Frequently Asked Questions

A: Yes. Meridian Home Mortgage is a brokerage firm in Hampstead, Maryland. We are not affiliated with any banks or lenders so you can rest assured knowing that we are working on your behalf.

A: No. This program is not connected to the sub-prime mortgage sector and is designed to include all homeowners, including those with less than perfect credit.

A: We establish certain legally specified criteria, like a minimum credit score, and ask a consumer reporting company for a list of people in the company’s database who meet the criteria.

A: No. As much as we would like to get a check to you today, income verification and a home appraisal may be necessary for a mortgage approval. However, Meridian has an extremely high 96% approval rate on our mortgage loan applications.

A: You can basically apply for a home loan if you know your annual income average for the most recent two years, your employment history, the amount of money you have for a down payment (if it’s a purchase), your date of birth and your social security number. A lender can pre-qualify you for a mortgage based on this information.
However, to get officially Pre-Approved for a mortgage loan you will need to show proof of the above information. You will need the most recent months’ worth of paystubs, last 2 years W-2 forms, last two years tax returns, and bank statements showing proof of down payment funds (for a purchase).

A: No. There are absolutely no mortgage application fees and no bank "runaround". There is no cost or obligation to find out what we can do for you.

A: Lender fees are fees charged to the borrower and paid to the lender in a loan transaction. Typically, most of these fees are financed in the mortgage loan. They can include an origination fee, discount fee, processing fee, underwriting fee, and application fee. Borrowers should never pay any fee out of pocket lender fees (e.g. application fee) if asked.

A: The loan to value ratio (LTV) is the percentage of your property that is being financed. If your home value is $100,000 and you obtain a mortgage of $80,000, your LTV is 80%. The LTV is a major factor that lenders use to determine how much you can borrower against a property. Typically, a lower LTV equals a lower risk for a lender and vice versa.

A: The combined loan to value ratio (CLTV) is the total percentage of all liens financed against your property. If your home value is $100,000 and you obtain a second mortgage of $10,000 and a first mortgage of $80,000, your CLTV is 90%. Typically, a lower CLTV equals a lower risk for a lender and vice versa.

A: A mortgage rate lock is basically an agreement between the lender and a borrower. It allows the lender to guarantee a specific mortgage rate for a specific period of time. This protects the borrower from market/rate changes. Rate lock periods vary, but typically there are 15, 30 and 60 day lock periods. The longer the rate lock period, the higher the costs as the lender is taking a higher risk.
Every lender should have a defined rate lock policy. It is important to understand a lenders' policy before locking in your mortgage rate.

A: Lenders and borrowers are subject to daily (and even hourly) mortgage rate changes. There are many variables in determining if and how mortgage rates fluctuate.

• Supply and demand is a major factor. If a lot of people are purchasing homes and refinancing their mortgages, the demand is high and interest rates tend to increase. Typically, if the economy is suffering and demand for credit is down, interest rates tend to decrease.
  
• Another major factor in mortgage rate changes is inflation. Higher inflation is usually paired with an economy experiencing rapid growth. The Federal Reserve might increase interest rates to slow down the economy in order to reduce inflation.
  
• Lending practices also have an impact on rate changes. Banks can determine mortgage rates based on risk. If a bank is offering higher LTV loans with lower credit scores, for example, the rates could be priced higher than someone with better credit borrower less. Banks can adjust rates based on history of loan performance and to offset risk.

There are many other factors that cause mortgage rates to fluctuate. Bond prices and bond rates and short term interest rates (determined by the Federal Reserve) are just a couple examples.

A: A point is 1% of your mortgage loan amount. If your loan amount is $200,000, a point is $2,000. Points can be financed in the loan or paid out-of-pocket. There are two types of points: discount points and origination points.
Discount points are basically prepaid interest. You can pay discount points to lower the interest rate on the loan. This kind of point is tax deductible; however, you should consult an accountant to be sure.
Origination points are fees charged by loan originators (lenders). They are to cover the cost of originating, processing, underwriting, closing, and funding the loan. These points are typically not tax deductible; however, you should consult an accountant to be sure.

A: There is no one answer that applies to everyone and every situation. If you plan on staying in your home a while, it could be to your advantage to pay discount points to obtain a lower rate. If you are looking for the lowest cost loan, you can choose to pay zero points. In this instance your interest rate might be a little higher. Most lenders should provide multiple fee option loans and be able to offer advice based on your specific needs.

A: Yes. Your loan can be sold no matter where you obtain it (through a broker, a lender, or a bank). There is a secondary mortgage market where lenders frequently buy and sell pools of mortgages. A lender buying your loan is mandated to honor all of the loan terms and conditions of your original mortgage loan. Therefore, the only thing that can change is where you mail your payment. You will know who to pay because current lender is mandated to inform you that your loan is sold, who the new lender is, and all contact information for that lender.

A: Most mortgage payments include Principal and Interest (except for interest only loans that that do not include principal).
If you impound (escrow) your taxes and insurance, they will also be included in your payment. This means that you pay a portion of your taxes and insurance every month with your principal and interest payment.
If you are required to pay Mortgage insurance, that will also be included in your mortgage payment.

A: PITI stands for Principal, Interest, Taxes and Insurance.
Principal, Interest- A mortgage calculator can determine what your Principal and Interest payment is on a specific loan size, term and rate. For example, a $200,000 mortgage at 4.75% for 30 years would have a principal and interest payment of $1,053.73.
Taxes and Insurance- Let’s say the home has an annual real estate tax of $2400 and an annual insurance premium of $600. The total amount of the taxes and insurance divided by 12 months = $250. This is your Tax and Insurance payment. Adding the $1,053.73 and the $250 = your new PITI payment of $1,303.73.

A: Borrowing less than 80% LTV of the value of your home on a conventional loan will allow you to avoid paying mortgage insurance. There are also circumstances where you can pay an upfront lump sum or a higher interest rate on loans greater than 80% LTV in order to avoid monthly mortgage insurance.
FHA loans generally require both upfront and monthly mortgage insurance unless you are borrowing less than 90% LTV on a 15 year term. In that instance, the monthly mortgage insurance is waived.

A: DTI stands for Debt to Income ratio.
The front end ratio is the percentage of your total PITI housing payment divided by your total gross monthly income.
The back end ratio is the percentage of your total monthly liabilities (including housing payment) divided by your total gross monthly income.

A: Recurring costs are costs that will occur more than one time. Examples of recurring costs are property taxes, property insurance, homeowner’s association fees, mortgage insurance, and interest.
Non-recurring costs are fees that are only charged one time. Examples of non-recurring costs are origination and discount points, appraisal fee, title insurance, escrow fee, title fees, processing fees, and underwriting fees.

A: No. It is unlawful for anyone to pull your credit without your authorization. We will only pull your credit report when you give us permission when working with one of our loan officers so we can get you the best rate and terms possible. Again, this will only be done with your authorization.

A: No. There will be “inquiries” on your credit report showing that we obtained your information for prescreening, but those inquiries will not have a negative effect on your credit report or credit score. For more, go to the Federal Trade Commission's website.

A: A mortgage calculator can help you determine loan payments for different home loan amounts and terms.
The only way to know for sure how much you qualify for is to call a lender and get pre-approved.

A: First time homebuyers can often get discounted tax and recording fees on their purchase transactions. Also, there are many National, State and local Down Payment Assistance (DPA) programs that can assist qualified first-time homebuyers with their down payment and closing costs.
There are several different purchase programs available to both first time homebuyers and seasoned homeowners. There used to be a bigger emphasis placed on first-time homebuyer purchase loan programs. Today, a first time homebuyer can utilize the same great home loan programs as repeat buyers. For example, there are no money down VA and USDA home loan programs, 97.5% FHA home loan programs and 95% conventional home loan programs available.

A: A fixed rate mortgage is a loan that will have the same mortgage rate throughout the life of that loan. If you get a 5% interest rate on a 30 year loan when you buy the home, your mortgage rate will remain 5% for the entire 30 year term.
An adjustable rate mortgage (ARM) is a rate can change depending on market conditions. Usually on first mortgage loans, an ARM is fixed for a specific period of time (1, 3, 5, 7 or 10 years are the most common options). After this fixed period of time the interest rate can adjust up or down. This will obviously have an effect on your mortgage payment. If you sign for a 5% mortgage rate on a 5 year ARM you are guaranteed that 5% for only 5 years.

A: VA (veteran) and USDA home loans have zero down payment loans (100% financing). For the VA home loans you must be VA eligible and for USDA home loans, your property must be in a pre-designated USDA rural area.
The next best purchase program is FHA which requires only 3.5% down payment (96.5% financing).

A: Yes, you can. See more information about how you can use these funds to finance a down payment.

A: There are many different factors that go into determining someone’s total closing cost. Some lender fees are negotiable, but generally you should expect to pay a small origination (0-1%) and an underwriting and processing fee (average between $500 and $1,000 – every lender differs slightly). Again, some of these fees are negotiable. It is important to ask your lender for different options (no cost, 1 point, discount points, etc). This way you can make an educated decision about which option best fits your needs.
Then there are your state and local taxes, stamps, and recording fees that are dictated by the collecting municipal. These can range from several hundred dollars to thousands of dollars depending on location. Sometimes the seller splits a good portion of these fees at closing.

A: At a loan closing, a home is officially purchased. Both the buyer and seller (and sometimes their agents/lenders) sign the necessary disclosures and legal papers that complete the sales transaction. Settlement charges are reviewed, and every disclosure is explained in detail by a licensed closer or title attorney. In most states, when a loan closing occurs, ownership is transferred immediately.

A: Home mortgage interest is tax deductible. It is always best to discuss the all tax deductions with a certified public accountant. There are home mortgage interest tax deduction calculators that can help estimate what your deduction might be.

A: If you’ve been pre-qualified for a mortgage refinance, that simply means that based on information in your credit report, you meet basic criteria for our refinancing program. It works in the same manner that credit card companies and insurance companies use when sending you offers that say you’re pre-approved.

A : An appraisal fee, normally $350 - $450 that's paid directly to the real estate appraiser, is usually the only out of pocket expense prior to your refinance loan closing. The rest of the fees and closing costs associated with your new loan can be financed into the loan amount.

A: Don’t worry. You don’t need perfect credit for a mortgage refinance. If you received an offer from us that says you’re pre-qualified to refinance your mortgage, you already meet our minimum credit requirements. We just need to verify your income and your equity and we’ll do everything we can to get you approved through our network of lenders. We’re here to help you.

A: Yes, you will need an appraisal, but Meridian will guide you through the process so you can relax and take it easy.

A: No. Always do your best to make your monthly payments on time while we process your refinance loan. However, if you have special circumstances, please let us know.

A: Your kitchen table! We provide IN HOME CLOSINGS at no extra charge. You can close any time between 9 AM and 9 PM, Monday through Friday. If you have special circumstances, let us know and we'll do everything we can to accommodate you.

A: Meridian provides you with the fastest and easiest way to get your money. We have all the latest technologies allowing us to close loans in as little as 7 to 10 business days (average is 14-30 days). You’ll receive your funds within 7 days from the date you close.

A: No. This used to be a popular measuring stick among consumers in the past. Even back then the advice made no sense at all for a lot of situations. Every borrowers needs are different. Every loan that a borrower might be trying to refinance out of is different. For example, if you have a $90,000 loan at 5% fixed mortgage rate and you want to refinance it at 4.25% - it might not make sense. It will have a very small effect on your mortgage payment and you will be paying costs, increasing your balance and starting over again on a new 30 year loan. But here are just some examples of where it makes sense:

• If you have a larger mortgage balance. The larger the loan amount the less the mortgage rate difference needs to be for you to realize worthwhile monthly savings. For example, lowering your rate by .75% on a $400,000 loan will save you much more than the $90,000 example above.
  
• If you are paying off an interest only loan, balloon, ARM, or any other loan type other than a simple fixed rate mortgage. Most borrowers doing this find comfort knowing they are refinancing out of a risky loan into a loan fixed for the entire term.
  
• If you are increasing your mortgage term. Increasing your term could easily lower your mortgage payment even with a higher mortgage rate because you are amortizing over a longer period of time. Typically, the higher the term the higher the rate. So, if you are paying off refinancing out of a 15 year term into a 30 year term, your rate might go up, but your mortgage payments should go down.
  
• If you are paying off and consolidation credit card or other consumer debt in the refinance.
  
• If you are taking out cash for home improvements or other purposes. There are many people who find themselves in the position of needing to utilize some of their equity for any number of reasons. Sometimes they cannot control the timing of such needs. Maybe they can only decrease their mortgage rate by a nominal percentage, but the need for the cash makes the transaction worthwhile.

A: The interest rate is the rate that you pay on the mortgage loan. It is what your principal and interest payment is based on.

The annual percentage rate (APR) is simply a tool designed to help consumers better compare mortgage offers. APR helps determine the borrower’s total cost of borrowing. Mortgage options can be packaged in many different ways. APR helps the borrower understand the better option in the long run. It takes into account the interest rate and specific costs associated with the loan including points, lender fees, and mortgage insurance. This is not full proof because sometimes you have to consider other factors, but it is a great tool to cut through the clutter and understand the real cost associated with a loan.

A: A cash-out option is when a borrower refinances and takes out extra money above and beyond what is needed to cover existing mortgages and loan fees. For example, a loan is considered to be a cash-out loan if the borrower walks away with cash in hand or pays off consumer debts.

A: Most mortgage refinance transactions have different fees depending on the lender, the county and state, and the title company. Some of the costs associated with refinancing could be:

• Origination fees
  
• Discount fees
  
• Underwriting/Processing fees
  
• Appraisal fee
  
• Title Insurance
  
• Title attorney fees
  
• Upfront funding fee (VA loan)
  
• Upfront Mortgage Insurance (FHA loan)

A: The most accurate way to find out how much equity you have is to get an appraisal. This will determine your home’s value. The difference between that and what you owe on the home is your equity. Or, take the sum of all liens against the property and divide it by the value. This gives you the percentage of equity that you have in your home. For example, if you owe $100,000 on your home and it appraises for $125,000 you have $25,000 in equity or 20% equity.
You can estimate the value of your home by researching similar homes that have recently sold in your neighborhood.

A: There is no one universal answer to this question. Typically, if it can be avoided, you would not want to pay off an auto loan in a mortgage. But here are just a couple of common circumstances where it does make sense:

• A borrower who is in desperate need of lower monthly payment and has exhausted all other possibilities
  
• A borrower needs to pay it off in order to qualify for a very beneficial loan. Sometimes leaving an auto unpaid will disqualify a borrower because of the negative impact a large auto payment will have on their Debt Ratio (DTI). For example, if a borrower could lower their payments dramatically on a loan that is paying off credit card debt and lowering their rate, it might be in their best interest to roll in the auto loan just to be able to qualify. Or, a borrower might need to get out of a dangerous ARM or balloon mortgage and paying off an auto is the only way to qualify.

A: We don’t want to send offers to anyone who may not be interested so we would glad to remove you from our mailing list right away. Just click here and we will make sure you’re not included on any more mailings.

A: You have two choices: You can opt out of receiving them for five years or opt out of receiving them permanently.

Call toll-free 1-888-5-OPTOUT (1-888-567-8688) or visit www.optoutprescreen.com for details. The telephone number and website are operated by the major consumer reporting companies. When you call or visit the website, you’ll be asked to provide certain personal information, including your home telephone number, name, Social Security number, and date of birth. The information you provide is confidential and will be used only to process your request to opt out.

Remember that if you have joint credit relationships, like a mortgage or a car loan with a spouse, partner, or other adult, you may continue to receive some prescreened solicitations until both of you exercise your opt-out right.

A: No. Your spouse owns your home for as long as he or she continues to live in it.

A: Yes. If you are 62 years of age or older and living in your home, you are eligible to qualify for a reverse mortgage.

A: No. You are free to use your reverse mortgage cash equity for any reason you choose. Many eliminate financial concerns associated with health care, debt reduction or remodeling; others use the monies as supplementary income, for gift funds to others, to travel, to purchase luxury items or to enjoy their retirement.

A: An appraisal is the only out of pocket expense associated with a reverse mortgage. All other closing costs can be paid out of the loan proceeds. These include:

• Lender Fees*
  
• Title Fees
  
• Origination Fee*
  
• Monthly Service Fee*
  
• Government Insurance*
  
• Government Recording Fees
  
• Government Transfer Tax*
  
• Counseling Fee*

A: Yes. You retain the title to your home. It is 100% your property. It is only after all borrowers move from the home or if your home becomes part of your estate that the loan is repaid.

At Meridian Home Mortgage, our personal advisors will explain the reverse mortgage option, review alternatives and answer your questions. In addition, the federal government requires borrowers to see a federally-approved reverse mortgage counselor as party of getting a HECM reverse mortgage.