lower the fee a little if you put more than 5% down, but currently for new loans remains on for the life of the loan and cannot typically be removed without refinancing out of an FHA Loan into another type of Loan such as a Conventional, unless you put down 10% or more, then the MI remains for 11 years before falling off.  Chances are you would refinance before then.

VA – Charges a Funding Fee which is currently set at 2.3% if putting less than 5% down (1.65% for 5% or more down, and 1.4% for 10% or more down) for first use.  After your first use the fee is 3.6% if putting less than 5% down (1.65% for 5% or more down, and 1.4% for 10% or more down). This fee is typically 0.5% for refinance. 

However, if your VA Certificate of Eligibility states that you are Exempt, then you could be entitled to have the Funding Fee Waived entirely.

Contact us for more information.

The annual percentage rate (APR) is an interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage because it takes into account points and other credit costs. The APR allows homebuyers to compare different types of mortgages based on the annual cost for each loan. The APR is designed to measure the “true cost of a loan.” It creates a level playing field for lenders. It prevents lenders from advertising a low rate and hiding fees.

The APR does not affect your monthly payments. Your monthly payments are strictly a function of the interest rate and the length of the loan.

Because APR calculations are affected by the various fees charged by lenders, a loan with a lower APR is not necessarily a better rate. The best way to compare loans is to ask lenders to provide you with a good-faith estimate of their costs on the same type of program (e.g. 30-year fixed) at the same interest rate. You can then delete the fees that are independent of the loan such as homeowners’ insurance, title fees, escrow fees, attorney fees, etc. Now add up all the loan fees. The lender that has lower loan fees has a cheaper loan than the lender with higher loan fees.

The following fees are generally included in the APR:

• Points – both discount points and origination points
• Pre-paid interest. The interest paid from the date the loan closes to the end of the month.
• Loan-processing fee
• Underwriting fee
• Document-preparation fee
• Private mortgage-insurance
• Escrow fee

The following fees are normally not included in the APR:

• Title or abstract fee
• Borrower Attorney fee
• Home-inspection fees
• Recording fee
• Transfer taxes
• Credit report
• Appraisal fee

An Appraisal is an estimate of a property’s fair market value. It’s a document generally required (depending on the loan program) by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property. The Appraisal is performed by an “Appraiser” typically a state-licensed professional who is trained to render expert opinions concerning property values, location, amenities, and physical conditions.

The property is officially transferred from the seller to you at “Closing” or “Funding”.

At closing, the ownership of the property is officially transferred from the seller to you. This may involve you, the seller, real estate agents, your attorney, the lender’s attorney, title or escrow firm representatives, clerks, secretaries, and other staff. You can have an attorney represent you if you can’t attend the closing meeting, i.e., if you’re out-of-state. Our Closings typically take 45-60 minutes but can vary at times depending on contingency clauses in the purchase offer, or any escrow issues with title.

Some or all of the closing paperwork can be signed digitally prior to arriving at the title company to sign documents depending on your lender.

Before closing, you should have a final inspection, or “walk-through” with your real estate agent to insure requested repairs were performed, and items agreed to remain with the house are there such as drapes, lighting fixtures, etc.

In most states, the settlement is completed by a title or escrow firm in which you forward all materials and information plus the appropriate cashier’s checks or wire transfer so the firm can make the necessary disbursement. Your representative will deliver the check to the seller, and then they give the keys to you!