Q: What are the pros and cons of getting an adjustable rate mortgage?

A: When interest rates are high, many borrowers choose an adjustable rate mortgage. This option will keep your monthly payment lower as you start out in your new home. When interest rates are low, fixed rate mortgages will lock in that low rate over the life of the loan. Other pros and cons:

 • Adjustable rate mortgages may be assumable, conventional fixed rate mortgages usually are not.

 • If you plan to sell in the near future, an adjustable rate mortgage is usually best because you pay a lower rate at the beginning of an adjustable loan. Therefore, you'll incur less interest expense for the short time you own the house.

 • This decision should be thought out carefully. If interest rates rise you may have higher monthly payments for a significant period with an adjustable loan.

Q : When is an adjustable rate mortgage right for me?

A : Generally, if you plan to keep your loan for a short period of time (1-10 years) or if fixed rates are high, an adjustable rate mortgage may be right for you. Zero Point Lender offers a variety of ARMs including 1-year Treasury ARM, 3-year Treasury ARM, 3/1 Treasury ARM, 5/1 Treasury ARM, 7/1 Treasure ARM and 10/1 Treasury ARM.

Other advantages of an ARM include:

• An ARM will usually offer a lower starting interest rate than a fixed rate loan.

 • An ARM can be less expensive than a fixed rate loan if interest rates remain steady or decline.

Q: What is credit scoring?

A: A credit score is derived by analyzing a number of variables to determine the likelihood that a person will repay the loan on time. The scoring system was developed from a statistical analysis of variables that predict loan repayment patterns. Variables include late payments, delinquencies and credit history. A higher score is better.

Q: What does a lender look at to approve me?A: At the heart of approving a potential borrower is what lenders call "the three C's of underwriting:"

Traditionally, all three were of equal importance. ditech, however, places the most emphasis on your credit history.

 Q: Should I pre-qualify or get pre-approval before I begin searching for a home?

A: Real Estate agents and home sellers will generally consider you a more serious buyer if you receive a pre-approval from a reliable mortgage banker. Not only does it allow you to narrow your price range, it also assures the seller that you qualify when you do find the home of your dreams.

Q: When should I lock in my interest rate?

A: To be an informed buyer, you'll want to be aware of recent interest rate movements. Have they been falling or rising? Depending on the market, you may want to wait before locking in an interest rate, or may want to lock in as soon as possible. We offer lots of flexibility but the decision to lock or float can only be made by you.

Q: Once I apply, how long will it take before I receive an approval?

A: It generally takes only 48 hours after we receive your completed application to obtain a loan decision. Some programs may require additional documentation, so approval may take a little longer. Check with your ML Mortgage Loan Officer for an estimate of the time that it will take to receive your approval. Once approved, you will receive a written commitment letter, which will outline your rate (if locked), terms, approval conditions and any additional documentation needed to close.

Q: How much money will I need at closing?

A: Your closing costs will depend upon the sale price, the amount of your down payment and the various fees connected with the purchase of your home. Generally, conventional loans require a minimum of 5% to 10% of the sales price in down payment. FHA loans require at least 3% to 5% down. Closing costs and escrow items include mortgage insurance, prepaid taxes, attorney's fees, title insurance, etc.

Shortly after you apply for a loan, ML Mortgage will provide you with a Good Faith Estimate of all closing costs and escrow items.

Q: What is the maximum monthly payment for which I qualify?

A: ML Mortgage, like most lenders, reviews your income and debts. While we offer lots of flexibility, a good rule of thumb is that up to 28% of your gross monthly income may be used for the payment of your mortgage, and up to 36% of your gross monthly income may be used for your total monthly debts (including your mortgage). ML Mortgage also offers programs with higher qualifying ratios. Call us for detailed and specific information about programs with expanded ratios.

Q: What are discount points?

A: A discount point is a fee that you can pay to reduce your interest rate. One "point" equals 1% of the loan amount. For example, one point on a $100,000 loan would equal $1000. If you're going to be in your home for a relatively short period, it may not be worth it to you to pay discount points. If you would like to lower your monthly payments by lowering your interest rate, then paying points up front may be the best way to accomplish this.

Q: Will one late credit card payment or loan default disqualify me from getting a mortgage?

A: If you have less than perfect credit, ML Mortgage has programs to meet your needs. Late payments should by no means automatically disqualify you from getting a mortgage. We understand that almost everyone has forgotten to pay a bill on time, or has had trouble making a payment. Many people find themselves in difficult financial situations. These often result from illness, divorce, or temporary unemployment.

If you can demonstrate that a problem is in the past, and you have been able to reestablish a good track record for a sufficient amount of time, you may be in a good position to get a mortgage loan. There may be a reasonable explanation, so speak to us honestly and openly about the situation. It's important to remember that lenders don't just look at your past history, but also at your ability and willingness to pay in the future.