Do you have questions? If so we can help you find the answers to several frequently asked questions.
What makes a pre-approval and pre-qualification different?
The pre-approval process is a more complete and detailed process than pre-qualification. During a pre-qualification, one of our loan officer asks you a number of questions, and depending on those answers along with a review of your credit report, you receive a pre-qualification letter. A pre-approval involves all the steps mention in a pre-qualification, along with all of the necessary documents and steps for a loan to be approved with the exception of the title search and appraisal. A thorough review of your documentation during the process puts you in a better position to negotiate with a seller, because you are closer to a full loan approval.
When is the best time to refinance?
There can be several reasons why you might possibly want to refinance. You may want to obtain a lower interest rate, save money by reducing the term of your loan, or eliminating your private mortgage insurance (PMI). If you have an adjustable-rate mortgage you may want to refinance into a fixed-rate loan. Many people refinance to obtain cash, consolidate debts, and/or make home improvements.
One of our mortgage professional can help you determine if it makes financial sense to refinance. We will calculate the total cost of the refinance and your monthly savings. Then, we will divide the refinancing cost by the monthly savings. You will then see the amount of time it takes to break even. The break even time frame can help you make a decision as to whether refinancing makes sense for you.
What is a rate lock?
A rate lock is an agreement that binds the borrower and the lender. It has four components namely: interest rate, length of the lock, loan program and points or credits. Depending on market conditions you may choose to lock a loan at the beginning of the process or you may choose to wait until the end of the process to lock in a rate. We can help answer any questions you may have in regards to locking in a rate.
What makes a mortgage broker and a lender different?
A mortgage broker helps to educate you on the many different loan programs that are available to you. Generally a mortgage broker has many options and many different lenders they can choose from. The ability to take the loan to a number of different lenders generally gives a mortgage broker a larger variety of loan types, products, and rates to choose from. A mortgage broker takes your application, gathers the necessary documents, process the loan, orders the appraisal, and submits the loan to a lender who then underwrites and funds the loan.
If I go directly to a mortgage lender, is it possible for me to save money?
In most cases the answer is no. Typically you can get as good of a deal or better, when you deal with a mortgage broker. A mortgage broker typically does not add to the net cost of the lending process and generally has less overhead which in turn means increased savings to the borrower. Mortgage brokers can quickly sift through hundreds of different products and programs that lenders offer, to find you the best deal for your situation. Mortgage brokers can also find lenders who specialize in different market niches, which are more often than not avoided by many direct lenders, so that you are more likely to get your loan approved at the best rate possible. If you’ve been declined by a credit union or bank oa mortgage broker is probably your best option to finding a loan product in order to become approved.
What is a full documentation loan?
A full documentation loan verifies your assets and income and these are used to determine your ability to repay the mortgage. Verification of employment is performed by your employer if you are an employee, or by a business license or accountant if you are self-employed. Your bank statement and income documentation are used to qualify for this type of loan. This is the most common type of loan for a mortgage as these loans typically offer the best interest rates and terms. We also offer programs that use a borrower’s bank statements to verify income, but these programs require more down-payment/equity, have stricter reserve requirements, and slightly higher interest rates.
What is the Loan Estimate?
This is the list of settlement costs and fees that the lender provides to the borrower within 3 days after he or she receives the complete loan application.
What is a conforming loan?
This is a loan that conforms to the annual requirements of Fannie Mae and Freddie Mac – the 2 largest federal agencies that purchase mortgages. Loans must conform and fit the guidelines in order to be purchased by either agency.
What is a jumbo mortgage?
This is a mortgage that has a larger loan amount than can be purchased by Fannie Mae or Freddie Mac. For example, the maximum loan amount that can be purchased by Freddie Mac and Fannie Mae for a one unit property in Los Angeles or San Francisco counties is $679,650. Different counties have different maximum conforming loan limits. If your loan limit is above the maximum for your county it will then fall into a jumbo mortgage and county loan limits are typically updated every December.
What are points?
Points are the upfront cash payment (each point equals 1% of the loan) charged by the lender and paid by the borrower to secure a lower interest rate. Points are typically used when the borrower intends to maintain the loan for at least 5 years. We offer zero point loans as well as the ability to pay points depending on your goal. We can help you to determine which option is better suited for your goals.
What is a closing cost credit?
This is a credit that is applied to your final closing statement and is associated with zero point loans. Many borrowers prefer to receive a credit towards closing costs so that they don't have to roll the closing costs into the loan amount or pay for the closing costs out of pocket, at the time escrow closes. When we offer a rate quote we offer several different possible options for you to choose from so that you can make the right choice to suit your needs.