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Frequently Asked QuestionsFAQ's - Frequently Asked Questions If you still have questions, please give us a call at 1-877-353-6835 or contact us online. Frequently Asked Questions
Why would I want an ARM vs. a Fixed Rate?An ARM allows you to receive more money at a lower interest rate than a fixed rate loan. If you are planning to move within a few years, you can save money and avoid rising payments. Fixed Rate A fixed rate mortgage is when the interest rate remains constant throughout the life of the loan. The most common fixed rate mortgages are repaid over a period of 30 years or 15 years. Thirty-Year Fixed Rate Mortgage The traditional 30-year, fixed-rate mortgage has a constant interest rate and monthly payments that never change. If you intend to stay in your home for seven years or longer, this may be a good option for you. However, if you plan to move within seven years, an adjustable rate loan may be less expensive. Fixed rate loans are particularly beneficial when interest rates are low because you can lock in the low rate for the duration of your loan. Fifteen-Year Fixed Rate Mortgage This loan is paid over a 15-year period and has a constant interest rate and monthly payments that never change. The advantages of a 15-year, fixed rate is that it offers a lower interest rate, and you'll own your home twice as fast. However, the disadvantage is that you commit to higher monthly payments. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan in 15 years. This approach is often safer than committing to a higher monthly payment, since the difference in interest rates isn't that significant.
How long will it take to apply and close a loan?The average amount of time from application to close is two to 10-15 business days, but this time may vary depending on your situation. Making sure you have all the proper paperwork is essential in speeding up the process! Check our Loan Checklist page for more information!
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What are points and how do they work?Points are fees paid to the lender at closing. One “point” is equal to 1% of the total loan amount. For instance, for a $200,000 loan, one point would equal $2,000. Most lenders charge between 1 and 2 points. If you want to lower your interest rate, you can pay more points up front. This is an effective way to save money by lowering your interest rate over the life of your loan. However, if you do not have money to pay upfront, opt for fewer points.
Why are some rates higher than others?An interest rate depends upon several factors. For instance, your rate will be higher if you have poor credit, put a limited amount of cash down, or have a high debt-to-income ratio. In addition, if you are going to purchase a condo, townhouse, manufactured home, second home, 2-4 units, or investment property, your rate will also increase. Your rate will be higher if you choose a no-doc or stated income loan as well. Loan Processing Steps
How do I qualify for a loan?Complete a Form 1003 application with a bank loan officer, credit union loan officer, or licensed mortgage broker. Most banks allow you to apply on line as well. However, if you do not qualify for a conforming loan, for instance, if you have poor credit history or a debt-to-income ratio greater than 40%, consult your licensed mortgage broker for assistance.
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How do I know how much of a loan amount I qualify for?Your loan officer and/or broker will tell you how much you qualify for after they review your application and pull credit. The loan amount depends on income and debt ratio. Your debt ratio is the total amount of monthly debt you pay out divided by your monthly income. The debt-to-income ratio lets the lender know how much mortgage debt you are able to handle. Pre-qualification Pre-qualification does not guarantee that you will be approved for the loan. If you do not pre-qualify under the conforming, Fannie Mae guidelines, your mortgage broker can discuss several options and offer strategies to qualify you for a loan, which may include:
What is a conforming loan?There are several factors that determine whether a loan is non-conforming. For instance, if you have low credit scores and only 5% down, you would be considered a non-conforming borrower. Also, borrowers who want to purchase or refinance a home at a high loan-to-value (LTV), i.e., 95% or 100%, fall under a non-conforming loan. In addition, if a borrower is unable to verify their income, they are considered to be non-conforming. For instance, self-employed borrowers who do not want to disclose income simply state how much they make on their 1003 application. Stated income loans at high LTV's are non-conforming as well.
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What makes a loan non-conventional?There are several factors that determine whether a loan is non-conventional. For instance, if you have low credit scores and only 5% down, you would be considered a non-conventional borrower. Also, borrowers who want to purchase or refinance a home at a high loan-to-value (LTV), i.e., 95% or 100%, fall under a non-conventional loan. In addition, if a borrower is unable to verify their income, they are considered to be non-conventional. For instance, self-employed borrowers who do not want to disclose income simply state how much they make on their 1003 application. Stated income loans at high LTV's are non-conventional as well.
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