Answers To All Your Questions
WHAT DOCUMENTATION DO I NEED TO PROVIDE?
The documentation required for each loan differs depending on the loan program. While some programs require income, employment, and asset verification, others require no documentation at all. A mortgage consultant will provide you with a list of items needed.
ARE THERE ANY LOAN PROGRAMS THAT DON'T REQUIRE A DOWN-PAYMENT?
Yes there are loan programs that do not require a down payment, depending on credit, employment history, and other determining factors. Please contact one of our mortgage consultants for more information.
WHAT IS MORTGAGE INSURANCE? IS THERE ANY WAY AROUND IT?
Mortgage insurance (MI) protects the lender from taking a financial loss in the event the mortgagor stops making payments. MI is applied to mortgage programs that require little or no down payment, and the lender's exposure is greater than 80% of the purchase price or appraised value, whichever is less. Mortgage insurance can be avoided by utilizing loan programs such as an 80/20, in which a 1st mortgage (80% LTV) and 2nd mortgage (20% LTV) are taken on the property. No down payment is required. Alternatively, there is Lender Paid Mortgage Insurance (LPMI). With this option, the lender pays the mortgage insurance, which is offset by a higher interest rate charged to the borrower.
IF I’VE FILED BANKRUPTCY IN THE PAST FEW YEARS, WILL I STILL QUALIFY FOR A MORTGAGE LOAN?
Yes, it's possible to get approved for a mortgage loan after a bankruptcy filing. Depending on the type of filing — Chapter 7 vs. Chapter 13 — and other factors, you may have to wait anywhere from two to four years before you can get another mortgage loan. Short sales and foreclosures are different. Give us a call to discuss your options.
WHAT ARE SOME OF THE BENEFITS OF GOVERNMENT LOANS (FHA, VA, USDA RURAL HOUSING)?
Government backed loans have become an increasingly attractive option for borrowers. With the ease of qualification and enticing low interest rates, these loans provide many borrowers with access to affordable mortgages. There are FHA,VA,USDA Rural Housing programs that require little or no down payments, no pre-payment penalties, and limited amounts of certain fees and charges the borrower must pay to establish the loan. These programs also have rates that are comparable to conventional loans.
HOW IS MY ARM RATE DETERMINED?
Adjustable Rate Mortgages are determined by adding a margin to an index on a specific date.
WHAT IS A BALLOON LOAN?
A balloon loan is a short-term loan with payments amortized over a more extended period. These payments are not sufficient to pay off the mortgage in full within the term of the loan. The remaining balance, known as the balloon payment, is due in full at maturity of the note.
HOW IS MY MONTHLY MORTGAGE PAYMENT APPLIED TO MY MORTGAGE LOAN?
Your monthly mortgage payment includes a payment to the principal balance, interest, and escrow, otherwise known as P.I.T.I. (principal, interest, taxes, and insurance).
WHAT IS THE DIFFERENCE BETWEEN PRE-QUALIFICATION AND PRE-APPROVAL?
Pre-qualification is a lender's judgment of your ability to make payments on your mortgage, based on your verbal statement of income, assets, and employment history. Pre-approval is the underwriting decision that you are conditionally qualified and is subject to the lender's review of your completed application, verification of your income, assets, employment history, credit check, appraisal and other determining factors.
IS THERE A FEE TO SUBMIT MY APPLICATION ONLINE?
No, applying online is free.
ONCE I’VE SUBMITTED MY APPLICATION ONLINE, HOW LONG WILL IT TAKE BEFORE I KNOW IF I’VE BEEN PRE-QUALIFIED?
You will receive a phone call from one of our mortgage consultants within 24 hours (during standard business days) of submitting your application. Depending on the complexity of your loan scenario, the pre-qualification process is relatively quick. A "pre-qual" is a guide as you go through the home buying process. It does not guarantee approval for the mortgage.
WHAT IS THE DIFFERENCE BETWEEN THE INTEREST RATE AND THE ANNUAL PERCENTAGE RATE (APR)?
The interest rate is the rate you agree to pay for your mortgage loan. It is used to determine the interest portion of your monthly payment. The annual percentage rate (APR) includes your interest rate and prepaid finance charges to give you an average yearly rate.
WHAT IS A DISCOUNT POINT?
A discount point is generally a percentage of the loan amount and is paid to the lender to buy down or lower an interest rate.
WHAT IS AN ESCROW ACCOUNT?
An escrow account is set up to collect your payments for property taxes, homeowners insurance and possibly other items, in equal amounts over a 12-month period, to be paid on your behalf when those bills come due.
WHAT IS A RATE LOCK?
A rate lock is a contractual agreement between the lender and buyer. There are four components to a rate lock: loan program, interest rate, points, and the length of the lock.
WHAT ARE POINTS?
It is an upfront cash payment required by the lender as part of the charge for the loan, expressed as a percent of the loan; e.g., “2 points’ means a charge equal to 2% of the loan balance.