COMMON QUESTIONS AND ANSWERS
Q: How long does the process of take from Application to Funding?
A: Typically, if the required documentation is furnished promptly, the financing process takes approximately 30 days. As a direct lender, we are able to complete the process in as little as half the time of typical industry standards.
Q: What are my Costs going to be? Will the costs be Out of my Pocket or Added to the loan balance?
A: All loans have associated closing costs. Whether the costs are brought into escrow during the closing process, or added to the loan balance is a factor involving the equity in the property, program requirements and personal preference. Third party costs like Appraisals, Title Insurance, Escrow Fees and Credit Reports are a part of every loan. Lender Fees such as Underwriting, Documents and Origination Fees are also a component of every loan. Some or most of these costs can be reduced or eliminated during the process by rate and program options available to most borrowers upon the determination of eligibility and qualification. Our licensed professional loan experts are available to explain these options to you in detail and in writing. A Loan Estimate will be provided to you within three days of your application outlining all costs and or lender credits available.
Q: How do I know if I can Qualify?
A: We will assess your income and debt as well as your credit. Credit, Debt to Income Ratios and Loan to Value Ratios are the three major components in the determination of Eligibility and Qualification for Financing Options. Some Government Streamline Refinance Programs have very few requirements to qualify. Compensating Factors such as economic hardships for credit issues may have eased requirements associated with program options. Other factors such as Cash Reserves may allow the debt to income ratios to be increased above the typical requirements.
Q: What Documentation is Required?
A: In general, proof of income and assets are required to determine your eligibility for most programs. Other documentation varies from Lender to Lender as well as Program Requirements. Upon receipt of your Application, you will be notified of the program requirements regarding additional documentation required.
Q: Is an Appraisal Required?
A: Typically an appraisal is required for real estate financing. In some cases, refinance programs do no not require appraisals.
Q: What if the value of my home has gone down because of real estate devaluation?
A: The Federal Home Affordable Refinance Program or HARP as well as other programs including VA & FHA loans, allow interest rate reduction options even when there is no equity in the property.
Q: What is a Direct Lender?
A: A Direct Lender has control of the entire mortgage process from Application to Funding. This control of the process allows us the ability to fund your loan up to 50% faster than industry standards.
Q: What will the Interest Rate Be?
A: Interest Rates are determined by the market as well as the term in years or amortization of the loan, credit and equity margin. In general, shorter term loans like a 15 year fixed have a lower rate than a 30 year option. Credit Risk is another factor which affects Interest Rates available. Program Options have general guidelines for qualifications. Our licensed mortgage professional will guide your through these complex variables to determine what options are available with the lowest interest rates and terms to meet your goals.
Q: But why do interest rates change? Who determines those changes?
A: Mortgage Interest Rates are determined by the market rates for related securities which are affected by the Federal Reserve. In addition to the indices that drive the rate momentum up or down, the types of loans themselves vary.
Higher Loan limits like Jumbo loan amounts have a higher rates than conforming loan limits. If a mortgage is the security for a 30-year term, it will be at a higher rate in general than a 15-year program or an adjustable rate mortgage. The reason Adjustable Rate Mortgages typically have a lower rate is because they have built in levels of increase or decrease for the rate within a relatively short period of time. This allows the investor of mortgage backed securities a more stable return because it is based on economic market fluctuations over a shorter period of time.
Credit is a significant variable for interest rates within every loan limit and program option. Mortgage Programs have credit standards that identify a range of credit scores permitted which is reflected by the interest rate within that specific program.
Occupancy is another factor that influences available interest rates. An Owner Occupied property versus an Investment rental will reflect a lower rate in general.
Q: Can I Buy Down the Interest Rate?
A: Discount Points also known as Buy Down Points can be paid to obtain a lower interest rate. A point equals 1% of the loan amount. Discount Points or fractions thereof can be paid by the borrower to get a lower rate.
Q: Can I get a No Closing Cost Loan?
A: There are closing costs associated with every type of financing. Who pays those costs is a matter of interest rate and program requirements. By utilizing a slightly higher interest rate, Rebate Points are available to pay the closing costs which allows an educated borrower to take advantage of market interest rate fluctuations to lower their rate while keeping the equity in the property they have worked to secure..