To Frequently Asked Questions
What factors affect my interest rate?
Mortgage program, Credit Score, Loan-to-Value, property type, number of units and occupancy type all have a bearing on the pricing of an interest rate. Rate pricing, in general is impacted by the Mortgage-backed Securities market. The 10 Yr. Bond is also a good gauge on the trending of rate pricing on a given business day.
How much money do I need to buy a house?
Even with no down payment programs such as VA and USDA, a Buyer must still have funds to cover closing costs and funds needed to establish the initial escrow account for future insurance and tax bills. As a ballpark estimate, the sum of closing costs and funds for escrow set up generally range from 5 – 6 % of the purchase price of the home.
Do you offer any first-time homebuyer programs?
Yes, the Fannie Mae HomeReady and Freddie Mac HomePossible programs are geared towards first-time borrowers. FHA, VA and USDA are also useful programs for first-time homebuyers as they either offer low to no down payment and often provide more attractive interest rates compared to Conventional mortgage programs.
What is the difference between using a mortgage broker versus a local bank?
- A Mortgage Broker assists the client in shopping for the best mortgage program available to meet their specific needs. Brokers have more lending options available due to having multiple lender relationships. Local banks and credit unions tend to be more conservative and often have “Underwriting Overlays” where they put in place more stringent underwriting guidelines of their own compared to the guidelines within the actual mortgage program being offered. This can lead to being denied a mortgage by a local bank or credit union, but being able to obtain a mortgage from a mortgage broker.
- A Mortgage Broker does not lend money, but facilitates the mortgage process from application to funding for the client. A Broker only offers mortgages and is able to focus all of his/her attention on the customer’s needs rather than seeking to sell additional products. A Mortgage Broker provide more direct, personal service during the mortgage process. Customers are not “handed off” to another person or department multiple times throughout the mortgage process. A Mortgage Broker is your contact the entire way through the process.
- A Mortgage Broker is typically found in the market in which you are searching for your new home and are a part of the community whereas loan originators from large, online lenders are working from an office in a city very much remote from the customer. The customer has no ability to meet face-to-face to discuss the mortgage process, have documents explained and have questions answered. The latter can lead to a poor service experience for the customer.
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What steps should I take to prepare myself when shopping for a mortgage?
Have income and asset documentation to reference when you call in to our office to work on your initial pre-approval. It is vitally important that accurate information is provided at that time so that there are no issues obtaining the pre-approval. We may ask for certain documents from you up front in order to ensure that your pre-approval is as iron clad as possible.
What is the general process of getting a mortgage or refinancing?
The very first step for either process is an initial application for pre-approval. This can be performed over the phone, via email or in person. You will want to have your employment, income and asset documentation available to reference during this application interview process.
That data is then utilized along with your credit report in order to run your file through an Automate Underwriting System (AUS). Fannie Mae, Freddie Mac and USDA each have their own, proprietary AUS. That system determines eligibility and determines the documentation that will be necessary in order to obtain a full mortgage approval from a Lender’s Underwriter.
Once you elect to pursue the mortgage with us, we schedule a meeting to review the application and disclosures with you so that you have an understanding of what the terms of your mortgage are and collect income, asset and any other documentation from you that will be needed in order to pursue a full mortgage approval by the Lender’s Underwriter.
Your file then is run back through the AUS , your file is put in a prescribed order and submitted to the Lender for the Underwriter to review. The appraisal and title search are ordered at this point as well.
The Underwriter reviews all documentation provided, including appraisal report and title documents once they are available, and determines if the transaction meets the requirements (i.e. underwriting guidelines) of the mortgage program. The Underwriter provides an update as to any additional information/documentation needed in order to obtain a full mortgage approval or clears the loan to close.
Once the loan is Clear to Close (i.e. fully approved by the Underwriter), your file makes its way to the Lender’s Closing Department who verbally verifies the your employment within 10 days of closing, continues to monitor your credit for new credit inquiries/debts (it is very important to not permit anyone to pull your credit thru the date of your closing for this reason) and prepares the initial Closing Disclosure for your transaction.
You must electronically sign and/or acknowledge the receipt of this document at least 3 business days prior to your closing date.
Once that is done and all other processes are complete, your mortgage loan documents are prepared by the Lender’s Closing Department and are sent to the Settlement Company that will be conducting your closing. The Lender also arranges to wire the loan proceeds to the Settlement Company as well.