Frequently Asked Questions

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You will find the answers to several frequently asked mortgage questions below.

What is a pre-qualification?

This is the process of determining whether a borrower has sufficient, stable income and assets to meet the lenders guidelines on a requested loan product.  A prequalification will also include a review of a borrower's credit profile, and verification of all facts submitted in connection with a borrowers applications.

What is a rate lock?

A rate lock is a contractual agreement between a mortgage lender and a borrower. There are four components to a rate lock: Interest Rate, Cost/Points, Loan Program, Length of loan with expiration date.

Why Mortgage Brokers are sought out.

A Mortgage Broker May Save You Legwork

Mortgage brokers have regular contact with a wide variety of lenders, some of whom you may not know, because they are in the wholesale channel. A broker also can also help you understand loan offers from other lenders, especially if they contain unattractive payment terms buried in their mortgage contracts.

Time and Efficiency of the Mortgage Broker
In comparison to the large banks, credit unions and national retail mortgage lenders, the mortgage broker is known for speed, availability and efficiency because time is of the essence.

When does it make sense to refinance?

Usually people refinance to save money, either by obtaining a lower interest rate or by reducing the term of the loan. Refinancing is also a way to convert an adjustable loan to a fixed loan or to consolidate debts. The decision to refinance can be difficult, since there are several reasons to refinance. However, if you are looking to save money, try this calculation: Calculate the total cost of the refinance Calculate the monthly savings Divide the total cost of the refinance (#1) by the monthly savings (#2). This is the "break even" time. If you own the house longer than this, you will save money by refinancing. Since refinancing is a complex topic, consult a mortgage professional.

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.

What is the Loan Estimate?

Also called an LE this form is a required disclosure which must be provided to all borrowers within three days of completing a mortgage application.  The loan estimate will clearly describe the terms of the loan offering including a breakdown of costs and an estimate of rate and monthly payment.

What is a conforming loan?

A loan eligible for purchase by the two major Federal agencies that buy mortgages, Fannie Mae and Freddie Mac.

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.

What are points?

Points are an expression of cost or payment for a particular interest rate.  Points are expressed as a percentage of the final loan amount.  For example, 1 point equals 1% which equals 100 basis points...