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Why should I use this website to find a mortgage loan? What Mortgage Lenders would you suggest I use for a loan? What does it mean to pre-qualify for a loan? What does a mortgage pre-approval mean? What are some common reasons for refinancing? When should I consider a no-cost refinance? I don’t have a great credit score, can I still buy a home? How long is credit information reported on my credit report? What does LTV (Loan-to-Value) mean? What are discount points that are applied to a mortgage loan? Do I have a choice of paying points or no points on my loan? How do I determine whether or not I should pay points? Should I “lock in” or “float” my interest rate? When can I lock in an interest rate for a loan? What documents will I need when applying for a mortgage? How long does it usually take to get approved for a home loan? Can I include my closing costs into the loan amount? How long does it usually take to close on a loan? What is PMI (Private Mortgage Insurance)? How can I avoid paying for Private Mortgage Insurance? What is a Good Faith Estimate? What is Hazard Insurance, do I need it? Why should I use this website to find a mortgage loan? By using the resources available on our website you are in the driver’s seat to find the lowest rates and overall most savings on the home loan you are searching for. You can freely contact the mortgage lenders you desire to, while having as many as you wish compete for your business. We only sponsor the top-ranked mortgage lenders, ensuring you will save the most money possible on your home mortgage loan. What Mortgage Lenders would you suggest I use for a loan? We are not biased to any of the mortgage lenders sponsored on our website. If they are on here, it is because they are some of the best in the business. Who you contact and further your mortgage loan with from here is completely up to you. We only provide a simple marketplace for you to freely choose from those lenders currently sponsored on our homepage. What does it mean to pre-qualify for a loan? Pre-qualifying for a loan means that you, the borrower have discussed a various home mortgage loan with a loan officer and have supplied required information about your employment and current debt situation. Then you and your loan officer (s) will be able to calculate an estimate of the loan amount that you may qualify for. What does a mortgage pre-approval mean? The mortgage loan pre-approval process involves completing a mortgage loan application and then being approved by a lender for a maximum loan amount that you can afford. A majority of the time, real estate agents will request that new home shoppers get pre-approved for a loan before showing them homes. This is so real estate agents can make sure to show you various homes in a price range that you will be able to afford. What are some common reasons for refinancing? Some common reasons for refinancing are to lower your monthly mortgage payment, consolidate debts, convert some of your home’s equity into cash for other purposes, such as home improvements, receive a higher education, or to invest in various money-growth investments. When should I consider a no-cost refinance? You should consider this type of refinance when you are sure to have the mortgage loan for less than 3 to 4 years. Especially if you are planning to sell the house within that period of time, or you are convinced that interest rates will fall further and you will refinance again at an even lower rate down the road. If you expect to have the mortgage more than 3 to 4 years, paying the refinance costs in exchange for a lower interest rate may be a good way to go. You should price out the above options with your loan professional (s) to see what is going to be most cost-effective. I don’t have a great credit score, can I still buy a home? Yes you can. Your credit doesn't have to be absolutely perfect to purchase a home. Many people across the United States have found themselves in difficult financial situations over time. Some reasons are often because of an illness, injury, divorce, or temporary unemployment. If you can demonstrate to the lender that the problem is in the past, and you have been able to re-establish your credit record for a sufficient amount of time, then you may be in a good position to get a mortgage loan. We would suggest that you be very open and honest with your mortgage lender(s) in order for them to see your ability and willingness to pay your mortgage in the future. How long is credit information reported on my credit report? Generally, this information is reported for up to seven years. However, any information about a bankruptcy, can be reported for up to 10 years on your credit report. What does LTV (Loan-to-Value) mean? Loan-to-Value is a ratio, which is determined by the loan amount divided by the property value. For example, if a home has a property value of $100,000 and the loan amount for that home is $80,000, then the LTV is 80%. LTV is a term that is used to define the maximum loan percentage available for each particular loan program. Mortgage lenders have various LTV parameters for different loan programs. Also, the LTV available to you will depend on your personal credit situation. Higher LTV ratios are usually available for people with higher credit ratings. An origination fee is a fee that is charged to cover the application and processing of a mortgage loan, which has been provided by the mortgage broker. What are discount points that are applied to a mortgage loan? Discount points are a percentage of the loan, which can be used to “buy down” or reduce the interest rate of the mortgage loan. One point is equal to one percent of the entire loan amount. Some mortgage lenders also refer to the origination fee in points. For example, if a mortgage lender were to charge you one point as an origination fee, this would mean that you would pay 1% for the broker to write the loan. Do I have a choice of paying points or no points on my loan? Yes, you do have a choice. You can either pay point(s) in exchange for a lower interest rate or you can pay fewer point(s) for a mortgage loan with a higher interest rate. Remember, one point is equal to one percent of the entire loan amount. How do I determine whether or not I should pay points? Paying points is to basically pay a little up-front now, in order to save more money over the life of the loan. Each discount point you pay, typically lowers your loan's interest rate by .25%. Points are a good idea if you plan to hold onto your home for a very long period of time. This will allow you to offset the costs of paying for the points. However, the majority of borrowers do not stay in the same mortgage loan for 20, 30 years or so. You should consult with your loan professional to figure what will be best for your situation. Should I “lock in” or “float” my interest rate? When applying for a mortgage loan, a simple interest rate quote may be available for you in moments. In order for you to be insured that the rate you have been quoted is still available at your closing time, the lender must lock in that interest rate for a term they feel it may require to process your mortgage loan. The longer it takes for your desired loan to go to closing, the higher the interest rate lock in will cost. Typical rate lock periods range from 30-45 days. However, if you and or your trusted loan professional feel that interest rates are trending lower you may choose to allow the interest rate to float and except whatever the prevailing interest is once you are closer to your closing date. When can I lock in an interest rate for a loan? Many lenders will lock in the rate for free once you have a purchase agreement and have completed the 1003 standard residential loan application. However, this circumstance will vary depending on the mortgage lender. Typically, if you do not have a purchase agreement in place, a lender will require you to pay a fee to lock the interest rate in. What documents will I need when applying for a mortgage? At minimum you will need your last 2 years W2 forms and your last two paycheck stubs. Most often your previous two months bank statements will be required. Also, a copy of the executed sales agreement for your home. If you are self-employed, you may be required to supply your last two years income tax returns. How long does it usually take to get approved for a home loan? This depends on your personal credit situation and the lender. Approval can sometimes be achieved within 24 hours. Usually, it requires 7-10 business days with most mortgage application situations. Each mortgage lender may have different costs associated to their programs or local lending market. Closing costs or the fees applied to complete the loan may consist of some or all of the following: Settlement and or attorney fees, Underwriting fee, Pre-paid: property taxes, mortgage interest, homeowners insurance and private mortgage insurance. A loan origination fee, Appraisal fee, Credit report fee, Messenger fees, Title recording fee, Survey fee if needed, Title insurance, Payment to escrow account for real estate taxes and homeowners insurance if applicable, and Documentation preparation fees. Escrows are pre-payments of real estate taxes and homeowners insurance, which are held in an escrow account. Escrow accounts make the annual payments to the appropriate parties by the mortgage lender. Can I include my closing costs into the loan amount? Most lenders will allow you to do so when you are refinancing an existing mortgage. However, most lenders will not allow you to include your closing costs into the loan when purchasing a new home. How long does it usually take to close on a loan? Some mortgage lenders can go to close on a loan within 7-10 days. However, the average home loan requires about 30 to 60 days to close. The length of time to close on a loan is dependant on a bunch of factors. Some examples are, whether a current appraisal is available for the property, how busy the mortgage processors are at the time of the loan request, required documents, and the length of time needed to process the title. What is PMI (Private Mortgage Insurance)? PMI is an insurance that protects the lender in the event you do not pay your mortgage. PMI allows certain borrowers to obtain a higher loan amount with a lower down payment. PMI is typically required when the LTV is 80% or more. We suggest that you check with each mortgage lender to ensure what their PMI requirements are. How can I avoid paying for Private Mortgage Insurance? PMI is typically required if the Loan-to-Value is 80% or higher. Many lenders will allow you to stop paying your PMI once you have either paid down your loan below an 80% LTV, or your property has increased in value to the point where the new Loan-to-Value ratio is less than 80%. You would be required to have your home appraised to prove the new market value of your home if it has increased. Some mortgage lenders offer loan programs such as an 80/20, where your first mortgage is for an 80% LTV and the second mortgage for the remaining 20% is at a higher interest rate. A reverse mortgage is offered to homeowners that already own their home and have reached an age (senior citizenship) where they want to withdraw the equity they have accumulated in their home. The money you desire to extract can be taken out as either a lump sum, monthly payments, or can be used as a line of credit. Typically, this type of loan is re-paid when the last surviving borrower no longer resides in the home for more than 12 months. The home is then sold to repay the loan. Reverse mortgages are not available from all mortgage lenders. If this is a loan you desire, then you should check with each lender you wish to contact on here to learn the specifics of the reverse mortgage programs that they may have available. You as the homeowner would still be responsible to pay all of your homeowner taxes, homeowner’s insurance, and general repairs on the home. Since November 29, 2005, the limit set by the secondary mortgage market is set at $417,000 for a single-family home in the continental U.S.; $625,500 for a single-family home in Alaska, Hawaii, and the U.S. Virgin Islands. What this means is that loans over the previous amounts are considered “non-conforming” jumbo loans. A jumbo loan will typically cost more and may have stricter underwriting requirements. What is a Good Faith Estimate? When you submit your desired mortgage loan application, under the terms of RESPA, the mortgage lender must provide you with a Good Faith Estimate of settlement services that you will likely incur. The Good Faith Estimate, a.k.a. G.F.E. may be stated as either a dollar amount or in a range for each charge. What is Hazard Insurance, do I need it? Hazard insurance is an insurance policy that is made to protect homeowners against various property damages. This premium prepayment is for insurance protection for you and your mortgage lender against any loss due to a fire, windstorm, and natural hazards. If a catastrophe were to suddenly happen to your home, hazard insurance should cover the costs to rebuild your home. Majority of Lenders often require you to get an insurance policy before you buy or refinance a home. The lender will usually require you to pay the first year’s premium at settlement. It means: Principal, Interest, Taxes, and Insurance. These are the four components of a monthly mortgage payment. Principal refers to the part of the monthly mortgage payment that reduces the remaining balance of the existing mortgage loan. Interest is the fee, which is charged for borrowing the money. Taxes and insurance refer to the amounts of money that are paid into an escrow account each month for property taxes and mortgage and hazard insurance. A prepayment penalty is a fee that a borrower must pay when a mortgage loan is paid off early. Either a percentage of the amount is prepaid or a number of months of interest on the amount prepaid. Not all mortgage loans come with prepayment penalties. Prepayment penalties are not allowed on FHA or VA loans. A loan that has a prepayment penalty may have a lower interest rate. Prepaid Interest is the interest that will accrue between the close of your loan and the last day of the month in which your loan closes. Interest on your loan after that date is included in your regular monthly mortgage payments. A VA loan is a benefit program that is offered by an independent agency of the federal government for veterans. These programs encourage mortgage lenders to offer long-term, no down payment financing to eligible veterans by guaranteeing the mortgage lender against any loss to their portfolio. |
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