Mortgage Lending FAQs
How does Mechanics Bank use my credit report?
Mechanics Bank uses your credit report to evaluate your mortgage request and determine how you have handled your credit obligations in the past. The following companies can provide you with a copy of your credit report, often free of charge. You can obtain a free credit report as a matter of federal law at www.annualcreditreport.com.
Equifax
www.equifax.com
1-800-685-1111
Experian
www.experian.com
1-888-397-3742
TransUnion
www.transunion.com
1-800-888-4213
Can I buy a home if I have less-than-perfect credit?
Yes. Keep in mind that lenders don't just look at your credit history, but also at your ability and willingness to pay in the future. At Mechanics Bank, we may be able to help you buy a home, even if your credit isn't perfect.
What documents will I need to apply for a mortgage?
Traditional loans usually require documents that verify your employment, income and assets.
What is the difference between interest rate and APR?
The APR is an accurate measure of the cost of borrowing money. The APR or annual percentage rate reflects not only the interest rate but also any mortgage points, fees, and any other charges that you may pay to get the loan. The interest rate alone is the cost you will pay each year to borrow the money. Unlike the APR, interest rate does not reflect fees or any other charges you may have for the loan.
What is an appraisal?
An appraisal is an unbiased professional evaluation of the value of a property. If you need a mortgage to buy a new home or take cash out using a refinance, a professional appraisal will usually be required.
What is PMI or MI?
When you buy a home or refinance your first mortgage and have less than 20% equity in your home, mortgage insurance (also referred to as private mortgage insurance or PMI), is generally required. The mortgage insurance premium is typically included in your monthly mortgage payment. Some programs allow for the PMI to be cancelled when your LTV (loan to value) reaches 80%.
What does LTV (Loan-to-Value) mean?
Loan-to-value, sometimes referred to as LTV is a term used by mortgage lenders to show the ratio of a loan or loan balance to the appraised value of a property that is purchased or refinanced. The higher your down payment, the lower your LTV ratio. Mortgage lenders may use the LTV in deciding whether to lend to you and to determine if they will require private mortgage insurance.
What are the benefits of refinancing?
You may want to consider refinancing if you are interested in paying off high-interest-rate debt, shortening the length of your repayment term for your mortgage or lowering your monthly mortgage payment.
