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What is the difference between pre-approval and pre-qualification?
The pre-approval process is more complete than pre-qualification. For pre-qualification, the loan officer asks you a few questions and provides you with a pre-qual letter. A full pre-approval includes all the steps of a full approval, except for the appraisal and title search. Pre-approval can put you in a better negotiating position.
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When does it make sense to refinance?
Refinancing might be a good decision for you if you wish to get out of a high interest rate loan to take advantage of lower rates, or if you have an adjustable rate mortgage (ARM) and want a fixed rate loan, or vice versa. You may wish to convert your mortgage to an ARM with a lower interest rate and/or a better rate and payment cap than the ARM you already have. Some borrowers use their equity to get cash for home improvements, children’s’ education and major purchases. A Dearie Morgage professional can help you determine if it makes sense for you to refinance your mortgage from a financial point of view. The broker can also examine other aspects of refinancing, such as whether you plan keep the house long enough to make the expense of refinancing worthwhile. The decision to refinance can be difficult, since there are several reasons to refinance. Since refinancing is a complex topic, consult a Dearie Mortgage professional.
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What is a rate lock?
A rate lock is a contractual agreement between the lender and buyer. There are four components to a rate lock: loan program, interest rate, points, and the length of the lock.
Dearie Mortgage will work together with wholesale lenders to provide you with the best rate available in the market, possibly floating down if rates are dropping.
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What is the role of a mortgage broker, and specifically, what services does a mortgage broker provide?
A mortgage broker counsels you on the loans available from different wholesalers, takes your application, and usually processes the loan which involves putting together the complete file of information about your transaction including the credit report, appraisal, verification of your employment and assets, and so on. When the file is complete, but sometimes sooner, the lender "underwrites" the loan, which means deciding whether or not you are an acceptable risk.
A Dearie Mortgage Professional will help you turn your dream of home ownership into a reality. Specifically, we are independent real estate financing professionals who specialize in the origination of residential and commercial mortgages. We shop around for the best mortgage for your particular situation and have access to, and relationships with, several lenders and dozens of programs to help you achieve that dream. We can arrange financing for your purchase of any residential or commercial property, including homes, condos or COOPs.
We can pre-qualify and pre-approve you for a mortgage. In doing so, we will run your credit report and review it with you, ask questions about your assets, income and the property you are planning to finance. We will provide professional advice, information and assistance concerning all aspects of your mortgage, and guide you through the process step by step from application to closing. We will provide you with an estimate of the expenses associated with a real estate closing.
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Will I save money going directly to a mortgage lender rather than using a mortgage broker?
Not necessarily. In fact, if you are a reasonably astute shopper, you will probably do better dealing with a mortgage broker. Mortgage brokers do not add any net cost to the lending process, because they perform functions that would otherwise have to be done by employees of the lender. Furthermore, because mortgage brokers deal with multiple lenders -- in a typical case, 10 to 15, sometimes more -- they can shop for the best terms available on any given day. In addition, they can find the lenders who specialize in various market niches that many other lenders avoid, such as loans to self employed applicants, those with poor credit ratings, loans to borrowers who do not intend to occupy the property, loans with minimal or no down payment, and so on.
A mortgage broker can help you turn your dream of home ownership into a reality. Dearie Mortgage Group has been doing so since 1988.
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What is a full documented loan?
Both income and assets are disclosed and verified, and income is used in determining the applicant's ability to repay the mortgage. Formal verification requires the borrower's employer to verify employment and the borrower's bank to verify deposits. Alternative documentation, designed to save time, accepts copies of the borrower's original bank statements, W-2s and paycheck stubs.
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What are the other types of loans?
Stated income/verified assets: Income is disclosed and the source of the income is verified, but the amount is not verified. Assets are verified, and must meet an adequacy standard such as, for example, 6 months of stated income and 2 months of expected monthly housing expense.
Stated income/stated assets: Both income and assets are disclosed but not verified. However, the source of the borrower's income is verified.
No ratio: Income is not disclosed or verified and is not used in qualifying the borrower. The standard rule that the borrower's housing expense cannot exceed some specified percent of income, is ignored. Assets are disclosed and verified.
No income: Income is not disclosed, but assets are disclosed and verified, and must meet an adequacy standard.
Stated Assets or No asset verification: Assets are disclosed but not verified, income is disclosed, verified and used to qualify the applicant.
No asset: Assets are not disclosed, but income is disclosed, verified and used to qualify the applicant.
No income/no assets: Neither income nor assets are disclosed.
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What is a good faith estimate?
Purchasing or refinancing real estate involves several fees and charges, some by the lender and some by other parties. The closing costs include fees charged by attorneys, closing agents, title companies, insurers and appraisers, states and counties (taxes). A Good Faith Estimate is an estimate of these fees and charges and is provided to you by your mortgage broker. Do not hesitate to ask your broker if you have any questions about specific fees or charges.
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What is a conforming loan?
A loan eligible for purchase by the two major Federal agencies that buy mortgages, Fannie Mae and Freddie Mac.
The Federal National Mortgage Association is known as FNMA or Fannie Mae. The Federal Home Loan Mortgage Corporation is known as FHLMC, or Freddie Mac. They are federally chartered corporations that are private companies, owned entirely by shareholders. They use private risk capital to help families of modest means achieve homeownership.
Fannie Mae (FNMA) and Freddie Mac (FHLMC) provide money in the secondary mortgage market which helps to replenish the supply of money available for mortgages and ensures that money continues to be available for new home purchases. They do this by purchasing mortgages from the mortgage lenders who originate the loans. Then they sell bonds backed by these mortgages to private investors through the securities market.
A wide variety of fixed and adjustable rate products are offered in their programs. Many people can be eligible to receive these loans, but the loans must meet certain criteria, such as loan limits. The current Fannie Mae/Freddie Mac loan limit for a first mortgage on a single family home is $417,000. New loan limits are announced every year. Mortgages higher than this amount are referred to as jumbo or non conforming loans.
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What is a jumbo mortgage?
A mortgage larger than the maximum eligible for conforming purchase by the two Federal agencies, Fannie Mae and Freddie Mac.
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What are points?
It is an upfront cash payment sometimes required by a lender as part of the charge for the loan, expressed as a percent of the loan amount; e.g., "2 points" means a charge equal to 2% of the loan balance.
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What are the questions I should ask a mortgage broker in our initial contact?
You should ask a mortgage broker to run your credit report and review it with you. You should ask for help in determining how much of a mortgage you can afford, once you have provided a few details about your assets, income and plans. Ask for a few different choices in mortgage products to see which one is right for you.
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