High DTI mortgages.

In the years past, when most mortgages were made by your local Bank or Savings & Loan, and many were government insured, required DTI (Debt-To-Income) ratios were well under 40%... that is, in the most simple terms, your total monthly debt, including your housing costs, could not exceed 40% or less of your gross monthly income.

At Mortgage Match, the vast majority of the lenders we work with allow up to 50% DTI, and some will even approve mortgages as high as 55% DTI.

Only 1 or 2 FICO scores.

It's been reported on several pages of the Mortgage Match website that mortgage lenders... as an industry standard... use a borrower's midscore FICO for qualifying purposes. That is, the middle number of the three FICO scores that most borrower's have is the score which determines whether a borrower qualifies for a mortgage program, and if so, at what rate and terms.

But, what if a borrower has not yet built enough of a credit history to show three FICO scores when credit is pulled? It's an unusual situation, and not the norm. But, Mortgage Match may still be able to assist a borrower in obtaining a mortgage when there's less than three credit scores available.

If you're a borrower in this situation, and one that's possibly already been turned down for a mortgage, you owe it to yourself to try Mortgage Match. Another credit pull may not even be necessary. A brief chat with a Senior Loan Consultant may be the first step in getting approved. You can talk to one directly by calling: 1.888.767.1921. Or, you can schedule a free, no obligation phone consultation by clicking here.

12 MAT LTVs and FICOs.

If you've been shut out of the 12 MAT, pick-a-payment mortgage "grab" because you're FICO score is too low, Mortgage Match may have some good news for you. Borrowers with midscore FICOs as low as 580 can now qualify for an 80% LTV 12 MAT option ARM mortgage. If your midscore is just 20 points higher at 600, then you can qualify for a 90% LTV 12 MAT option ARM. Both of these lower FICO score programs require the borrower to have the ability to go "full doc" on income verification.

If you're a borrower who has no choice but to go "stated income", here are some new 12 MAT programs which may help you...

Stated Income/Verified Assets:
-- Purchase/ 720 FICO/ 95% LTV up to $500,000.
-- Purchase/ 720 FICO/ 90% LTV up to $750,000.
-- Purchase & Rate/Term Refinance/ 660 FICO/ 90% LTV up to $500,000.
-- Cash Out Refinance/ 660 FICO/ 80% LTV up to $650,000.
-- Cash Out Refinance/ 620 FICO/ 75% LTV up to $700,000.

For more on 12 MAT, pick-a-payment mortgages see...
New 12 MAT LTVs and FICOs.
Now there's a zero down 12 MAT.
12 MAT mortgages... often misunderstood.
Libor vs. MTA vs. COSI and more... common indices for 12 MATs.
The 12 MAT... for mortgages with more control.
The 12 MAT in depth.
Refinancing with the 12 MAT.

Jumbo - Super Jumbo Mortgages.

The term "Jumbo" mortgage is used to classify mortgage loans which exceed Fannie Mae loan limits that currently are $333,700. Jumbo loans range from this number up to $650,000.

A "Super Jumbo" mortgage is a loan amount greater than $650,000 and quite commonly goes up to $10 million. Both jumbo and super jumbo loans accommodate the purchase and refinance of upscale luxury homes, vacation properties and high-end SFR (single family residence) investment properties.

At Mortgage Match it's possible to obtain 100% financing on super jumbo mortgages up to $4 million... often with an interest only option available. If you are considering a jumbo or super jumbo mortgage for either purchase or refinance, please consider one of the Mortgage Match Senior Loan Consultants for designing a custom-built jumbo or super jumbo mortgage to meet your needs.

This type of financing requires special knowledge and expertise in the jumbo/super jumbo loan market. Experience in this area is crucial to obtaining the right mortgage. For more information on jumbo and super jumbo mortgages, please click here. Or, for a free, no obligation consultation, just call 888.890.5625 toll-free and speak directly to a Jumbo/Super Jumbo mortgage expert.

Interest only mortgages simplified.

The idea behind an interest-only loan is simple... borrowers are not required to pay down any principal for a fixed number of years. For example, on a 30-year mortgage with a five-year, interest only ARM (Adjutable Rate Mortgage), the borrowers would have the option of paying no principal for the first five years. For the remaining 25 years, assuming they continue to carry this interest only mortgage, and do not refinance or sell the property, they would have higher payments, compensating for the first five years.

The biggest upside to an interest only loan is the smaller monthly payments... providing homeowners with more control of their monthly cash flow. The possible downside is that homeowners are building equity by appreciation only... not by paying down their principal. If a homeowner with an interest only mortgage has their property in a depressed real estate market... and there aren't many of those in the U.S. right now... this could be a problem, only if the homeowner doesn't handle the interest only strategy correctly. Most borrowers are either refinancing out of their interest only mortgages just before the interest only option expires, or they had plans of keeping the property for a set period of time, and selling it before this happened. So, interest only mortgages have worked well for borrowers who have had the right idea about getting one in the first place.

They've worked exceptionally well for first-time home buyers, real estate investors, and those borrwers with substantial assets who could see making more money elsewhere... rather than using their money in building equity in their homes.

There are a number of great strategies for what can be done with the money that an interest only mortgage saves. Mortgage Match is the internet's leading website for zero down, interest only mortgages. Get preapproved for your interest only mortgage, or schedule a free, no-obligation, phone consultation with a Mortgage Match Senior Loan Consultant for fast and accurate answers to your interest only mortgage questions, by clicking here.

For more information on zero down, interest only mortgages, please also see...
Zero down, interest only mortgages and The Home Depot.
Interest only mortgages simplified.
Interest only mortgages... they're a good thing.
The benefits of getting preapproved for an interest only loan.
It's not that hard to get an interest only mortgage.
Why it's hard to quickly quote a rate on an interest only loan.
Zero down, interest only mortgages even with bad credit.
FAQs on interest only mortgages.

Closing costs explained.

There's usually not a huge difference in the dollar amount of a borrower's closing costs between a refinance mortgage and a purchase mortgage. However, there's one distinct difference in how these two mortgage transactions can work, and that is, in a refinance, a borrower can almost always elect to have the closing costs financed into the new mortgage. Whereas, in a purchase mortgage, the borrower may need to pay those costs out of funds the lender will verify the borrower has in a bank account of some sort before approving the mortgage.

Now, if the borrower does not have those funds, this does not necessarily mean a home can NOT be purchased. There are ways around this challenge, and for more on the strategies and options available in this situation, please consult a Senior Loan Consultant at Mortgage Match by calling toll-free, direct at 1.888.890.5625. Or, a free phone consultation can be scheduled by clicking here. Otherwise, to learn more about closing costs, what they are, and who they're paid to, please read on...

Purchase and Refinance Mortgages
The costs of closing a refinance or purchase mortgage generally include the following: title and escrow fees, lender's fees, appraisal fees, credit fees, and insurance and tax impounds. When refinancing, the major expense is the title and escrow fees (though they are not as costly as when purchasing property). When you refinance, you have the option of financing the closing costs by adding them into the new mortgage balance (assuming there is sufficient equity in the subject property to do so), or you may cover the costs with cash at closing. Another increasingly popular option is the no-cost mortgage (usually available with mortgage amounts in excess of $200,000).

With a no-cost mortgage, borrowers can avoid adding fees into their existing mortgage balance, by paying their closing costs with cash, or by taking a higher interest rate; whereby the mortgage originator can cover some or all non-recurring closing costs on the mortgage, (all costs except taxes, insurance and interest) utilizing a lender rebate.

Title & Escrow Fees
Title and escrow fees include both the owner's and the lender's policy of title insurance, as well as the escrow fee. Title insurance protects both the buyer and lender by ensuring a clear chain of title, and that those persons, with the legal right to convey title to your property, are the ones doing so. Also, some polices protect against the occurrence of fraud and forgery.

Some borrowers may complain about paying for another title insurance policy when they have already incurred this expense at the time they purchased the property. Keep in mind though, the lender is insured as well as you, the borrower. A new title search is required to insure against there being no new liens or substandard conditions attached to the property. So, on this basis, refinancing creates the need for a new policy for the new mortgage.

Now, most title companies offer reductions (up to 30%) on the price of both the title policy and escrow fees for a refinance. While the escrow fee is a service fee charged by the title company for acting as an independent third party in handling the transaction, and insuring that all parties to the transaction perform as agreed.

Other title fees may include; the fee to notarize your mortgage documents, the fee required to record your deed of trust with your county recorder's office, as well as miscellaneous drawing, courier and express mail fees. You may call a title company located near the property, provide them with the mortgage amount you'll be requesting, and they will usually provide you with a free, accurate fee quote.

Lender's Fees
The flat fees that a lender charges to process and fund a mortgage can assume or be described by a variety of names. They include: underwriting, processing, administrative, document preparation and funding fees. Additional lender fees may include wire, tax service fees and flood certification fees. These fees are charged by virtually all lenders and range from approximately $795-$1,250 in total fees charged.

Appraisal Fees
While appraisal fees are sometimes referred to as a closing cost, they really are not. Because appraisal fees are paid directly to the appraiser shortly in advance of, or at the actual time of the field appraisal. The fee an appraiser will charge to inspect a property will depend on the type of property involved (e.g., single family as opposed to multi-unit) and whether the property will be owner occupied, or used as a non-owner occupied, investment property. The typical fee for a standard, owner occupied, single family home (SFR), condominium or townhouse is $300-$400. An investment property may require a rental survey and an operating income statement to be completed with the appraisal. These extras can add an additional $200-$300 to the cost of the appraisal.

Credit Fees
The fees to check a borrower's credit (using a tri-merged credit report as all lenders require) range from $20-$35 per person or per married couple.

Insurance Impounds
A homeowner's or hazard insurance policy will need to be new or current at the time the new mortgage closes. The standard coverage requirement a lender requests is replacement-of-the-property cost coverage. Most lenders require that your current policy be effective for a period of not less than four months after the first payment date on the new mortgage (though some lenders and insurance companies my require you to pay up to a year's premium in advance). For example, if your current policy expires within two months of the first payment date on the new mortgage, the lender require you to pay two more months premiums. Also, consider checking with your insurance carrier to verify they will accept an incremental vs. annual payment, otherwise you may have to pay for another full year.

If your property is located in a geological hazard zone (e.g. earthquake or flood zone) the lender may require you to have policies in place to cover these hazards as well. Geological hazard zones are established by FEMA, and the property's appraisal will determine whether the property is located in such a zone by referring to the most current FEMA geological hazard map. FEMA reclassifies hazard zones periodically, and while your property may not have been located in such a zone at the time of purchase, it may now be included in one.

Check with a preferred insurance carrier for a homeowner's or hazard insurance quote, as well as a quote for earthquake coverage, if it's required. Contact The National Flood Insurance Program at 800-638-6620 for a flood insurance quote, if it's needed.

Property Tax Impounds
The lender may require that all delinquent or outstanding property taxes, if any, be paid at mortgage closing. Most counties require the payment of property taxes on a semi-annual basis. But if you happen to be refinancing in close proximity to when your property taxes are due, but not yet delinquent, you may be required to pay the installment in escrow, prior to closing, because your property taxes are now a valid lien on the property.

Purchase Mortgage
If a borrower is obtaining a purchase mortgage, this mortgage transaction's only difference may be fees for a pest control report (typically $40-125), if the structure isn't new. Additionally, the title insurance policy is typically 30% higher on a purchase mortgage than a refinance mortgage.

Adjustable Rate Mortgages

The interest rate of an Adjustable Rate Mortgage (ARM) changes according to a predetermined timeframe based on fluctuations in specific market interest rates.

To moderate or reduce extreme fluctuations, ARMs have adjustment caps, which limit the amount an interest rate can change within a given time period. In effect, caps place ceilings on, or limit how high a rate can go within a specific timeframe.

Adjustable Rate Mortgages have a loan term of 30-years, with a fixed introductory period ranging from 6 months to 10 years. Many borrowers choose a shorter fixed introductory period to obtain a lower rate for the length of that period. In most cases, the introductory period matches the borrower's timeframe for carrying the mortgage, which means the mortgage will be either refinanced, or the property will be sold prior to the end of the introductory period. After the initial fixed period, it will convert to an adjustable rate mortgage, and the interest rate will adjust according to fluctuations in the market.

Adjustable rate mortgages are offered on Conforming & Jumbo (loans above $333,000) Loan amounts as well as being offered on Full Doc, Stated Income (No Income Verification), No Ratio, Stated Assets, and No Documentation Mortgages. What follows are brief descriptions of some of the more common and popular ARM programs.

- 1- or 3-Month Adjustable Rate Mortgage. This type of mortgage is actually fixed for the 1st year. After the 1st year, its interest rate may change every three months. Especially advantageous for borrowers who need a low payment for the 1st year. Offered mostly on COFI, MTA, COSI, or CODI indexes. Available with...
-- Interest only option.
-- 12 Mat, Pick a Payment - 4 Payment Option ARMs.

- 6-Month Adjustable Rate Mortgage. This type of mortgage changes its interest rate every six months. When interest rates are perceived as declining, this very short term ARM often enables borrowers to secure lower rates which mean lower payments on their mortgages. Available with...
-- Interest only option.
-- 12 Mat, Pick a Payment - 4 Payment Option ARMs.

- 1 Year ARM / 6 Month Adjustable Rate Mortgage. Offers an initial fixed rate for the first year, then converts to a adjustable rate for the remaining 29 years. Generally, this type of financing offers a lower initial rate than a 3 year ARM / 6 month ARM. Available with...
-- 1-year interest only option.

-- 2-Year ARM / 6-Month Adjustable Rate Mortgage. Offers an initial fixed rate for a three-year period, then converts to an adjustable rate mortgage for the remaining 28 years (2/28 arm). Generally, this type of loan offers a lower initial rate than a 5-year ARM / 6-month ARM. Available with...
-- 2-year interest only option.

-- 3-Year ARM / 6-Month Adjustable Rate Mortgage. Offers an initial fixed rate for a three-year period, then converts to an adjustable rate mortgage for the remaining 27 years. Generally, this type of financing offers a lower initial rate than a 5-year ARM / 6-month adjustable. Available with...
-- 3-year interest only option.

-- 5-Year ARM / 6-Month Adjustable Rate Mortgage. Offers an initial fixed rate for a five-year period, then converts to an adjustable rate mortgage for the remaining 25 years. Generally, this type of loan offers a lower initial rate than a 7-year fixed /6-month ARM. Available with...
-- 5-year interest only option.

-- 7-Year ARM/6-Month Adjustable Rate Mortgage. Offers an initial fixed rate for a ten-year period, then converts to an adjustable rate for the remaining 20 years. Generally, this type of financing offers a lower initial rate than a 30-year fixed-rate mortgage. Available with...
-- 7-year interest only option.

-- 10-Year ARM/6-Month Adjustable Rate Mortgage. Offers an initial fixed rate for a ten-year period, then converts to an adjustable rate for the remaining 20 years. Generally, this type of financing offers a lower initial rate than a 30-year fixed-rate mortgage. Available with...
-- 10-year interest only option.

Mortgage Match is the internet's leading website for zero down, interest only mortgages, and 12 MAT, Pick-A-Payment mortgages, as well as non-resident alien mortgages; all of which may use many of the ARMs described above. To talk with a Senior Loan Consultant, about obtaining an ARM for either a purchase or refinance mortgage, please call toll-free: 1.888.767.1921. Or, to schedule a free, phone consultation with a highly-experienced Mortgage Match consultant, simply click here.

Down payment gifts or gifting.

Mortgage lenders would prefer homebuyers to have enough money available to make a down payment of between 10 to 20 percent of the home's purchase price. If however, you cannot come up with a down payment of any size, there are programs available which require ZERO or no down payment. Borrowers should understand that higher interest rates will accompany no down payment mortgages, because the lender is assuming more risk when they're financing 100% of the purchase price.

While there can be some exceptions made, qualifying for a zero down mortgage usually requires a midscore FICO of 580... in some cases, a borrower may obtain a zero down mortgage with a midscore FICO as low as 560, but this score is the lowest allowed.

Homebuyers who don't have a high enough score to qualify for a zero down mortgage may also rely on another source of funding for the down payment... a gift, or money given by a parent, other relative or friend which does not need to be repaid. A person may give another person up to $10,000 per year without either party being taxed. A married couple, therefore, could give a child or spouse as much as $40,000 for a down payment tax-free. If you do use gift money for a down payment, you may be required to present a letter stating so... that's signed by both the giver(s) and the receiver(s) to the lender.

Another form of down payment gifting permitted by some lenders is when a home or property is being sold, and the seller may be a relative or friend who will credit the buyer with a down payment... even though no money for a down payment is actually being rendered to the seller as a down payment. This works for the borrower who does not qualify for 100% financing, but does qualify for 90%, 85% or 80% LTV (loan-to-value) financing.

For more on down payment gifts, it's best to talk directly with a Senior Loan Consultant who can explain the intricacies of creative down payment gifts. You can speak directly to one by calling toll-free: 1.888.767.1921. Or, you can schedule a completey free, phone consultation by clicking here.

Mortgage process explained.

What happens after you apply for a mortgage may give you some insight into how and where you may find your first or next mortgage. Most mortgage seekers will find their best mortgage through a mortgage broker, rather than going to a direct lender like a local bank. There are many reasons why a broker will be the best source. Given this, what will be addressed here, is the mortgage process explained when a borrower is being assisted by a broker. The reasons why a broker is the better way to go for most borrowers will be detailed later in this article.

The mortgage process actually starts with a preapproval effort. Regardless of where you go for a mortgage, you'll always be dealing with a representative who is either a Loan Officer or a Loan Consultant. It's this person's job to determine if you can qualify for a mortgage, and to some degree, what type of mortgage will work best for you... if you don't already know what you're looking for, or what you can afford. The loan consultant is not a salesperson, nor do they really have any direct authority in how, or if, a mortgage is approved. They start and guide the borrower through the process, and are the borrower's advocate... working on the borrower's behalf, and not the lender's.

In getting the process started, the loan consultant will ask you questions about your credit, your income and your plans for the property you're either purchasing or refinancing. Your answers to these questions will help develop a plan or direction for the loan consultant. If your chances for obtaining a mortgage are very slim or nonexistent, your loan consultant will explain why, and how you may correct or improve your borrowing profile.

If you're a good candidate for a mortgage, the loan consultant will most likely suggest moving forward to obtain a formal preapproval for you. Most borrower's questions about what kind of mortgage they can qualify for, its pricing and terms, and what will be required of them to obtain a final approval will be determined in the preapproval phase.

A real preapproval through an actual lender, which can be achieved in 24-48 hours, requires the loan consultant to pull a tri-merged credit report from Experian, Equifax and Transunion... the three major credit bureaus. Since all credit bureaus assign a credit, or what many people refer to as a FICO score, what the loan consultant needs to see is what the borrower's middle or midscore FICO is. For most borrowers, the 3 FICO scores which are assigned to their reports are 3 different numbers, and it is the mortgage industry's standard to use not the highest or the lowest score, but the one in the middle as the borrower's qualifying score.

Additionally, there are two paper forms which are the standard, and are universally used by all brokers and lenders in the mortgage field. One is simply the Uniform Residential Loan Application which is usually called by its nickname the "1003" (Ten-O-Three), and the shorter version of this form which provides a "snapshot" of the mortgage and the borrower called the "1008" (Ten-O-Eight). The loan consultant will complete both of these forms for the borrower, and along with a copy of the borrower's tri-merged credit report, will submit these three items to the lender or lenders who would be most likely to approve and fund the borrower's mortgage. The lenders will review this submission, and providing the borrower meets their lending guidelines, will offer pricing (interest rates and terms) and conditions to be met, relative to lending the borrower the funds required to either purchase or refinance the subject property. This submission process between broker and lender is how all brokers and lenders work together to fund mortgages. It is the accepted standard in the industry for how this part of the process works.

Borrowers often ask, "how long is a preapproval good for?". This can very slighty from lender to lender, but usually a preapproval is valid for 30 days and no longer. The reason for this timeframe is that many factors in the borrower's profile can change. Credit scores can go up or down. A borrower's employment situation can be altered. And, issues relative to the terms of the loan can change due to fluctuating market conditions.

Now, for many people a question arises at this point... will having several brokers or lenders pull and review their credit affect their credit scores? The answer is "no" as long as it's done within a 30-day period. As a credit consumer, you can have unlimited credit pulls as long as they're all credit pulls and reviews related to obtaining a mortgage loan. This is a relatively new law which went into effect in January, 2004.

After a preapproval has been obtained, a borrower who's going to purchase a home can begin the house hunt; knowing what price is affordable, what the monthly payments will be, and will have the confidence in purchasing as a preapproved buyer. Once a suitable or desirable property is located, the borrower then needs to secure a valid purchase contract on the property. If the borrower is buying without a realtor's assistance, it will be important that an accepted, legal form be used to demonstrate the fully-executed sales contract is valid in the state where the property is located.

After the borrower has secured the purchase agreement or sales contract, it's important for the borrower to provide a copy of the contract to the loan consultant. The next step will be getting the property appraised. While the loan consultant must make the arrangements for an appraisal, it is customary in the typical real estate transaction that the borrower pay for the appraisal. Full field appraisals in most parts of the country cost $300-$350, and this must be paid to the appraiser at the time of appraisal, or shortly in advance of it.

Obtaining a satisfactory appraisal is an important step in getting a final approval for the mortgage. The property being purchased must appraise for at least the purchase price. If it does not, the borrower will have the option of cancelling the sale, renegotiating the purchase price, or if the borrower wishes to proceed with the purchase at the agreed price, will have to come up with the difference in the purchase price and the appraised value. Lenders will not provide a mortgage for a property for more money than what it appraises for... so, if a borrower is approved for a zero down mortgage at $100,000, as an example, but the property appraises for only $97,000, the lender will provide financing of $97,000. And, if the borrower still wishes to purchase the property, the $3,000 difference will have to be paid by the borrower. So, in summary, getting an adequate appraisal is an important step for a smooth transaction.

Now, in the background while the borrower has been looking for a home, and while the appraisal is being performed, the lender, with the assistance of the loan consultant and the loan processor, is undertaking what is sometimes called, "due diligence". Things like the borrower's employment, rent or mortgage history, sources of assets, and so on, are being verified by the lender. Some lenders will obtain these verifications verbally, some will have regular written forms which are used for verfication that require signatures. But basically, much of the information which the borrower had provided to the loan consultant during application is now being verified. For instance, if a borrower at the time of application states that employment has been with the same company for the past two years, but an employment verification reveals only 11 months can be proven, then the borrower may have a problem. So, it's important to understand what a borrower claims will eventually be verified.

The process is almost at its final stage. Usually, the appraisal is the last step before the borrower's mortgage file can be completed by the loan consultant and processor, and then submitted to the lender's final underwriting review for approval. The lender's underwriter or underwriting team will usually complete this process in 24-48 hours. They will review the loan to see if all of the conditions have been satisfied. After which, assuming final approval is granted, the mortgage will move from underwriting to the lender's scheduling department for closing and funding.

Generally, the "closing docs" which are all the many papers a borrower signs at closing, are generated within 24 hours of the loan being scheduled for closing. These papers are usually e-mailed to the title company or escrow agency which is handling the closing. The borrower is then contacted by a title or escrow officer for a signing appointment. At this point, the process draws to a close, and the borrower has now officially purchased or refinanced a home.

You may wonder, if preapproval and final approval may each be completed in as little as 48 hours, why then make it require anywhere from 10 to 30 days to close and fund a mortgage loan? Well, it's all the things which happen in between preapproval amd final approval which can take time. Usually, securing an appraisal is a time-consuming effort, depending on the real estate market, obtaining an appraisal may take a week or more.

Verifications of employment, bank funds, rent history and so on... because their dependent on the cooperation of outside third parties... can also be time-consuming.

Usually, it's everyone's desire, and in everyone's best interest, to move the mortgage process along as quickly as possible. At Mortgage Match, mortgages have been closed and funded within 10 days, and our Senior Loan Consultants are experts in knowing what it takes in getting a loan closed in the best interests of a borrower.

Mortgage Match is one of the internet's premiere national brokers, doing mortgages in all 50 states, who excels in securing borrowers the best mortgages on the best terms possible. It has direct lending relationships with hundreds of national, regional and specialty niche lenders all around the country. Whether a borrower is a first-time buyer, or a home owner seeking to refinance on the best terms available, Mortgage Match is positioned to shop, find and secure a mortgage for a borrower as fast, easy and hassle free as the process needs to be. With Mortgage Match, wide product diversity and selection, along with richly experienced mortgage professionals can be the difference between borrowers getting the loans they need, and not getting the loans they need. Greatly enhance your prospects of getting the mortgage you want by clicking here.

Mortgages and reserves.

A visitor to the Mortgage Match website recently asked, "how much will I need in reserves for a zero down, interest only, 80/20 mortgage?". It's a good question, and it's surprising questions on this topic aren't asked more often.

First, let's explain what reserves are. A reserve fund is a certain amount of money that a mortgage borrower has in a verifiable bank account of some sort. From a lender's point-of-view, this reserve may work as a sort of back-up or emergency fund for a borrower, if for some reason, the borrower's income is interrrupted and temporarily stopped, as might be the case, if a borrower suffers a job "lay off".

The amount of money required in a reserve fund will vary from lender to lender; based on the specific lender's mortgage approval requirements. It can be equal to anywhere from two to six month's worth of mortgage PITI (principal, interest, taxes and insurance) payments.

Now, before this starts sounding a little "scary" to borrowers who don't have a lot of cash to work with... don't worry, there are some lenders who do NOT require any reserves at all. However, be aware if you're a borrower fitting this category, the number of lenders you may be able to obtain a mortgage from has narrowed considerably. Also, because a mortgage candidate without reserves may be considered a more risky borrower to work with... expect to pay a slightly higher interest rate on your new mortgage.

Getting back to the explanation of reserve requirements, as an example, if your new mortgage payment, consisting of principal, interest, taxes and hazard insurance premiums, adds up to $1,000 monthly, you may be required to have anywhere from $2,000 to $6,000 in a bank account which can be verified AFTER your closing costs are paid or deducted from your bank balance.

As a rule of thumb, how reserves and a borrower's cash position affect the overall success of a borrower getting approved for a mortgage can be summed up like this... the less money or cash that a borrower has, the fewer number of lenders will be available, and the higher the interest rate will be. The more cash a borrower has to work with, even on a zero down loan, the greater the number of mortgage options will be available, and the better the interest rate will be.

There's nothing wrong with being cash-strapped when your're a borrower; especially if your a first-time home buyer... the important thing is to simply get approved, and buy your home. At Mortgage Match, many, many borrowers have been helped even when they haven't been in a great cash position. The first step toward purchasing a home when you have limited cash resources is getting preapproved, and you can do that by clicking here.