The home loan application process can be overwhelming and confusing. Read our FAQ’s to help you understand how the loan process works and why.
Our loan originators may request various documents to verify your identity, income, and other personal financial information, including but not limited to:
Certain situations and life events may require additional documentation as well, including the following:
a. Include purchase agreement with all addendums, signed by both buyer and seller.
b. Please provide a property listing sheet or printout describing the lot’s size, square footage, year built, and applicable taxes.
c. Lastly, please include phone numbers for each realtor involved in the transaction.
Yes, you can get prequalified. A prequalify provides you with immediate confidence, plus an advantage when you sit down at the negotiating table. Please contact one of our loan originators today to learn more about the application process and how you can get prequalified for your mortgage loan.
This is one of our most frequently asked questions. In most cases, we’re able to close purchase loans within 30 days. Refinance loans may require up to 45 days, but often close earlier.
With a fixed rate loan, your interest rate will never change, meaning your monthly payment amount will always remain the same. Conversely, adjustable rate loan rates are tied to an index, which may cause your monthly payment amounts to vary. The type of loan you opt for should be based on several factors, including how much you can afford each month and how long you plan to live in your new home.
Refinancing your loan can impact your monthly payment amounts, your remaining balance, or both. Some of the most common reasons for refinancing include:
We’re here to help you understand your options and to make smart choices. Please contact your mortgage loan originator with any questions you may have about refinancing.
The interest rate simply describes the cost of borrowing money proportional to the loan amount. By comparison, APR (annual percentage rate) also factors in any applicable fees to express the full cost of a loan, making it easier for consumers to compare true costs. Keep in mind that an adjustable rate loan’s APR does not reflect its maximum interest rate, and therefore comparing versus fixed rate loans in this fashion can be problematic.
Any interest which accrues between your closing date and the last calendar day of that month is considered prepaid interest. This amount is factored into closing costs in order to avoid offsetting your first monthly payment.
Beyond the price of the property itself, all expenses incurred by buyers and sellers when transferring property ownership are known as closing costs. This can include appraisal and escrow costs, title insurance fees, prepaid interest, and other expenses. The specific fees and amounts charged will vary according to the property’s location and mortgage type among other factors. During the loan process, you will be provided with an estimate so you have the opportunity to review these costs prior to your closing date.
If you applied for a loan prior to October 3, 2015, you would have received a form known as a good faith estimate (GFE) which details basic information about your loan including monthly payments, estimated interest rate, and mortgage closing costs. (Please note, that as of the October 2015, this form is only used for reverse mortgage applications.)
If you applied for a loan on or after October 3, 2015, you will receive a new form known as a loan estimate. This three-page document outlines many of the important facts covered by a GFE, in addition to information regarding penalties, balance increases, and more. This newer form is standard for all lenders and incorporates clear, easily understood language to help borrowers better understand each aspect of a loan.
When applying for certain types of loans, you may also receive a third type of document known as a truth-in-lending disclosure. This applies to loans such as HELOCs (home equity lines of credit), manufactured housing loans, or loans secured through certain homebuyer assistance programs.
Private mortgage insurance is designed to protect lenders in the event that a buyer defaults on a conventional. In most cases, a borrower will be expected to pay for mortgage insurance unless the loan-to-value is below 80%; once the loan has been paid to below 80% loan-to-value, borrowers can request that the insurance be removed.
FHA loans are those which are insured by the Federal Housing Administration. They require borrowers to pay monthly premiums as well as an upfront mortgage insurance premium (UFMIP), which is added into the principal amount and paid over the term of your loan. Options are available to prepay the costs of mortgage insurance—please contact us to determine if this approach is right for you.
Loan-to-value, or LTV, compares the value of your home versus the value of your loan. To determine this number, divide your loan amount by your property’s fair market value (as established by an appraisal) or the purchase price, whichever is lower.
Your debt-to-income ratio is determined by adding together all of your regular monthly debt payments and dividing by your gross monthly income (earnings before taxes and deductions). This is one tool lenders use to determine your ability to manage loan payments.
A licensed mortgage originator, processor, and underwriter will each review your application and all supporting documentation provided. Taking into account the value of the property, your credit history, and your DTI, we determine whether we are able to approve the loan and if so, the applicable interest rate.
As just one factor in the underwriting process, your credit history will not necessarily qualify or disqualify you for a loan. Better interest rates or lower down payment amounts may be available to those with higher credit scores, although the primary concern is willingness and ability to repay debts on schedule.
For most loan programs, the minimum qualifying credit score is 620. However, we do offer expanded credit loan programs which may help those whose scores are lower. Please contact one of our licensed mortgage originators today or visit our Loan Center to learn more about your options.
Applying will not lock you into a particular interest rate. Instead, your loan originator will provide an estimated rate based on several factors (loan type, DTI, credit history, etc.) during the application process. We then monitor actual rates and inform you when it’s the best time to lock in your loan based on your individual financial situation.
Your privacy is of paramount importance to us, which is why we utilize secure protocols whenever transferring sensitive data over the Internet. Our application website employs official SSL (secure socket layer) Certificate protection which provides an encrypted connection to keep your personal information safe and confidential.
If you’re more comfortable applying offline, one of our licensed mortgage originators would be happy to assist you. Please contact us today to apply over the phone, or to set up an appointment to complete your application in person.
In order to avoid any potential conflict of interest, a random appraiser is chosen from a preapproved third-party group, based on the location of the property.
Your minimum down payment is based on your particular loan program. For example, conventional loans require at least a 5% down payment, as opposed to 3.5% for FHA programs. Those who qualify for a VA loan are not necessarily required to make any down payment. Please visit our Loan Center to learn more about each of these programs.
If seeking a conventional loan, you must be at least four years discharged from your bankruptcy. For FHA and VA loans, the requirement is two years. Programs do exist which may help you acquire a loan in spite of a more recent bankruptcy, however. Please contact us to discuss detailed wait times and additional options which may be available to you.
Foreclosures and short sale situations require longer waits—seven years from completion date for conventional loans versus three years for FHA programs or two for VA loans. Even if you’re still within the designated waiting period, programs may be available to help expedite the process. Contact one of our licensed mortgage loan officers today to learn more.
An escrow or impound account is one which is set up and managed by a lender in order to facilitate payment of large, infrequent property-related expenses, such as taxes or homeowner’s insurance. Because many of these accounts bill only once or twice each year, many people elect to make monthly installments as part of their regular mortgage payments.
In order to avoid unnecessary risk, many lenders will require property taxes and insurance to be paid in this fashion. In some cases, escrow accounts may even be required by law. Keep in mind that your escrow payments may fluctuate along with corresponding tax rates and insurance premiums.
Launched in 2008, the Nationwide Mortgage Licensing System is a centralized database which maintains fundamental information regarding loan officers, originators, and principals. Each loan originator is assigned a unique identifier, which consumers must be provided access with early in the course of a transaction so that they may access the registry before making a commitment.
The system was put in place both to protect consumers and to streamline the licensing process for mortgage loan companies as a whole. With a single, uniform source of data, the possibility of disreputable individuals gaining licenses in new states is eliminated.
If you have any questions which have not been covered in this FAQ, please contact us and we’ll be glad to assist.