Frequently Asked Questions
Pre-qualification vs. Pre-approval
Interest Rates
Types of Loans
Points and Fees
Refinancing
Mortgage Broker vs. Mortgage Lender
Compliance
What is a pre-qualification?
This is the process of determining whether a customer has enough cash
and sufficient income to meet the qualification requirements set by the
lender on a requested loan. A pre-qualification is subject to verification
of the information provided by the applicant. A pre-qualification is short
of approval because it does not take account of the credit history of the
borrower.
Back to Top
What is the difference between pre-approval and
pre-qualification?
The pre-approval process is much more complete than pre-qualification.
For pre-qualification, the loan officer asks you a few questions and
provides you with a pre-qualification letter. Pre-approval includes all the
steps of a full approval, except for the appraisal and title search.
Pre-approval can put you in a better negotiating position, much like
a cash buyer.
Back to Top
When does it make sense to refinance?
Usually people refinance to save money, either by obtaining a lower
interest rate or by reducing the term of the loan. Refinancing is
also a way to convert an adjustable loan to a fixed loan or to consolidate
debts. The decision to refinance can be difficult, since there are
several reasons to refinance. However, if you are looking to save
money, try this calculation:
- Calculate the total cost of the refinance
- Calculate the monthly savings
- Divide the total cost of the refinance (#1) by the monthly savings
(#2). This is the "break even" time. If you own the house
longer than this, you will save money by refinancing.
Since refinancing is a complex topic, consult a mortgage professional.
Back to Top
What is a rate lock?
A rate lock is a contractual agreement between the lender and buyer.
There are four components to a rate lock: loan program, interest rate,
points, and the length of the lock.
Back to Top
When can I lock into an interest rate?
If you are financing through a bank, you can typically lock your rate right away, sometimes with lock in fee or application fee attached. If you are going to finance through a mortgage agent, after the loan application has been completed the agent will then search for the lender that will accept the loan, once a lender has been assigned the interest rate can be locked for the period of time you and your agent agree on.
Back to Top
What happens if I lock my rate and now rates are better, what can I do?
If your rate is locked and rates go down, some agents work with
lenders that allow for you to float down your rate. If that is not
an option the agent can look at other options, such as moving your
loan to a new lender that will start your lock time over again at
the new rate. Please be aware that if you move your loan to a new
lender you will loose your original lock, if rates move again before
the new lock can be put in place you will loose not only the original
lock rate but you will be starting the whole process again with another
lender.
Back to Top
What's the difference between a mortgage broker
and a lender?
A mortgage broker counsels you on the loans available from different
wholesalers, takes your application, and usually processes the loan
which involves putting together the complete file of information about
your transaction including the credit report, appraisal, verification
of your employment and assets, and so on. When the file is complete,
but sometimes sooner, the lender "underwrites" the loan
which means deciding whether or not you are an acceptable risk.
Back to Top
Will I save money going directly to a mortgage lender?
Not necessarily. In fact, if you are a reasonably astute shopper,
you will probably do better dealing with a mortgage broker. Mortgage
brokers do not add any net cost to the lending process, because they
perform functions that would otherwise have to be done by employees
of the lender. Furthermore, because mortgage brokers deal with multiple
lenders -- in a typical case, 25 to 30, sometimes more -- they can
shop for the best terms available on any given day. In addition, they
can find the lenders who specialize in various market niches that
many other lenders avoid, such as loans to applicants with poor credit
ratings, loans to borrowers who do not intend to occupy the property,
loans with minimal or no down payment, and so on.
Back to Top
What is a full documented loan?
Both income and assets are disclosed and verified, and income is
used in determining the applicant's ability to repay the mortgage.
Formal verification requires the borrower's employer to verify employment
and the borrower's bank to verify deposits. Alternative documentation,
designed to save time, accepts copies of the borrower's original bank
statements, W-2s and paycheck stubs.
Back to Top
What is a "No Cost" Loan?
A no cost loan means that all closing costs associated with the
financing of your transaction will be paid using premium pricing
provided to the mortgage agent from the lender. This means your interest
rate will be higher than the market rate; the agent uses the premium
pricing to pay all closing costs. There are pros and cons to this
type of loan so be advised and ask questions.
*Note: Because there are definite advantages and
disadvantages with this type of loan, we will discuss with you
all of the different aspects to see if it would be beneficial for
your situation.
Back to Top
What is a conforming loan?
A loan eligible for purchase by the two major Federal agencies
that buy mortgages, Fannie Mae and Freddie Mac. The loan limits
are currently $359,650 for a single family house.
Back to Top
What are the other types of loans?
Stated income/verified assets: Income is disclosed and the
source of the income is verified, but the amount is not verified.
Assets are verified, and must meet an adequacy standard such as, for
example, 6 months of stated income and 2 months of expected monthly
housing expense.
Stated income/stated assets: Both income and assets are disclosed
but not verified. However, the source of the borrower's income is
verified.
No ratio: Income is disclosed and verified but not used in
qualifying the borrower. The standard rule that the borrower's housing
expense cannot exceed some specified percent of income, is ignored.
Assets are disclosed and verified.
No income: Income is not disclosed, but assets are disclosed
and verified, and must meet an adequacy standard.
Stated Assets or No asset verification: Assets are disclosed
but not verified, income is disclosed, verified and used to qualify
the applicant.
No asset: Assets are not disclosed, but income is disclosed,
verified and used to qualify the applicant.
No income/no assets: Neither income nor assets are disclosed.
Back to Top
What is a jumbo mortgage?
A mortgage larger than the maximum eligible for purchase by the
two Federal agencies, Fannie Mae and Freddie Mac, currently $359.650.
Back to Top
What is a good faith estimate?
It is the list of settlement charges that the lender is obliged
to provide the borrower within three business days of receiving the
loan application.
Back to Top
What are points?
It is an up front cash payment required by the lender as part of
the charge for the loan, expressed as a percent of the loan amount;
e.g., "2 points" means a charge equal to 2% of the loan
balance.
Back to Top
Are discount points and origination points the same thing?
No, a discount point is what would be used to buy an interest rate down, if the rate being quoted has a discount point or points attached, that means you are buying this rate. Origination point or points is a fee you are paying the mortgage agent for the work they will provide to you to arrange the financing.
Back to Top
Do I have to pay any fees up-front?
Fidelity Lending Northwest does not require any up-front fees or "charges". Most mortgage agents do not make you pay up-front fees, however some agents will have you pay fees such as a lock in fee or application fee as a way to retain your business and prevent you from shopping for the best loan.
Back to Top
If I cancel my loan transaction am I responsible for any fees?
Depending on the initial agreement you made with the mortgage agent, some agents will have you pay for any processing work that has been performed on your loan, in addition if the appraisal has been completed you would then be responsible to pay for that service. Be sure to look at the documents you sign at the initial loan application to determine what if any fees you could be responsible for as all mortgage agents are different.
*Note: If you decide to cancel the loan in process, Fidelity Lending Northwest will not
charge you for any fees.
Back to Top
If I pay for my appraisal and want to go another
lender, do I have to buy another appraisal?
No.Once you have paid for your appraisal, you have the option to have that report re-assigned to any new lender or mortgage agent you choose to go with. If you cancel your loan, you will need to request this within 30 days in writing.
Back to Top
I've listed my home for sale recently, can I refinance?
No, Listing your home with a real estate agent may prevent you from re-financing for up to 12 months after the listing expires. If you listed your home yourself, you may be able to refinance earlier if you did not have a MLS number, this is the database realtors use to see what homes are available for sell.
Back to Top
How long until my original documents that I provided be returned and how?
All original documents you provide to the mortgage agent should be copied and the originals returned to you within 48 hours of the loan application. How your documents will be returned can be arranged with your mortgage agent, typically they are returned VIA US mail.
Back to Top
How will my personal information be stored and disposed of?
For your protection any personal information you give or the mortgage agent receives should be stored in secure filing cabinets at the place of their business, and any documents that need to be discarded should be shredded and disposed of in a secure manner.
Back to Top
| 4090 SW 177th Ave.
Aloha, OR. 97007
Phone: (503) 259-8655
Fax: (503) 259-8899 |
|
|
