Frequently Asked Questions about Mortgage Programs and Situations
What are the interest rates charged for your loans?
Loan rates are determined by a variety of factors including, but not limited
to, the loan product, borrower's credit history, loan amount, loan-to-value
ratio of the property, and borrower's income (loan type / property type). Every
loan is as unique as its borrower. We recommend you take advantage of our online
application form to get some individually tailored rate quotes. There is
no cost or obligation.
What causes an adjustable rate mortgage to adjust?
The interest rate of an adjustable rate mortgage (ARM) is linked to a particular
index of economic conditions. An index frequently used by lenders is the
six-month London Interbank Offering Rate or LIBOR. This index is the average
of interest rates charged by major international banks to borrow U.S. dollars
in the London money market. LIBOR is the British equivalent to the U.S. Prime
Rate.
The LIBOR index is officially fixed once each day, although changes occur
throughout the day. Changes in this index correspond to changes in the interest
rate of an adjustable rate loan. Because the interest rate of an ARM is calculated
by adding the index plus a "margin" (a
pre-set, fixed interest rate established by the lender), a change in the index
value will cause a change to the interest rate calculation. The number of times
an ARM loan will adjust each year, and the maximum amount it can change, varies
per loan. Borrowers are encouraged to consult their lender or loan specialist
with any questions regarding the ARM loan adjustment process.
What is negative amortization and how does it occur?
Negative amortization occurs when scheduled monthly mortgage payments are not
sufficient to repay the fully scheduled amortized payment (principal and
interest) due on the loan and the outstanding balance of the loan grows larger
with each payment.
Can I get loan rates over the phone?
Absolutely. But remember, obtaining a loan program that fits your particular
needs is just as important as the loan rate. Just call us or complete the
online application form, and we'll have the necessary information to answer
your questions, and even begin the loan application process over the telephone.
After I apply for a loan, what should I expect?
After you complete the application process and authorize us to request your credit
report, we will evaluate your application and credit, present you with a loan
proposal containing a variety of loan options. We will suggest which option
we feel will best accomplish your objective.
How am I approved?
We understand that every customer is unique. That's why we evaluate your individual
situation and find the right loan for you. As your Loan Specialist we will
be able to discuss with you what factors go into approving your loan. Most
everyone with income and assets can get loan approval for some loans program,
finding the right loan program to meet your needs and satisfaction depends
on your approval and your loan specialist knowlege of available programs.
Employment and Income Data
- W-2 tax forms for the past two years
- 1099s (if applicable)
- Pay stubs showing current year-to-date earnings within 30 days.
- Your employment history and any explanation of a job change within the last two years
If Self-Employed (defined as owning 25% or more of a business)
- Business and personal federal tax returns (including all schedules) for the past two years
- Current year-to-date profit or loss statement K-1 for all partnerships
- Residence addresses for the past two years
- Properties owned
Assets
- Bank account statements for the past two months
- Most recent investment account statements
- Most recent retirement account statements
- Signed gift letter and transfer of funds verification
Liabilities
- Credit cards, including account numbers and balances
- Auto loans and leases, including account numbers and value of the car
- Explanation and paperwork for any derogatory credit in the past seven years
- Explanation letter of any derogatory credit, such as bankruptcy, collection, foreclosure or default
- Student and personal loans, including account numbers, monthly payments and balances
- Landlord address(es) for the past two years if necessary
Property and Real Estate Agent Information
- Name and contact information of your Real Estate Agent
- Homeowner's insurance information
- Rental or lease agreements
Do I have to document my income?
We offer income documentation programs: full and stated. Full documentation
programs require that you substantiate your income with tax returns, bank statements,
pay stubs, and/or other such paperwork. If you choose not to document your
income, you can take advantage of our stated income program, which requires
no income verification, but you must satisfy other loan requirements. Please
speak to your loan advisor to tailor docs needed.
Can I apply for a purchase loan before I've found my property?
Yes, you can become pre-qualified or pre-approved for a maximum loan amount and a loan program. Once you find a specific property, the specifics of the loan can be changed to suit your purchase. Please note that a rate can't be locked in until there is a specific property address.
What is the cost to submit a loan application?
There is no cost to submit a loan application or to be pre-qualified for a loan. You will only incur a cost when you have accepted a loan offer and an appraisal is ordered for your property.
How do I know what my loan rate is and when do I get it?
You will be quoted an interest rate and APR when we present you with a loan offer. All rates quoted in our loan proposal are good for 30 days from the date of issuance.
What is the difference between the interest rate and the APR?
The Annual Percentage Rate (APR) is the yearly cost of a mortgage expressed as a percentage, and takes into account the total cost of a loan, including the interest rate and other finance changes (e.g., closing fees and points). The interest rate consists solely of the cost for borrowing a lender's money.
Using an APR allows a borrower to more accurately compare the true costs of various loans offered by different lenders, or different loan programs offered by the same lender.
Can I make changes to my application?
Yes, you can make changes to your application at any time before the final approval. Any changes after the final approval may affect the time it takes to close your loan, the cost of closing the loan, the interest rate, the type of loan and sometimes the loan approval itself.
What is hazard insurance?
Hazard insurance is a type of homeowner's insurance that protects against damages caused to property by fire, wind, or other common risks. Lenders require that you get a hazard insurance policy before you buy or refinance a home.
What if I have bad credit or a bankruptcy?
We offer loans to people with all sorts of credit. Whether you have good credit, credit issues, a past bankruptcy, or the need to re-establish credit, we encourage you to apply.
What is "loan-to-value" ratio?
Loan-to-value ratio is a measure used by lenders to assess the relationship between the value of the property and the amount of the loan. The loan-to-value ratio is determined by dividing the loan amount by the fair market value of the property.
What loan is right for me?
Many factors and personal preferences affect a borrower's choice of "the best
loan," including
the purpose of the loan (e.g., new purchase, debt consolidation, etc.), the
length of both the loan and the ownership of the property, and the type of
loan a borrower requires (e.g., a small amount of down-payment, a large amount,
or no money down). We encourage you to go through the loan application to determine
what kinds of loans you might qualify for depending on your specific needs.
What costs are involved in the loan process?
Fees on home loans fall into the following 3 main categories:
- Lender Fees - These are fees charged by lenders for originating, processing, underwriting and funding your loan. These fees are set by the lender and vary by state and loan program.
- 3rd Party Fees - These fees are charged by other companies which are necessary for completing your home loan. Examples include title companies, appraisers and attorneys (in certain states). 3rd parties set their own fees.
- Government Fees - These fees are charged by state and local governments. Examples include; recording, state tax, tax stamps or transfer tax. Your local and/or state governments set these fees.
For a complete breakdown of fees associated with you loan, please see your Good
Faith Estimate (GFE).
