Frequent Asked Questions

Getting pre-qualified for a mortgage is a great first step to kickstart your homebuying journey. Pre-qualification gives you a picture of how much you can afford based on your credit, income, and debt. It helps you determine your budget, understand estimated monthly payments, find the right loan program, strengthen your offer, and save time.

When you apply for a home loan, several documents are requested to confirm your ability to make monthly mortgage payments. Here are a few items you will likely will need to submit:• Income history and employment verification from the past two years, such as tax returns, W-2s, and 1099s (if applicable)• Asset statements for bank, retirement, and brokerage accounts• Monthly debt payments, including any outstanding loans and credit cards• Records of rent payments, divorce, bankruptcy, or foreclosure

There is no one-loan-fits-all. Meridian Home Loans offers a wide range of mortgage programs to choose from depending on what may be the most beneficial for your circumstances. Your Loan Officer can present different scenarios to see what best aligns with your goals—whether a fixed-rate or adjustable-rate mortgage, or a Conventional loan or government-backed loan, such as FHA, VA, or USDA.

A monthly mortgage payment includes several components often referred to as PITI: principal, interest, taxes, and insurance. Any condo fees or homeowners association fees may also be factored into a monthly payment.

Closing costs are paid upfront for necessary expenses associated with purchasing a home. When applying for a loan, you’ll receive a Loan Estimate outlining these settlement charges for added fees like loan origination, appraisal, credit report, title insurance, document preparation, prepaid interest, and other miscellaneous fees.

Two challenging questions that surround every loan are – How does a lender determine my interest rate? What can I do to ensure I get the best possible rate? To answer these questions, we must consider three criteria on which a lender bases their decision.Credit Rating – The credit score is the most important point in mortgage lending. The credit score is not the only aspect considered in lending, however in most cases it is the most crucial. Lenders will also look for multiple late payment occurrences over the last two years.Ratios – Secondly, the borrower’s monthly obligations (this does not include utilities, phone, or items generally not reported on a credit report) are calculated and reviewed by lenders. Two ratios are determined, front-end and back-end. For most lenders, a “grade A” conventional loan is one in which a borrower has a front-end ratio less than 28% and a backend ratio less than 36%. For example, a borrower has a gross monthly income of $4,000, a car payment of $350, a credit card payment of $55, and a new house payment of $1,000. The calculations are as follows:$4,000/1,000 = 25% Front-end Ratio$4,000/1,405 = 35% Back-end RatioDown Payment – Thirdly, the lender factors in the amount of a borrower’s initial down payment. The less money spent on the down payment means a higher interest rate charged by the lender. Simply stated, more risk for the lender equals a higher rate for the borrower. Even if a borrower has perfect credit and wants to put 0% down, their rate will generally be about ½% higher than a person who puts 10% down.After a lender has considered the three points described above, the borrower’s application must pass the specifications set by an underwriting department for the loan to be approved.

Lenders generally charge discount points for the following purposes. 1 discount point equals 1 percent of the loan amount. Discount points are used to lower the interest rate. The discount fee is normally charged as a line item on your Closing Disclosure at the time of closing.

Your closing costs depend on the type of loan you decide is best for you. Depending on your home state, you normally pay the following amounts:Origination Fee: 1% of the loan amount – cost of establishing a loanDiscount Points: Used to lower the interest rate (refer to Discount Points section above)Appraisal Fee: Dependent on the house sizeCredit Report Fee: Charge for pulling your credit report from the credit bureaus (Refer to Credit     Report question in this FAQS section)Underwriting Fee: Payment to the end investor for services providedProcessing Fee: Payment to the lender for services providedFlood Certification Fee: Certification that your property is not in the 100 year flood zoneTitle Charge: Payment to the title company for closing your loanTitle Policy: 1% of purchase price depending on the state (the seller normally pays)Recording Fee: Payment for filing fees depending on the stateMany of these costs are third party charges and cannot be negotiated by you or the lender.