FAQs

Do you have questions? We can help! You will find the answers to several frequently asked mortgage questions below.

What is the difference between pre-approval and pre-qualification?
When does it make sense to refinance?
What is a rate lock?
What is the difference between a mortgage broker and a lender?
Will I save money going directly to a mortgage lender?
What is a full documented loan?
What is a loan estimate?
What is a conforming loan?
What is a jumbo mortgage?
What are points?
What is a pre-qualification?

What is the difference between pre-approval and pre-qualification?

The pre-approval process is much more complete than pre-qualification. For pre-qualification, the loan officer asks you a few questions and provides you with a pre-qual letter. 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, much like a cash buyer.

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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.

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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.

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What is the difference between a mortgage lender/banker and a mortgage broker?

A mortgage lender/banker completes the entire loan process "in house". That means the mortgage lender helps you find the best loan product, originates, processes, underwrites, closes and funds your home loan in one place.  A mortgage broker takes your application and then searches for a lender who can underwrite, close and actually fund your loan file.

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Will I save money going directly to a mortgage lender?

Probably. Becauase mortgage lenders control the entire mortgage origination process. Addtionally, because mortgage lenders control the entire process, they do not have to pay a "middle man" for submitting an application.  

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What are some of the things that a lender looks at when I apply for a 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 is a loan estimate?

This new form integrates and replaces the RESPA GFE and the initial TILA disclosures.
o The LE  contains a good faith estimate of credit costs and transaction terms.
o The LE is provided to you in writing.
o The LE will be delivered to you or placed it in the mail no later than the third business day after receiving your application.

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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.

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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 required by the 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 is a pre-qualification?

This is the process of determining whether a customer has enough cash and sufficient income to meet the qualification requirements set by the lender on a requested loan. A mortgage prequalification is based on the homebuyers verbal representation pertaining to their income, expenses, available cash, and liquid assets. A prequalification is not a mortgage commitment because no mortgage processing to confirm home buyers’ verbal representations was done.

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