Q. How does Chase use my credit report?
A. Your credit report is used to evaluate your mortgage request by showing Chase 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.
- Equifax
Website: www.equifax.com
Phone: 1-800-525-6285 - Experian
Website: www.experian.com
Phone: 1-888-397-3742 - TransUnion
Website: www.transunion.com
Phone: 1-800-680-7289
Q. Can I buy a home if I have less-than-perfect credit?
A. Yes. Keep in mind that lenders don't just look at your past history, but also at your ability and willingness to pay in the future. At Chase, we may be able to help you buy a home, even if your credit isn't perfect.
Q. Which is better: a fixed or adjustable interest rate?
A. If you plan to be in your home for more than seven years, you may want to consider a fixed rate mortgage, which offers predictable payments and long-term protection against rising mortgage interest rates. If you plan to be in your home for seven years or less, an adjustable rate mortgage could be attractive. Keep in mind that with an adjustable rate mortgage, your monthly payments have the potential to go up each time your interest rate adjusts.
Q. When should you pay discount points?
A. When you pay a discount point, you are essentially paying part of your interest to the lender up front. This will lower your interest rate — as well as your monthly payment — over the life of the loan. One discount point is typically equal to 1% of the loan amount. For example, one point on a $100,000 loan would require payment of $1,000 at closing. Generally speaking, the longer you plan to remain in a property or hold your mortgage, the more advantageous it is to pay points. There is no requirement to pay discount points; whether or not you decide to pay points is completely up to you.
Q. What documents will I need to apply for a mortgage?
A. Traditional loans usually require documents that verify your employment, income and assets. However, low-documentation options may also be available for some homebuyers. Some documents you may need when applying for a traditional mortgage loan include:
- Your Social Security number
- Pay stubs for the last two months
- W-2 forms for the past two years
- Bank statements for the past two or three months
- One to two years of federal tax returns
- A signed contract of sale (if you've already chosen your new home)
- Information on current debt, including car loans, student loans and credit cards
Q. How much do I need for a down payment?
A. There is no set amount. In fact, you might be surprised to learn that many first-time homebuyer programs require as little as 3.5% down. Today, there are many loan programs that can be tailored to fit your needs and financial resources. Keep in mind that for down payments of less that 20%, private mortgage insurance may be required.
Q. Which mortgage and homeowners costs are tax-deductible?
A. Three types of mortgage and homeowners costs may be tax-deductible: discount points, interest paid on a home loan or home equity loan and property taxes. After the year of sale, your mortgage interest and annual property taxes are the only deductible costs. For a refinanced loan, points must be deducted over time. Consult your tax advisor for advice about your situation.
