1. My real estate agent recommended that I get a pre-approval letter. What is a pre-approval letter, and why should I get one?
The lender gives a commitment letter that states the lender agrees to provide a mortgage to a homebuyer based upon certain criteria being met. Commitment letters help you set realistic goals while you're house-hunting, provide the same negotiating ability as a cash buyer and enable you to move quickly once the perfect home is found.
2. When lenders refer to "PITI" what are they referring to?
PITI is principal, interest, taxes, and insurance - the components of a monthly mortgage payment.
3. When my loan officer asks me if I want to waive escrows, what exactly does she mean?
When you waive escrows, you take the responsibility of paying your taxes and insurance rather than having them included in your monthly payment. Waiving escrows may add a small fee to your closing costs. You can only waive escrows if your loan program allows for this such as conventional loans that have a loan value of 80% or less on your first lien.
4. What does my mortgage lender mean by points or origination fee?
One point is equal to one percent of the loan amount. Points and origination fees are used to buy down the interest rate. Origination fees help pay the cost for the lender to do the loan.
5. How does the annual percentage rate differ from the interest rate?
The APR (Annual Percentage Rate) differs from the interest rate as it is the financing rate calculated with the finance charges over the life of the loan.
Once you have made an offer on a home and your offer has been accepted, your Realtor will draw up a sales contract. At that time, we will lock your interest rate which means you are guaranteed that rate for 30 days.
7. Do I need to have a certain amount of money left after I buy my home?
Reserve requirements are program specific and will be gone over with you by the Loan Officer.
PMI can be eliminated by having a down payment of at least 20% or by obtaining a second lien with an 80-10-10 or an 80-15-5 loan program.
10. Will I have two separate payments if I have a second lien?
Borrowers with a second lien will make two separate payments each month - one on the first lien and one on the second lien.
11. How will I be updated on the status of my loan?
We have found that the most efficient means of communicating this information to you is through email. If you have informed us that you prefer a different form of communication or do not use email, we will respect your preferences and contact you in your preferred method. I send out regular updates on Monday mornings to you and via email or contact you by phone if you prefer. Generally, if email is your preferred form of communication, we will not call unless absolutely necessary.
12. What documentation will I have to provide for my loan to be approved?
You will be provided with a document checklist at the time of application that will outline what you will need to provide to support what is on the application. Please provide photocopies. Originals are not necessary unless specifically asked for. Click here to download our document checklist.
Truth-In-Lendings are sent to all borrowers after a loan application has been made. The Truth-In-Lending Act is a federal law requiring lenders to reveal all of the terms of a mortgage.
14. Will I get a copy of my credit report and appraisal?
I will provide you with a copy of your credit report and appraisal. You will receive a copy of your appraisal at your closing.
