Frequently Asked Questions

This is a list of the top 10 most frequently asked questions asked from clients during the loan process along with answers to those questions. At this point you may be pre-approved, and if not, I am happy to get you to that point, which leads to the first question that’s usually asked:   

Question #1: What is the difference between pre-qualification and pre-approval? 

Pre-qualification is a lender’s opinion of your ability to purchase a home; pre-approval is an underwriter’s decision that you actually are qualified. When it comes to writing an offer for a home, a pre-approval letter contains much stronger language and evidence to the seller and the listing agent, and often is the determining factor in winning the contract in a competitive bid situation. Once we receive your application and supporting financial documentation, we will quickly pre-approve you. 

Question #2: Is it okay to use Internet statements instead of actual hard copy bank statements to verify my bank and investment or asset accounts? 

Internet statements are allowed only provided they reference your name, address, account number and name of the entity holding your assets. If that information is not on an Internet statement, we will accept it if it has the institution’s stamp and signature verifying anything missing from the statement. Also, an important item – bank and investment statements will always designate the number of total pages. For instance, it may say “1 of 3” or “1 of 5” pages. Always include all pages of your statements, even if there’s nothing on the last page and even if the first page is an advertisement. With all due respect to our underwriters, their job is to assume any missing pages might contain important data. In actuality, it’s what they can’t see that makes missing pages a problem, and is probably still the greatest reason we have to come back to our clients and ask for additional documentation later. 

Question #3: Who orders the appraisal and homeowner’s insurance, and when is it ordered? My processor orders the appraisal for you. 

We usually wait until you have reached inspection resolution before ordering the appraisal to avoid an unnecessary charge should the inspection reveal defects that would cause you not to purchase the property. You will then find your own insurance company and order the insurance policy, but my processor will give them the details of what must be covered and how. I am happy to provide you with a list of insurance agents from which to choose. We will make sure that all deadlines for your loan to close on time are met, so you will need to order your inspectionyou’re your insurance as early as possible. The appraisal will be ordered in time to meet the appraisal date on your contract. 

Question #4: What is meant by “locking in my interest rate”, and when and how do I lock? 

Locking your interest rate refers to guaranteeing a specific interest rate on your loan for a specific period of time. That period of time is called the lock period. The lock period guarantees your rate through the loan approval process until you close on your loan. I will ensure your loan closes prior to the expiration date of your lock. There are varying lock periods, including extremely long term lock periods of 120,180, even 270 & 360 days. You should never worry about how much time you need for your lock with all the available choices. All things being equal, shorter lock periods provide better interest rates, and as lock periods increase, so does the cost of the lock. I will ensure you get the minimum lock period for the time required to close your loan at that rate, and keep your rates at the lowest possible level for your situation. Remember though, the market can be volatile, and rates move with market activity up and down even within a single day. If you are concerned that rates are going up significantly, call me and let’s lock your rate. The bottom line is that I work for you, and I’ll do exactly what you wish concerning your rate lock. I will give you my advice if you ask, but the final decision is yours. You can lock your rate once you have a property. If you choose to wait to lock your rate hoping rates will improve, we will do our best to advise you of market changes and help you get the best rate. You must, however, lock your rate at least 5 days prior to your closing. 

Question #5. Do you sell your loans? Another way of asking that is, who will collect my payments after closing the loan? 

Since we are a mortgage banker, we do not service the loans we offer, but instead we sell them to the investor with whom we locked your rate. The means we originate your loan, then we process, underwrite, close, and fund your loan from our office. That gives us total control of every step, and there are no excuses for anything going wrong with your loan. I’m able to shop your loan with multiple investors to make sure that we obtain a competitive interest rate for the best loan program for you. After your loan has closed the investor that we’ve locked with is going to be the lender to whom you will make your payments. This is very important: I am there for you for the long run, so if you ever have a concern or a problem with your mortgage loan I want you call me right away. We can represent you to the investor that currently services your loan. 

Question #6. What are origination and discount points? 

Origination and discount points are both charged as a percentage of your loan amount. If it is a 1% discount or 1 origination point, it would be 1% of the loan amount. If your loan amount were 200,000, then your origination fee or discount point would be $2,000. They are both charges that can be used by your mortgage professional to get you into the best loan product possible at that time. They are simply put a pricing tool to get you a “better” rate. An origination fee or discount point can help you obtain a lower rate than what is available at the time. The total amount of discount points you decide to pay will determine the interest rate you can obtain. Generally speaking every discount point will reduce a fixed rate by one-quarter percent, and an adjustable rate mortgage by approximately 3/8 of a percent. The two are really synonymous, and are treated the same when it comes to your closing statements and in some cases your taxes, however it is important to understand the varying reasons you would pay either and what you get when you pay such fees. In either case, they should be considered a sometimes valuable but not always necessary means to obtain your loan, as there are plenty of loan programs that don’t require any such fees. We will discuss this more specific to your own situation when you select your loan program and we lock your rate. 

Question #7. Once I sign my application, am I committed to borrow the money? 

A lot of people believe that once they’ve signed the loan application, they’re obligated to do that loan. That is absolutely not the case; in fact, none of the documents that you have received from me are contracted until you are at the closing and have signed your mortgage note and other documents. All we are doing with an application is using that information to approve you for the loan program for which you are applying, making it possible for you to secure the money you need to borrow to purchase or refinance your home. What I work hard to do is provide you with so much value and make the experience so easy and worry-free for you, that you will feel most comfortable and confident completing your loan with me and can’t imagine needing to go anywhere else. 

Question #8. What is APR and why is it higher than the rate I thought I was getting? 

This will appear on your Truth-In-Lending disclosure, a document you get immediately after signing your loan application. The rate in the upper left hand corner of the Truth-In-Lending is known as the “APR,” or annual percentage rate. Quite often the APR is higher than the actual note rate, or the actual quoted interest rate. You may or not be locked at this rate. The APR is different than your note rate or the rate that you were quoted, because the APR includes not only the interest you are paying but also includes some of the pre-paid costs and closing fees required to obtain your financing. The rate on the Good Faith Estimate (another document you receive immediately upon signing your loan application) is the note rate, or your actual interest rate followed by your payment. Simply stated, if there were no costs in obtaining your financing, your note rate and APR would be the same. If you are comparing two loans with the same parameters, such as 30 year fixed at 7.5%, any difference in the APR will indicate which loan program contains the highest costing loan. It is not possible to compare different loan programs this way, and especially variable rate loans that have too many differences to truly compare. 

Question #9. How will I be kept updated on the status of my loan? 

I will be providing frequent communication to you and will be available during regular business hours. You’re always welcome to call me directly, and if you get my voicemail, be assured I will return your call as promptly as possible. It is my responsibility to keep you updated on the status of your appraisal, survey, final loan approval, homeowners insurance and title insurance. Feel free to call me anytime! 

Question #10. Where will I be closing, how much do I need to bring to closing, and can I bring a personal check? 

Your loan closing will usually take place at either the title company or the realtor’s office. We will call you within three days of your closing to reconfirm the terms of your loan, and to give you an exact dollar amount so you have time to obtain any funds needed from you at closing. You can either have funds wired directly from your bank to the title company or you can get a cashier’s check. Personal checks under $100 or cash are never accepted. I will call you three days from closing to give you the exact amount and to coordinate the delivery of copies of your loan documents to you so you can review them prior to closing. This will give you an opportunity to ask any final questions, and make sure all information is correct.