Q1:
What is
Pre-qualification?
A1:
The
process of
determining how much
money a prospective
homebuyer will be
eligible to borrow
before a loan is
applied for.
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Q2:
What is a
Pre-approval?
A2:
This
allows you the
ability to get
approved for a
specific loan amount
prior to finding the
home you want to
purchase. The loan
is underwritten and
the lender commits
to a specific loan
amount. This can
give you a great
advantage with a
homeowner or realtor
if someone else is
interested in the
same home at the
same time. Also, if
you're thinking
about refinancing
and want to payoff
creditors or take
cash out, but not
sure you would
qualify – you can
apply for a
pre-approval and
could save on the
cost of getting an
appraisal on your
home until you know
if you qualify.
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Q3:
What
information do I
need to provide
when I apply?
A:3
When
you're ready to
apply, you need the
most current
information on your
monthly income and
debt, a total of
your assets, your
social security
number, and
employment
information.
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Q4:
Is there a
cost to apply? If
so, how much?
A4:
This
varies from lender
to lender. Some
lenders charge an
application fee to
cover actual out of
pocket expenses and
money for their
efforts. Other
lenders charge a
reasonable credit
report and appraisal
fee, which cover out
of pocket expenses.
This could range
anywhere from $50.00
(credit report only)
to $500.00.
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Q5:
Where do I
close and sign for
my loan?
A5:
Typically
your closing will
take place at a
title closing
agent’s or
attorney’s office.
When all parties
agree upon a closing
date, we will
provide you with the
exact location and
time of your loan
closing.
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Q6:
What documents
will I receive at
closing?
A6:
At closing
you will sign and
receive copies of
all legal documents
that will be
recorded and placed
on record regarding
the property that
you are purchasing
or refinancing.
Also, you receive
all pertinent
information
regarding your
mortgage payment and
servicing
information for your
new loan.
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Q7:
How long will
the loan process
take?
A7:
Loan
approval and funding
time frames vary
depending on the
type
of transaction and
the complexity of
your personal
finances. The
process can take, on
average, anywhere
from 14–60 days.
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Q8:
What is a
lock-in?
A8:
The
lock-in represents
the interest rate
you choose and will
be the interest rate
used to factor your
monthly payment. The
lock-in secures the
interest rate during
the process of your
loan approval as
long as your loan
is processed and
closed prior to the
rate expiration
date. This date is
given to you when
you lock-in the
rate.
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Q9:
When can I
lock-in my rate?
A9:
You can
lock or float your
interest rate at any
time during the
process of your
loan. The Loan
Officer will discuss
these options with
you upon taking your
loan application. If
you are submitting
your loan
application via the
Internet, a loan
officer will be
contacting you to
discuss your
interest rate lock
or float options.
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Q10:
How long is my
rate lock valid?
A10:
Depending
on the type of
transaction and the
time you need, lock
periods can be valid
anywhere from 10
days up to 180 days.
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Q11:
Can I pay my
loan off early, can
I pay
extra each month?
A11:
Yes, you
can make principal
payments at anytime
during your loan
term or pay the loan
in full. You can
also pay a set
amount each month
above the normal
payment due or make
lump sum payments
periodically.
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Q12:
What is an
escrow account?
A12:
An account
maintained by the
lender to collect
funds from the
borrower in order to
pay the taxes and
property insurance
due on the loan.
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Q13:
What is PITI?
A13:
This
represents the
accounts your money
is applied to when
you
make your monthly
mortgage payment:
P – Principal
I – Interest
T – Taxes
I – Insurance
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Q14:
How do I know
what loan is best
for me?
A14:
Review
your current
situation and future
goals, then answer
the following
questions to help
determine the
direction you may
wish to take. Also,
discuss these
questions with your
loan officer to help
determine the type
of loan you need.
-
How
long do you expect to stay in
the house?
-
Which is more important, low
monthly payments, or low closing
costs?
-
Will my income increase or
decrease in the next three
years?
-
How
comfortable are you with your
monthly payment potentially
increasing?
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Q15:
What is the
difference between a fixed rate
and adjustable rate mortgage?
A15:
With a fixed rate mortgage, the
interest rate and payment remains
constant over the life of the loan.
Whereas, with an adjustable rate
mortgage, the interest rate can
either increase or decrease, based
upon
the terms of the loan. This could
cause the monthly payments to
increase
in order to have the loan paid in
full by maturity.
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Q16:
What is a
convertible mortgage?
A16:
A convertible mortgage allows you to
convert your adjustable rate
mortgage to a fixed rate mortgage
for a flat fee during a specific
time frame. This fee can range from
$250 - $500 per lender.
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Q17:
What is a
balloon mortgage?
A17:
A loan with a fixed rate payment for
the first five to seven years of
the loan, then a lump sum payment is
due on the balance of the loan at a
specified date when the balloon loan
matures.
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Q18:
What is a
conventional loan?
A18:
A mortgage not guaranteed by VA or
insured by FHA, FMHA or State Bond
Agencies.
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Q19:
What is a
jumbo loan?
A19:
A conventional loan that exceeds the
maximum agency (Fannie Mae, Freddie
Mac) mortgage amount guidelines for
a conventional loan.
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Q20:
What is PMI?
A20:
This stands for Private Mortgage
Insurance. On a conventional loan
PMI is required if you borrow over
79.99% of your appraised value. This
protects the lender against
financial loss if the loan is
defaulted.
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Q21:
What is
mortgage life insurance?
A21:
This insurance would pay the balance
owed on your mortgage home loan in
the event of your death during the
term of the mortgage.
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Q22:
What is hazard
insurance?
A22:
This represents the insurance that
protects your investment in your
home. It provides compensation to
the insured in case of property loss
or damage.
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Q23:
What are
points?
A23:
Points represent an origination fee
charged by the lender and loan
discount points sometimes charged on
the note rate to lower the interest
rate.
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Q24:
What is a
buy-down?
A24:
A fee paid to lower the interest
rate on a mortgage. The buyer,
seller, or any other interested
party may pay it. A permanent
buy-down would lower the rate for
the entire term of the mortgage,
while a
temporary buy-down lowers the rate
for a specified shorter term,
generally 3 years or less.
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Q25:
What is an
origination fee?
A25:
The origination fee is charged by
the lender, and is typically
1% of the loan amount you borrow.
This fee is used to cover expenses
during the process of the loan.
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Q26:
What are
closing costs?
A26:
Fees and costs that both buyer and
seller must pay at closing.
They generally include: origination
fee, discount point, appraisal fee,
credit report, title search,
recording fees, and other costs
described
in the HUD I at settlement.
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Q27:
What is
the Code of Conduct for Home Valuation?
A27:
The Home
Valuation Code of Conduct (the Code) is the
result of a joint agreement between Freddie
Mac Fannie Mae, the Federal Housing Finance
Agency (FHFA), and the New York State
Attorney General to enhance the independence
and accuracy of the appraisal process, and
provide added protections for homebuyers,
mortgage investors and the housing market.
Effective
Date
Effective May
1, 2009, Freddie Mac will no longer purchase
mortgages from Sellers that do not adopt the
Code with respect to single-family mortgages
that are delivered to Freddie Mac.
Also, effective
for single-family mortgages with loan
application dates on or after May 1, 2009,
Freddie Mac Seller/Servicers must represent
and warrant that the appraisal report is
obtained in a manner consistent with the
Code.
The sale of the
following mortgages is excluded from the
representation and warranty: FHA/VA
Mortgages, Section 184 Native American
Mortgages, and Section 502 Guaranteed Rural
Housing Mortgages.
Independent
Valuation Protection Institute
Freddie FHFA,
Fannie Mae and other mortgage market
participants regarding the Independent
Valuation Protection Institute (Institute).
The Institute has not yet been established,
and therefore, the provisions regarding the
Institute are not yet effective.
For more
information
-
Download
the
Home Valuation Code of Conduct fact
sheet [PDF 88K]
-
Download
the
Home Valuation Code of Conduct [PDF
25K]
-
The Home
Valuation Code of Conduct (the Code) is
the result of a joint agreement between
Freddie Mac Fannie Mae, the Federal
Housing Finance Agency (FHFA), and the
New York State Attorney General to
enhance the independence and accuracy of
the appraisal process, and provide added
protections for homebuyers, mortgage
investors and the housing market.
Effective Date
Effective
May 1, 2009, Freddie Mac will no longer
purchase mortgages from Sellers that do
not adopt the Code with respect to
single-family mortgages that are
delivered to Freddie Mac.
Also,
effective for single-family mortgages
with loan application dates on or after
May 1, 2009, Freddie Mac Seller/Servicers
must represent and warrant that the
appraisal report is obtained in a manner
consistent with the Code.
The sale of
the following mortgages is excluded from
the representation and warranty: FHA/VA
Mortgages, Section 184 Native American
Mortgages, and Section 502 Guaranteed
Rural Housing Mortgages.
Independent Valuation Protection
Institute
Freddie
FHFA, Fannie Mae and other mortgage
market participants regarding the
Independent Valuation Protection
Institute (Institute). The Institute has
not yet been established, and therefore,
the provisions regarding the Institute
are not yet effective.
For more
information
|
