Frequently Asked Questions

Question: Why don't you post interest rates on your webpage?
Answer: Interest rates fluctuate, sometimes daily, in response to current market conditions.  We monitor the short-term and long-term interest rates so that we can help you get the best rate every day.  Experience shows that lenders who post rates on the internet are tempted to quote misleadingly low rates.  Our rates are competitive everyday with a guarantee that you'll be happy with your loan and service.

Question: What is Pre-qualification?
Answer: A Pre-Qualification can occur over the phone, email, or in person.  Your income, asset, and credit information are not verified, but it can give you a quick idea of how much you can borrow. 

Question: What is a Pre-approval?
Answer: A Pre-Approval occurs after you have provided your loan officer with income, asset, and credit information which will be evaluated prior to your loan officer informing you that have been approved for a mortgage.  It happens before a property is found or an appraisal is done, so you can shop for a new home with confidence or before any expense has been incurred. It is highly recommended that you get pre-approved before you start looking for a house.

Question: What information do I need to provide when I apply?
Answer:  Each individual's financial situation is different, so the documentation required from you may be different from the list you see here.  There are loan situations where we will not require you to document your income or your assets.  As a rule of thumb,

If you are salaried: provide your last two years W-2's and one month of pay-stubs

If you are self-employed: provide your last two years tax returns and a YTD profit & loss statement.

If you own rental property, please provide rental agreements.

Please provide 2 months bank statements for each of your checking, savings & investment accounts.

If you have had a divorce or bankruptcy, please provide a copy of divorce decree or the discharge papers as applicable.

If you're refinancing, please provide a copy of your current mortgage note(s).  This will normally be found in your closing loan documents for your first mortgage.

Question: Is there an  application fee? If so, how much?
Answer:  Some lenders charge a fee to apply for a mortgage and could range anywhere from $50.00 to $500.00.  We do not charge an application fee.

Question: How long will it take to close my loan?
Answer: The length of the process can vary depending on the type of loan and the complexity of your personal finances. The process can happen in as quickly as 5 days but averages 14 days.  There are many people behind the scenes working on your loan, and your cooperation is critical to making the process move quickly.

Question: I want to pay my loan off early, can I make extra payments each month?
Answer: Some loans may have pre-payment penalties that restrict the type or amount of pre-payment you can make.  For example, you may be able to sell your home, but not refinance.  Or you may not be able to pay off more than 10% of the original loan balance.  You should be clearly informed if the loan you are applying for contains a pre-payment penalty.  If no pre-payment penalty exists, you can make additional principal payments at anytime during your loan term or pay off the loan in full. You can pay a set amount each month above the normal payment due or make lump sum payments periodically.

Question: What is PITI?
Answer: PITI is an abbreviation that reflect the different components of a mortgage payment.  P, principal, is the amount of the payment that reduces your loan balances.  I, interest, is the portion of your payment that pays for the accumulated interest.  T, taxes, is the portion of your payment collected in an escrow account that the lender will use to pay your property taxes when they are due.  I, insurance, is the portion of your payment collected in an escrow account that the lender will use to pay your homeowner's insurance when it is due.

Question: What is an escrow account?
Answer: Account maintained by the lender to collect funds from the borrower in order to pay the taxes and property insurance due on the loan.

Question: I want to pay my own taxes and insurance.  Can I do that?
Answer: The lender prefers to pay your taxes and insurance, since if those items are not paid it will jeopardize their investment.  Many lenders will allow you to pay your own taxes and insurance, known as "waiving escrows", for a fee.

Question: How do I know what loan is best for me?
Answer: Review your current situation and future goals, then discuss the following questions with your loan officer to help determine the direction you may wish to take.

How long do you plan to keep the home?  If you plan to sell the house in a few years, you may want to consider an adjustable rate mortgage. On the other hand, if you plan to keep the house for a longer time you may want to look at fixed loans.  You need to pick the loan program that best fits your lifestyle & future plans.

How long do you plan to keep the loan?  The interest rate and points you may pay on a mortgage are related.  Points (a point equals 1% of the loan amount) are considered to be prepaid interest and are tax deductible. The more points you pay, the lower the rate you will get. Are you better off with a higher rate and paying less fees or with a lower rate and paying more fees?

Do you anticipate any major changes in your financial situation in the next 5 years (i.e. retirement, having a baby, sending a child to college, etc.).

How comfortable are you with your monthly payment potentially increasing?

Question: What is the difference between a fixed rate and adjustable rate mortgage?
Answer: With a fixed rate mortgage, the interest rate and payment remains constant over the life of the loan. Whereas, with an adjustable rate mortgage, the interest rate can adjust after the initial period has expired. For example, the interest rate on a 5 Year Arm will adjust 5 years after the loan begins.  As a result, your payment may increase.

Question: What does is mean if mortgage balloons?
Answer: It means that a loan will require a lump sum payment due on the balance of the loan at a specified date when the balloon loan matures.  You should be clearly informed if the loan you are applying for has a balloon feature.

Question: What is a conventional loan?
Answer: A mortgage not guaranteed by VA or insured by FHA, FMHA or State Bond Agencies.

Question: What is a jumbo loan?
Answer: A loan amount that exceeds the maximum agency (Fannie Mae, Freddie Mac) mortgage amount guidelines for a conventional loan.

Question: What is PMI?
Answer: Private Mortgage Insurance protects the lender against financial loss when you borrow more than 80% of the appraise value of the home.

Question: What is mortgage life insurance?
Answer: Typically, you will purchase mortgage life insurance after your loan closes so that in the event of your death, the balance owed on your mortgage home loan is paid.

Question: What is hazard insurance?
Answer:  Also known as homeowners insurance, hazard insurance protects you in case your property is lost (fire or other disaster) or damaged (burglary, theft, vandalism, etc.).

Question: What is an origination fee?
Answer: The origination fee is typically 1% of the loan amount you borrow and is used to cover administrative costs incurred during the processing of your loan and to compensate your loan officer.

Question: What are points?
Answer:  A point is equal to 1% of the mortgage amount.  Points can include the origination fee or loan discount points, which are used to lower the interest rate.
 

If you're question wasn't answered here, contact us directly.