FAQs

What if I am new at my job?

A new job can work in your favor when you apply for your loan. Loan program guidelines generally look for a 2-year job history in the same line of work, but a job change for a better position is looked on favorably. If you are a recent college graduate, you may be able to obtain a loan even though you do not have a 2-year work history.

What will I need to bring to closing?

The closing will take place at the title company. Each borrower will need to bring a valid driver’s license the day of closing. The funds due at closing must be in the form of either a cashier’s check made out to the title company where your closing will take place or a wire transfer.

What is a fixed rate loan?

A loan which has an interest rate that remains constant throughout the life of the loan, usually available for 30 or 15 years, or even for 20 or 40 years, depending on the lender.

What are my obligations if I fill out a loan application?

You are not obligated to proceed with the loan process should you decide not to at any point; however, we do require $35 to access your current credit report and qualifying score via the three major credit bureaus.

What is the origination fee?

The amount charged for services performed by the mortgage company handling the initial application and processing of the loan.

What are the lenders’ fees?

Lenders fees are costs charged for generating the loan. Examples are origination fees, processing fees or underwriting fees, etc.

What is a discount point?

A discount point is paid to the lender to permanently buy down or lower the interest rate. It is usually a percentage of the loan amount.

What is prepaid interest?  This is the interim interest that accrues on the mortgage loan from the date that you close your loan to the beginning of the period covered by the first monthly payment. For example, if your closing date is scheduled for May 26th, your first mortgage payment will be due July 1st. The lender will collect at closing a per-diem interest amount for the six days between May 26^th and May 31st.

What documents are typically requested when I apply for a mortgage loan?

To issue a Pre-Approval, we will need all the following items: Last two prior years’ Tax Returns – All Schedules, pay stubs for the last 30 days – for all current employment, your last two complete bank statements and your realtor contact information – if applicable.

Once you have signed a purchase contract, we will also need many of the following items:  ⦁A signed purchase agreement contract; ⦁Past two (2) years W-2; ⦁Most recent transaction summary of 401K, IRA, or Mutual Fund Accounts; ⦁         A letter of explanation for any known credit problems; ⦁12 months canceled rent checks or the name and address of your current landlord; ⦁Condo Association contact information (if purchasing a condo only); ⦁DD214 Form (VA loan only); ⦁Fully Executed Divorce Decree – if applicable; ⦁Year-to-Date Profit and Loss Statement (if self-employed only); ⦁Balance Sheet (if self-employed only).

What is PMI and why is it required?

Private mortgage insurance (PMI) is insurance written by a private company that protects the lender from losses in the event the borrower defaults on the mortgage. Borrowers are required to pay the premium for private mortgage insurance. If you make a down payment of less than 20%, even if you have a good credit profile, lenders generally require private mortgage insurance.

What is title insurance?

Title insurance provides the lender and the buyer (if you purchase owner’s coverage) with coverage for losses resulting from specific title defects listed in the policy. In cases where land and property have changed hands over time, there is always the possibility an error has occurred. If an error has occurred, it may be that someone else may be in title to or have an interest in the property where improvements encroach on property lines, or that other similar problems exist. In these scenarios, if you do not have title insurance you could lose your investment in your home. Lenders require “lender’s coverage” to protect their investment which only protects the lender. The owner’s coverage is optional and provides separate coverage for the borrower.

What is an escrow account?

An escrow account is typically established at the time you close your mortgage loan. This account is held by the lender for the future payments of recurring items relating to the mortgaged property, such as real estate taxes and insurance premiums, as they become due. Lenders usually require you to pay an initial amount for each of those items to start the reserve account at the time of closing.