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Q:
What happens after I submit my loan application?
A: You will receive an interview within one business day to confirm
and verify your application. The interview is also intended to
select the most suitable loan program, and ensure a favorable
outcome to your application. If your loan is approved, usually
within 3 days, you will be notified in writing about the terms
of your loan approval and what documentation you must furnish.
Our loan approval will include a comprehensive list of items you
may expect to provide.
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Q:
How long will it take to get approved?
A: Traditional lenders take between 6-8 weeks to approve a loan
because they require all supporting documents up front. We have
reversed this process and can get you approved in less than 3
business days. You will be asked to submit supporting documents
after the approval.
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Q: What documentation will I be required to
provide?
A: The actual documents you will need to provide will vary based
on your situation. For a comprehensive list, contact
us.
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Q:
Can I get a loan without a down payment?
A: In some instances loans are available today with no down payment.
These loans require that you have a good credit and employment
history. First time home buyers may also benefit from such favorable
terms. For more information, please contact one of our mortgage
counselors.
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Q:
What is PMI?
A: PMI is private mortgage insurance, not to be confused with
mortgage cancellation insurance or life insurance. PMI is typically
required on loans where the down payment is less than 20%. This
type of insurance protects the lender from financial loss in the
event of a foreclosure.
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Q:
What are No Income Verification Loans?
A: No Income Verification loans are for those borrowers with non-traditional
sources of income and/or those who cannot properly document their
income earnings. This may include self-employment income, non-taxable
income, etc... To qualify borrowers usually need substantial savings
for a down payment (on purchase loans) or a high equity position
on refinance loans.
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Q:
At what point can I lock my interest rate?
A: Normally, you must have satisfied the terms of your approval
letter before you can lock your loan. Once you decide to lock
your loan, your lock cannot change, whether or not interest rates
go up or down. We do however, extend special lock privileges to
our V.I.P. clients (depending on the circumstances).
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Q:
What is the difference between a fixed rate and adjustable rate
loan?
A: Fixed rate loans have a set interest rate and payments that
do not change over the lifetime of the loan. Adjustable rate loans
are linked to an index and fluctuate as the index rate changes.
Since there is more risk involved with adjustable loans, lenders
often reward borrowers with initial discounted interest rates
that are lower than fixed rate loans. Adjustable loans are normally
recommended for borrowers who do not plan on keeping the loan
for the full term, or for borrowers who want to benefit from lower
payments during the initial term of the loan.
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Q: When does the property need to be appraised?
A: As soon as possible. If you are applying for a purchase loan,
we will order your appraisal and charge it to your credit card.
If you are refinancing, you may need to have your appraisal completed
and prepaid before your apply for your loan. We do however extend
special privileges to our V.I.P. clients, which includes other
payment options.
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Q:
What is APR?
A: APR stands for Annual Percentage Rate and is another way of
recalculating the interest rate of a loan. This rate is the true
cost of a mortgage loan and is usually higher that the note rate
on a loan because it factors in closing costs associated with
a loan. APRs are calculated based on a loan amount after lender
related closing costs(finance charges), rather than the gross
loan amount that is borrowed.
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Q: What are closing costs?
A: Closing costs are all the expenses incidental to the sale of
real estate such as loan fees, title fees, appraisal fees, etc.
For a comprehensive itemization of closing costs that may be associated
with your loan, contact
us.
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Q:
What is a loan escrow (also refered to as a loan impound?
A: When a loan is "escrowed" (or "impounded")
, the borrower pays their property taxes and insurance along with
their monthly mortgage payments. These monies are placed into
an account held by the lender who in turn pays the taxes and insurance
on behalf of the borrower when they are due. This should not be
confused with an "escrow" company. An escrow company is the neutral
third party that is hired to handle the details of your settlement
at closing. In some areas, the escrow company or settlement agent
is an attorney.
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Q:
What is title insurance?
A: Title insurance is an insurance policy issued by a title insurance
company which insures a home owner against title and ownership-related
to errors, omissions or claims. The premiums are determined primarily
by the value of the property or loan amount.
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Q: Should I refinance?
A: There are many variables to consider before taking the refinance
plunge. Do you want a fixed rate? Do you need cash out? Did you
accumulate any negative amortization? For a better picture, contact
us.
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Q:
What is negative amortization?
A: Negative amortization or deferred interest, or reverse accrual
is when your mortgage payment is not sufficient to cover the interest
rate you are being charged. The unpaid interest will be added
to your principal balance and will increase the amount you borrowed.
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Q: What is an ARM and how does it work?
A: An ARM is an adjustable rate mortgage whereby your interest
rate changes periodically. The adjustment period may vary from
1 month to as long as 10 years. With ARMs you normally get a very
competitive initial (teaser) rate depending on your program. Your
interest rate will change at every adjustment period. The rate
is determined by adding two key figures--the index plus the margin.
The index is the fluctuating value that the lender uses to determine
your interest rate changes (such as the prime rate, treasury rates,
etc). The margin is the spread (or add-on) over the index and
is fixed for the life of the loan and determined at the time of
lock. Most loans will have periodic and lifetime caps to protect
you from wild fluctuations.
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Q:
Why do interest rates fluctuate daily?
A: Interest rates fluctuate based on the availabilty of mortgage
funds in the financial marketplace. Mortgage(s) fall into two
general categories: Investment Grade and Portfolio Grade. Investment
Grade mortgage loans are sold in a secondary market that has a
consistent appetite for such loans. This means that loans made
to the homeowner are sold to another financial entity after the
lender makes the loan to the homeowner. The secondary market determines
the yield requirement on these loans based primarily on economic
news and the level of demand for such products during a given
day. With inflationary news, the market will demand higher yields.
The reverse is true with deflationary news. Portfolio Grade loans
lag the market and are usually not as competitive. Portfolio loans
are designed for borrowers with qualifying problems, and as a
result are not in high demand in the financial market place. Portfolio
loans are higher in interest rates because of these reasons.
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Q:
What is a buydown?
A: A buydown is when you pay a premium up front in order to establish
a lower initial rate and/or payment so you may qualify for a given
loan. In certain situations such as new construction, home builders
will subsidize the mortgage to make it attractive to the home
buyer. They are essentially "buying down" the loan by
paying a premium up front, which is normaly built into the cost
of the home
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Q:
What are no point, no fee loans?
A: So called, no point, no fee loans will have hidden costs. These
costs may be in the form of higher interest rates, pre-payment
penalties, larger margins, etc. Whether or not these loans are
for you depends on your particular situation. Generally, for homeowners
who anticipate a short stay in their property, a no cost loan
without pre payment penalty may be the right choice. However,
the homeowner who does not anticipate a move for a long time is
better served with a loan with points, and a lower interest rate.
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Q:
What is a home equity loan?
A: Home equity loans are loans which use the equity in your home
to get cash (Capital) they fall into two different categories:
lines of credit and straight loans. A line of credit acts like
a credit card where you pay interest only on the amount of credit
that is borrowed. As long as you make the minimum monthly payment,
you can borrow up to your limit at any time, or pay down the balance
at any time.
A straight
loan is a fixed amount you borrow and pay back over a pre-determined
time period. Home equity loans are typically available from $20,000
to $200,000. Your credit limit or the amount you are qualified
to borrow is determined by taking a percentage of your home's
appraised value and subtracting any outstanding mortgages on the
property.
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Q:
What are qualifying ratios?
Qualifying Ratios are the ratios lenders use to determine how
your debts measure up to your income. There are two ratios used
in qualifying a borrower: the housing (or top) ratio and the total
debt (or bottom) ratio. The top ratio is determined by dividing
your housing costs (principal+interest+propertytax+hazard insurance+mortgage
insurance+homeowners dues), as applicable, by your income. The
bottom ratio is similar to the formula above, however your minimum
monthly consumer debt obligations (credit cards, auto loans etc.)
are added to your housing expense then divided by your income.
Generally lenders look for ratios of 28 on top and 36 on the bottom
to qualify a borrower. Deviations from these figures are always
made depending on a number of factors. These factors could be:
credit, equity in the property, cash reserves, stable employment,
etc.
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Q: Who are FNMA & FHLMC?
A: FNMA & FHLMC, also known as Fannie Mae and Freddie Mac
respectively are quasi government institutions created by Congress
to purchase conventional home loans from financial institutions
and mortgage bankers. FNMA and FHLMC are the primary buyers of
mortgages in the secondary market and they secure said loans to
sell major investors such as pension funds, insurance companies,
etc. This creates much needed funds for future home owners by
recycling funds back to the lending institutions.
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