How much down payment?

One of the first questions that home buyers ask is "how much down payment are we going to

need?" Unfortunately, there is no standard answer. Down payments will vary from 0% (with a VA--Veteran's Administration loan) to upwards of 25% (with certain "non-conforming" loans). As an average, most home buyers make down payments in the 5%-15% range, although your own personal situation may dictate more or less down payment. When you are factoring money for a down payment, don't forget about closing costs, which will total in the 2-5% range, payable in cash at the time of closing.

What is Prequalification? Does it mean that the loan is approved?

Prequalification is the initial step in securing a mortgage. A lender will analyze your current income, debt and basic credit history situation in order to qualify you for a maximum loan amount. This gives you a clear picture of your financial parameters and a maximum housing price (the mortgage amount plus your down payment). With pre-approval, the lender verifies your income, debt and

financial picture, approving the loan subject to a favorable appraisal of the property you select. See the discussion on mortgage prequalification and pre-approval for more information. Looking for a source for pre-approval?

Try Lending Tree Mortgage Loans (see information in the next section).

• Principal: The repayment of the original amount borrowed on a monthly basis.

• Interest: The cost of borrowing the principal amount, repaid on a monthly basis.

• Taxes: Real Estate taxes paid to a local government agency.

• Insurance: Homeowners insurance on the home. Also any mortgage insurance, which is paid to protect the mortgage company.

  
  The total of these items is known as the PITI (Principal/Interest/Taxes/Insurance) payment.
  

I'm having a problem with the current mortgage company that is servicing my loan. What can I do?

First, it should be noted that there is currently no regulation of the mortgage loan servicing industry in the State of New Jersey. These matters normally have to be worked out between the consumer and the servicing company. If this cannot be accomplished, either party has civil recourse as the matter would be dealt with as a contract issue.

If you feel that the servicing is in breach of your mortgage contract (for example, not applying your payments properly, charging you fees that are not indicated on the mortgage note, failing to make timely tax payments through your escrow account, etc.) you should consider consulting with legal counsel (find Lawyer Referral Service or legal aid (if applicable) in your county). This counsel should have expertise in dealing with mortgage loan contract issues.

You can also file for assistance with the Department of Banking and Insurance. As a courtesy, we will send a copy of your complaint along with a letter asking the subject mortgage company/bank to address the issues involved.

Please note that you can file a complaint at the same time as filing a civil action against the company as the complaint investigation will not impact any legal proceeding that may subsequently occur.

NOTE: Certain mortgage loan servicing companies are under the jurisdiction of the following federal agencies:

Office of Thrift Supervision - This agency regulates federally chartered savings and loans or savings banks. These institutions may use the word "federal," "F.A." or "F.S.B." in its name. This agency would also regulate the subsidiaries of this type of financial institution. An example of such a company would be the nation's largest mortgage servicing company, Washington Mutual Home Loans, Inc.

Office of the Comptroller of the Currency - This agency regulates all federally chartered banks. These institutions may use the word "National" or "N.A" after its name. As with the Office of Thrift Supervision, this agency would also regulate the activities of any subsidiary of this type of financial institution. An example of a mortgage loan servicing company that is a subsidiary of a National Bank would be Bank of America Mortgage.

I am currently in default of my mortgage payments and the mortgage company/bank has begun foreclosure proceedings. What can I do?

There are many legitimate reasons why borrowers may find themselves in default (loss of employment, sickness, death of a co-borrower, etc.). It is the borrower's best interest to contact the institution servicing their mortgage and explain what the issue is before they are more than thirty days default on a payment. It is strongly recommended that you notify the institution by sending it a certified letter to the appropriate area and then following it up with a telephone call. Most companies have specific units that handle these types of matters.

As a borrower you can request that the institution consider modifying the mortgage loan terms. An example would be the company allowing the borrower to refinance at no or low cost to obtain a

lower interest in order to be able to continue making their monthly payments. If you can not make any payment and believe that this can be rectified within a reasonable amount of time, you can request that the institution provide you with a period of forbearance. This would give you the opportunity to address the financial hardship and then begin making your regularly scheduled payments. The institution would then apply the missed payments to either the end of the loan or to be due in full at a later date.

If you and the institution cannot agree on a specific type of loan modification or if your request for forbearance is denied you should immediately contact legal counsel for assistance (see above). When selecting an attorney, be sure to obtain the services of someone who has experience dealing with foreclosure cases and understands your rights pursuant to the Fair Foreclosure Act (NJSA 2A:50-53 et. Seq.) This act states that a creditor must give the debtor thirty (30) days notice before commencing a foreclosure and provide the possible availability of financial assistance by State, Federal or nonprofit organizations.

What are the "Prime" and "Subprime" markets?

“Prime” and “Subprime” refers to the interest rate and terms of the loan based on the borrower’s credit history. Borrowers with the highest credit scores and cleanest payment histories present limited risk to the lender and are usually offered lower interest rates and placed in the “prime” market.

Borrowers with lower credit scores as a result of events such as late payments, court judgments and bankruptcies present a higher risk to the lender; and, therefore, are offered higher interest rates and are placed in the “subprime” market.