What are Morty's credit requirements for borrowers?
To use Morty, you will need a FICO credit score of 600 or greater.
All accounts on your credit report must be current. Only one 30-day past due payment is permitted in the last 12-months. If you have any outstanding non-medical collection or charge-offs, the balances cannot be more than $2,000. Non-traditional credit is not supported.
We'll use the information on the credit reports we pull to determine your mortgage eligibility. When you're ready, we'll actually pull credit reports from all three of the major credit reporting bureaus: Equifax, Experian, and TransUnion. If the scores differ, we'll use the middle score for eligibility and pricing.
If you think there may be negative data on your credit reports that should be addressed before you officially apply for your mortgage, it might be wise to check your credit on your own before completing your Morty profile. If you need to boost your credit score before moving forward with a home purchase, we have partners in our marketplace that can help you do that. Contact us to learn more.
If your credit report shows a significant derogatory event, like a bankruptcy or foreclosure, you may still be eligible for a mortgage if sufficient time has passed. Morty follows Fannie Mae guidelines regarding waiting period requirements after significant derogatory credit events. Other loan programs have different waiting periods if you don't meet Fannie Mae's requirements.
For more information or for help understanding your options, we recommend speaking to a HUD-Approved Housing Counselor in your area.
Can my rate lock expire?
A rate lock can expire after a certain period of time, but there are multiple options to choose from when locking a rate to prevent it from expiring before your closing date. Standard lock periods are 30, 45, or 60 days, but some lenders (including those in Morty’s marketplace) can offer extended rate locks of up to 150 days, depending on your circumstances. Choosing the right lock period will ultimately come down to your closing schedule and the type of property you’re purchasing.
What does my mortgage payment include?
A mortgage payment consists of principal and interest. If your down payment is less than 20% of the purchase price, your payment will include principal, interest and mortgage insurance. In addition, you'll be required to make payments of your homeowners insurance and real estate taxes to your lender on a monthly basis to be placed in an escrow account, in addition to other required expenses that may apply. Your lender will then pay those third parties from the escrow account funds.
* The principal portion of your payment reduces the original amount you borrowed.
* The interest portion covers the fee to borrow the amount you will owe.
* The taxes and insurance parts are collected and held in an escrow account to pay your property taxes and homeowners insurance on your behalf as they come due. If mortgage insurance is applicable to your loan, that part of your payment is forwarded to the agency that is providing the insurance.
Note: Use of an escrow account to pay real estate taxes and homeowners insurance may be optional for some borrowers. If you choose to use an escrow account to collect the funds to pay these agencies, you should be aware that once your mortgage loan is paid in full, you will be responsible for paying your taxes and insurance directly when they come due.
What are points?
Points, also known as discount points, lower your interest rate in exchange for an upfront fee. By paying for a lower interest rate, you will pay less interest over the life of the loan. However, the cost of the points should be weighed against how much the lower rate is saving you. The opposite of points is called lender credits. A lender credit is money given to you by the lender to be applied towards your closing costs in exchange for a higher interest rate.
The cost for originating a mortgage is different for every lender and this is determined by a number of factors, including perceived lending risk in addition to the level of interest rates (treasury and mortgage rates) in the broader market. This is why you see different levels of discount points or lender credits (where you receive money back to the lender to apply to closing costs) for any given interest rate across any given lender, as well as the day-to-day change in the amounts. These costs are largely being priced into the discount points that are then being offered to you as the homebuyer.
What is escrow?
At its most basic level, an escrow account holds your money until that money becomes due. For mortgages the money in an escrow account is used to pay for things like taxes, homeowner's insurance and HOA fees. The bank collects both an upfront escrow payment from you and then you pay into it monthly for the life of your loan. The upfront amount can vary slightly from lender to lender, but generally they collect two full months of cushion payments for both HOI and property taxes plus however many months of taxes they will need to ensure they have the full amount when the tax bill is due. This amount varies because all states have different tax collection dates and depending on when you purchase your house you may end up owing more or less taxes for the year. Now, you might be wondering why these bills need to be paid in an escrow account and you aren't able to pay them yourself each month. The bank or lender who has undersigned your mortgage has an ownership interest in your property should you default and be unable to pay. So, they want to ensure that you pay into it each month.
What is mortgage insurance?
Buyers who put down less than 20% must pay private mortgage insurance, or PMI, which protects your lender in the event that you default on your mortgage. Many lenders will stop requiring mortgage insurance payments when a homebuyer reaches 20% equity in her home.
Buyers can avoid paying for mortgage insurance if they are able and willing to make a down payment of at least 20%. If not, mortgage insurance allows homebuyers who might otherwise be unable to qualify for a mortgage to buy a home.
Common Mortgage Questions
Will a credit pull lower my credit score?
Having your credit pulled for a mortgage should not have a substantial impact on your credit score. Most lenders treat all mortgage inquiries as a single inquiry as long as they are done within a specific time frame (usually 30 days). This allows you to shop around and get your credit pulled from multiple lenders without hurting your score. Without looking into your credit, a lender cannot approve you for a loan or give you an accurate rate quote. The rate you are given is determined by a myriad of factors, including credit.
We encourage all homebuyers to shop around for a mortgage and get pre–approved with different lenders. Morty’s platform can make this easier, providing you access to loans from multiple lenders with a single credit pull.
When am I legally bound to my mortgage application?
You could go through the entire homebuying process and decide to switch your lender the week before the closing was scheduled. However, we don't recommend this, as you could risk losing your security deposit if a new lender cannot meet the dates you've agreed to in your contract.
How can I get the lowest possible interest rate?
Mortgage rates fluctuate daily and are driven by a range of macroeconomic factors, including financial markets, interest rates, and inflation. The specific rates offered by Morty through our lender partners will also depend on your transaction, including your credit score and characteristics of the transaction. Our goal is to offer you the most competitive rate possible on the loan that’s right for you, and provide full transparency into that option.
There are a number of tools of ways to ensure your rate remains competitive, such as float-down options (read the question below) or extended rate locks.
What if mortgage rates go down and I've already locked my loan?
No one can predict the way rates will shift and it’s common to see significant swings day-to-day or week-to-week. Morty offers a number of float-down options that protect homebuyers in decreasing rate environments. Upon request, Morty will review your locked loan to determine if the latest changes in rates result in improved pricing that makes you eligible for one of our float-down options. This is also contingent on the following: (1) the appraisal on your property has not been completed by your current lender, and (2) there is still sufficient time to meet your anticipated closing date.
What are the cost and fees associated with a mortgage?
The Consumer Financial Protection Bureau’s Loan Estimate is a standardized document you will receive after you submit a mortgage application. It breaks down your costs very clearly, including the costs paid to third parties, the down payment, taxes, insurance and lender fees and it lumps it all into one OVER-ESTIMATED figure called "cash-to-close." Your Morty Loan Officer can walk you through these costs to answer any questions you have and help you prepare for closing.
How long does a pre-approval take?
Getting pre-approved is one of the first steps towards buying a home. Morty’s technology allows you to get pre-approved online in just minutes, which is increasingly common within the industry. Getting pre-approved lets you know how much you can afford in the eyes of a lender. It is not the same as locking your loan and your rate (and therefore your affordability) can still change before you make an offer on a home.
What if I don't have a specific property in mind yet? How can I get pre-approved without a specific property address?
Feel free to use another property address as a placeholder and include the expected purchase price and loan amount that you are looking to be pre-approved for. The pre-approval letter will then help you make offers at that price point and can be edited later once you've found a particular home.
How much should I put down for a down payment?
This comes down to your individual financial situation. There are plenty of programs out there geared to borrowers who do not have 20% of the home's value saved for a down payment. This includes conventional programs like HomeReady and government programs like FHA, VA, and USDA. Remember that most programs that allow for down payments of less than 20% will involve some kind of mortgage insurance.
So do not fear if you only have 3-5% of the home's value set aside. It may be worth considering not spending all of your savings on a down payment and utilizing that money elsewhere. Visit the What We Offer pages on our homepage to explore different loan types.
Do I need to meet people in person to get my mortgage?
There is no requirement that says you have to call or meet your mortgage loan officer in person. More and more transactions are being done without meeting in person and even without speaking directly, allowing for faster, more efficient closing times. We tailor the experience to your needs as a buyer, and we’re always standing by to talk, help and answer any questions you have.
How quickly can I close with Morty?
Our technology and team have created an efficient experience that means we can get most buyers to close in a timeframe well below the national average. Each buyer (and seller) situation is different and there are factors outside our control that can influence your closing date. Morty’s Closing Date Promise means that XX and Quick Close Advantage means that qualifying buyers can close in less than 14 days. We’ve even helped buyers close in just 11 days!
Rate and mortgage FAQs
What are today's mortgage rates?
The mortgage rate landscape is ever-changing: rates can update multiple times per day. A variety of factors affect today’s mortgage rates, some of which are outside of your control (like the overall economic outlook) and some that are within your control (like your credit score and type of loan). Influenced heavily by the current state of the market, you wind up with a collection of daily rates that are always subject to change.
What is a mortgage rate lock?
A rate lock protects borrowers from some of the up-and-down nature of interest rates in the market.
With a rate lock, a lender agrees to offer the borrower an exact interest rate for a set window of time. If the market interest rates go up, the rate you’re being offered for your mortgage will remain steady, at least for the time frame specified by your lender. While lock periods typically range between 30-60 days, Morty also offers 75-, 90-, and 180-day locks.
What is a mortgage discount point?
Mortgage discount points are fees paid by you toward the lender, increasing closing costs in order to reduce the interest rate on the loan. Each “point” you buy costs 1% of the total mortgage amount and typically lowers the mortgage rate by .25%, resulting in a lower monthly bill over the life of the loan and lower interest paid.
What is a mortgage lender credit?
The opposite of discount points, lender credits are when you take on a higher interest rate for additional money from the lender that will help offset your closing costs. They’re calculated the same way as discount points, but appear as a “negative” point on your loan, since you’re getting money from the lender rather than paying more to them. While credits help you pay less in closing costs upfront, accepting them will also increase your monthly mortgage payment.
What is the lowest 30-year mortgage rate?
The lowest 30-year mortgage rate for you may vary on a day-to-day basis, based on a number of market factors and benchmarks, including activity from the Federal Reserve, the bond market, inflation, and the overall health of the economy. Lenders can update their rates every day. Just because one lender has the lowest rate for you on a given day doesn’t guarantee that they’ll also have the lowest rate for you the next day.
A quick, simple way to check today’s lowest 30-year mortgage rates is via this rates tool, which is updated daily.
Are mortgage rates expected to drop?
The short, unsatisfying answer: it depends. Current forecasts don’t suggest rates are likely to fall significantly in the near future. That said, high levels of volatility within the market mean that rates could indeed drop week-to-week, even over the course of a several month span during which rates rise overall. Checking regularly is the best way to stay up-to-date.
What are the advantages to choosing an online mortgage provider over a local lender?
While a local lender may offer a longstanding history of operation, online mortgage providers bring their own suite of advantages to the table. Compared to local lenders, online providers have access to a much wider network of potential lenders, allowing you to compare more options and further ensure you’ve found the right loan for you. Online lenders also offer streamlined web-based platforms, which simplify the mortgage process by allowing you to track every step of your loan in one place. This same platform advantage can even save you time by making it quicker and easier to get pre-approved and apply for a loan.