Q & A
Prequalification is an estimate of how much you will be able to borrow. You supply the lender with some basic information about your income, debts and assets. The lender checks your information and gives you a general estimate of home loan amount and monthly payments. Prequalification only takes a few minutes and it’s free.
With preapproval, lenders review some basics about your finances and provide you with an official letter that states that as long as you meet certain conditions, you will be approved for a specific loan amount and loan program. That allows you to shop with confidence, as sellers often require a preapproval when you go to bid on a home. Learn more about the preapproval step in the loan process.
This should not be confused with your note rate. The Annual Percentage Rate, or APR, is the cost of your credit expressed as an annual rate. Because you may be paying closing costs, also known as prepaid finance charges (origination fee, discount points, appraisal, interest, etc.), the APR on the disclosure is often higher than the interest rate on your loan. This APR can be compared to the APR of other loan programs to give you a consistent means of comparing rates and programs.
You should always make your next mortgage payment unless instructed otherwise, as any defaults/delinquencies may impact your credit.
Purchase and refinance loans are ever the same, so it is difficult to estimate how long it takes to complete a loan. If you provide us with all of the requested documentation in a timely manner, we will certainly do everything in our power to make sure that your loan transaction is completed as quickly as possible and within any rate lock period specified (if your rate has been locked in).
Once your loan has been closed/funded and its servicing has been transferred, you can contact your new servicer to setup and schedule an auto payment.
Unless this is a purchase transaction with an estimated closing date, the exact closing date for your loan is not typically known until the processor and underwriter have reviewed your application in its entirety and fulfilled any other conditions/documentation requested for it. We will definitely do our best to make sure that the transaction is completed as timely as possible.
You can elect to have an impound/escrow account to pay your property taxes and homeowner’s insurance along with your monthly mortgage payment, or to waive it and pay them both yourself. However, typically an impound/escrow account is required when your loan-to-value exceeds 80% or if you obtain an FHA loan. If you initially lock in your rate with an impound/escrow account, there may be a charge (points) or increase in the rate for waiving the account.
Why am I paying X number of months of property tax and homeowner's insurance reserves at the closing of my loan?
To properly reconcile your impound/escrow account, the loan docs department must ensure that you hold enough reserves to pay off the property taxes and homeowner’s insurance when they come due. This may require several months of property taxes or homeowner’s insurance reserves being collected at the closing of your loan. If you currently have an impound/escrow account with your existing lender, you will be sent a refund for any remaining balance after your new loan closes.
Our investors require that you pay the property taxes or homeowner’s insurance renewal at the closing of your loan if they are due within 60 days of the closing date. This is because the investor does not want the risk of assuming your loan, and then having the property taxes or homeowner’s insurance become delinquent. Also, in many states, there may be a “delinquent after” date for your property tax installment which can be a couple months after they are actually due. We must collect the property taxes based on the actual due date, and not the delinquent date.
A second home is a home you use personally. The mortgage process for a second home is very similar to your primary home mortgage. An investment property is a property you rent out (become a landlord) or buy for the purpose of fixing up and selling at a higher value. This could be an apartment property, condominium, or single family residence.
Private Mortgage Insurance (PMI) is automatically terminated at 78% loan-to-value/22% equity (based on the amortization schedule) if the loan is current or has reached the midpoint of the payoff. You can also sometimes request that it be cancelled at 80% loan-to-value/20% equity.