Quizzle.com, the web's only true free credit score and report provider, offers you facts and tips on mortgages and the home loan process.

1. Quizzle’s Mortgage Basics

2. Quizzle’s Mortgage Basics
Guidebook
Table of
Contents...
1. The Home Loan
2. Mortgage Rates
3. Mortgage Refinancing
4. Common Mortgage Questions
5. Quick Mortgage Tips
GET THIS GUIDEBOOK!

3. 1. The Home Loan

4. 5 Questions Before Buying a
Home
1. Can you put 20 percent down?
2. Do you have ample cash savings?
3. Do you have a stable income?
4. Do you have a good credit score?
5. Do you plan to stay in the house for 5 years?

5. You Found Your Dream Home…
Now What?
1. What’s your living situation: renting or selling?
Negotiate timing of close date
2. Get pre-approved for home loan—don’t wait to
get financing in order
3. Make an offer! (Consider a real estate agent)
4. Provide documentation to mortgage lender
5. Finalize home loan after appraisal, title work,
and close date

6. The ‘Dos and Don’ts of Home
Loans
DO:
1.Have access to ALL sources of assets needed for your
mortgage
2.Provide two years of tax returns to your lender
3.Keep relative income and credit info at hand
DON’T:
1.Open new credit accounts
2.Transfer large sums, deposit cash in accounts
3.Have active disputes pending on credit report

7. What to Look for When Selecting
a Mortgage Banker
1. Find someone you can trust: ask friends, family, and
co-workers who may have worked with a mortgage
banker and had positive experiences.
2. Find some with expertise: look for an experienced
banker—someone who answers your questions and
who asks YOU questions.
Choose someone who displays an understanding of the
market, and is responsive to your calls, email, and
other communications.

8. The 3 Biggest Mortgage Mistakes
1. Failure to realize mortgage pricing changes—often
rapidly, even within the span of a day
2. Working with a mortgage lender you don’t know or
feel you can’t trust
3. Getting a quick quote and going with the lowest rate
—a common, often costly mistake

9. How to Streamline
the Home Loan Process
1. Know your credit status by getting free credit reports
and scores through Quizzle
2. Get income records ready: 1-2 paystubs within 30 days
of application and two years of W-2s, (have 2 yrs of tax
returns if self-employed)
3. Have a 60-day transaction history of accounts,
personal asset sales, stock/CD cash-outs, etc.
4. If refinancing, make sure construction & remodeling
projects are done by appraisal time

10. Federal Housing Administration
Basic Information
1. Since 1934, the FHA has helped finance over 34
million properties
2. FHA loans offer lower monthly PMI (private mortgage
insurance) rates than traditional PMI payments
3. FHA purchase loans offer as little as 3% down
payments which can be “gifted” by close family
4. While private loan qualifications have gone up recently,
FHA loans still offer more relaxed guidelines

11. 2. Mortgage Rates

12. 3 Ways to Lower Your
Mortgage Rate
1. Improve Debt-to-Income (DTI) Ratio: your DTI is
calculated by dividing monthly debt by monthly
income--keep DTI to about 30%
2. Improve Loan-to-Value (LTV) Ratio: your LTV is the
loan you want to borrow divided by the value of the
home—keep LTV to 80%
3. Improve credit scores: make on-time payments, use
only credit you need—but keep what you have, dispute
inaccuracies, and limit new applications for lines of
credit

13. 5 Ways to Take Advantage of
Low Mortgage Rates
1. Get your free credit score with Quizzle
2. Get your free credit report with Quizzle: an official
Experian credit report, completely free, no strings
3. Get organized: have paystubs, W2s, tax returns,
employment history, bank statements, and other
financial information ready for review
4. Know what you can afford: examine your debt-to-
income ratio and budget—make sure you can pay for
what you want
5. Start saving up for your down payment

14. Is Owning a Home Really
Cheaper than Renting?
The short answer. Yes!
The slightly longer answer… Yes, but it’ll take a minute.
Renting may be cheaper than buying at first—with down
payments and closing costs—but over the long haul, your
monthly mortgage payment will likely be lower than your
rent.
Plus, as you pay your mortgage, you build equity—a real
asset, whereas with rent, the money’s just sort of spent
month-to-month with little to show for it.

15. 3. Mortgage Refinancing

16. 4 Reasons to Refinance
1. Lower monthly payments by converting to a longer
term mortgage
2. Pay off the balance of your home loan faster
3. Consolidate high-interest debts like credit cards to
lower-interest mortgage debt
4. Use equity to take cash out for other big expenditures,
such as college tuition or retirement accounts

17. 4 Considerations Before
Refinancing
1. Long-term costs: you do end up owing more on your
mortgage, even if it’s at a lower rate
2. Time frame: if you refinance a 15-year mortgage to a
30-year, it takes longer to pay off
3. APR: besides just the interest rate, know the annual
percentage rate (APR)—the real cost
4. Other costs: in addition to closing costs, you will be on
the hook to pre-pay interest on the mortgage,
insurance, and taxes

18. 4 New Types of Mortgage
1. 40-year Mortgage: a longer term than 15 or 30 years
allows for a lower monthly payment
2. Hybrid: fixed interest rate to start, adjustable rate later
—ideal for short-term owners
3. Modification: owners ‘underwater’ or in tough financial
straits can sometimes re-negotiate terms with lenders
4. YOURgage: some lenders, like Quicken Loans, allow
you to tailor-make your mortgage to fit your needs and
lifestyle; a made-to-order loan

19. Quick Refinancing Tips (Part I)
1. Lock-in a rate for 45 days: when you start the
refinancing process, your lender should offer a 45-day
guaranteed interest rate; Close within that time frame
so you get the rate you want
2. Re-coup costs in 2 years: you should make up for the
money you spend on closing costs, attorney fees,
appraisals, etc. with lower monthly payments—ideally
within 2 years
3. Consider shorter terms: many people want to pay-off
their loans sooner than the traditional 30-year time
frame; YOURgages are popular tools to help with this

20. Quick Refinancing Tips (Part II)
4. “De-leverage”: while most fold closing fees into
monthly payments, many now choose to pay these
costs up-front
5. Appraisal problems? Try a PIW: a “Property Inspection
Waiver” can allow you to forego an appraisal and go
with Fannie Mae and Freddie Mac’s home value
estimation
6. Want to refinance? Act soon: interest rates have never
been lower, so if you want to refinance and have the
credit, income, and equity—act as soon as possible!

21. 4. Common Mortgage Questions

22. Q&A
Q: How important is my credit score
to getting a mortgage loan?
A: It’s always been crucial—but never
more so than today. The housing market
crisis has resulted in significantly tougher
mortgage underwriting guidelines.

23. Q&A
Q: Is now the right time for me to buy a house?
A: While it depends on your situation, mortgage rates
have never been this low since long-term
mortgages came out…in the 1950s!
In the wake of the housing market crisis, your
home-buying dollar has almost never bought more.
If you want to buy a house, yes, your best time is
right now!

24. Q&A
Q: What should I do if I’ve been denied a
mortgage?
A: First, ask the person handling the application why you were
turned down.
Second, an appraisal may be the issue. Banks don’t accept
another, so look for a new lender.
Third, your DTI (debt-to-income) ratio may be high.
Community banks may understand your situation better.
Fourth, it could be your credit—the classic problem. Get free
credit reports & scores with Quizzle so you know what repairs
to make.
Fifth, after you’ve done these things—re-apply!

25. Q&A
Q: What are Discount Mortgage Points and Should I Use
Them?
A: These are interest points paid up-front. (1 pt = 1% of total
balance.)
Say you qualify for a mortgage with 6% interest. Or you could
pay 1 point and 5.25% interest…which is better?
Divide the points by the rate difference. (1.00/0.75 = 1.33).
That’s how long (in years) it takes to recoup pre-paid interest
—making the points a wise choice if you stay in your home
for 1 year, 4 months. After that, you’ll be saving money—
regardless of the loan amount.

26. Q&A
Q: What is Mortgage Recasting?
A: Mortgage Recasting is one of the best-kept secrets in the
home loan world. Recasting is popular among homeowners
that can’t necessarily qualify for refinancing. While recasting
doesn’t change your balance or interest rate, it can lower
monthly payments.
In exchange for a lower payment, you typically pay a lump-
sum upfront—usually starting at $5,000. You also pay a
lender fee, generally around $250.
The lender then amortizes the mortgage based on existing
balance.

27. Q&A
Q: What’s a Reverse Mortgage?
A: A Reverse Mortgage allows older homeowners age
62 or older to get cash from the equity they have in
their home. Repayment isn’t required until the mortgage
holder leaves the home.
You can get cash as a lump sum, a monthly payment
or a line of credit that you can use at your leisure.
The amount you can borrow depends on your age,
appraised home value and current interest rate.

28. Q&A
Q: Can Changing Jobs Hurt my Chances of Getting a
Home Loan?
A: Yes, it could cost you. Don’t change jobs before you
apply for a home loan.
Also, now wouldn’t be a good time to become self-
employed.
The goal is to show lenders stability, which means
you’ll be less likely to default on the loan.

29. 5. Quick Mortgage Tips

30. 10 Tips for Buying and Selling Your
Home
For Buyers:
1. Know your credit score: Quizzle alone offers both your
free credit scores and reports
2. Hold off on other big purchases: don’t apply for new lines
of credit—it can lower your score
3. Get a home inspection: know all the flaws in the home
you’re buying or it could cost you
4. Find the right neighborhood: the “three rules” of real
estate are location, location, location!
5. Budget for insurance: make sure you’ve factored these
into the cost of buying

31. 10 Tips for Buying and Selling Your
Home
For Sellers:
1. Evaluate the need for a real estate agent: agents can
help with paperwork, closing, etc.
2. List a fair price: be reasonable or your house could be
on the market longer than you want
3. Complete some improvements: finish painting or
landscaping—curb appeal makes an impact
4. Offer incentives: offer to defray closing costs or
possibly a higher sales commissions
5. Review mortgage options: if you’re looking to buy a
new house—know your borrowing ability

32. Homeowner Tax Tips
A Short List of Common Deductions:
1. Mortgage interest
2. Property taxes
3. PMI (private mortgage insurance)
4. First-time homebuyer credit

33. How to Make Yourself
Creditworthy
1.35% of your credit score is based on payment history, so on-
time payments boost scores
2. 30% relates to balances, which have to be at
manageable and reasonable amounts
3. 15% is the length of relationships with creditors
4.10% is credit types; scorers like different lines of
credit--credit cards, student loans, auto loans, etc.
5.10% is about establishing new credit; apply for new
credit, preferably a type you don’t have yet

34. 15- or 30-Year Mortgage:
Which is right for you?
Interest rates on 15-yr mortgages are typically lower than
those on 30-yrs. Of course, that lower rate also comes
with higher monthly payments.
The first half of the life of your mortgage goes mainly to
paying interest. With a 30-year, you won’t be paying down
principal until about 15 years in.
In the long run, 15-yr mortgages are cheaper since you
pay less interest. However, you’ll have larger payments—
so be sure that fits in your budget. (Missed payments can
jeopardize your ability to get another home loan later in
life!)