Frequently Asked
Questions:

• How does the loan process work?
• How do I make the loan process go faster?
• Should you talk to a mortgage professional before house hunting?
• What information will be needed for the application?
• Should I consider a fixed or adjustable rate mortgage?
• What is the difference between the interest rates and A.P.R.?

An overview of the loan process:

Make no mistake, there's a lot involved in getting a mortgage loan. You wouldn't be here on our website if you could fill out a one-page application and get the best loan for you funded the same day. The good news is that we do most of the heavy lifting, so you can concentrate on what's important – preparing to move into your new home, saving money, or making plans for your home equity check.

There are four main steps involved in getting a loan. You'll see that we've made your part in them as easy as possible, and we do the work! That's what we're here for.

Step 1: Determine how much you can borrow

This is a function of a several things. How much of a monthly payment can you afford? And given your unique credit and employment history, income and debt, and goals, how much will a lender loan you? You can get a rough idea of the right monthly payment by using the mortgage calculators available on our website. We'll also help you through different scenarios by asking a few simple questions. Based on standard lender guidelines, we'll get you a good idea of what kind of terms and loan program you can expect to benefit most from.

Step 2: Pre-qualify for your loan

This is where the rubber meets the road and you save the most money. You supply information about your employment, your assets, your residence history, and so on. We get your permission to run your credit report. After reviewing your information, we give you a Pre-Qualification Letter. Handle it with care -- to a home seller, it's like a suitcase full of cash! Your realty agent will use your Pre-Qual (as they may call it) to make the best offer on the home you choose, and the seller knows you're pre-qualified. It gives you buying clout! And while you're picking out the home that's right for you, we're busy finding the loan that's right for you.

Step 3: Apply now! We make it easy

Once you've made an offer and it's been accepted, it's time to complete the loan application. It couldn't be easier, and you can do it online, right here at our website. When the time is right, we'll order an appraisal of your new home.

Step 4: Your loan is funded

Once your loan is approved, your realty agent and the seller's agent will work together to designate an escrow/title company to handle the funding of your loan. We'll coordinate with the escrow company to make sure all the papers your lender will need are in order, and you'll sign everything at the escrow/title company's office.
You've answered a few questions, given us some detailed information, applied online, and next thing you know, you're moving in!

Get Your Loan Faster!
5 ways to make the loan process go faster

We should say that "working with us" is the first way to make the loan process go faster! When you let us help you find the loan that's right for you, you truly are taking advantage of some of the area's best technology and expertise to get a loan decision and funding on your loan quickly.

But here are five "other" ways you can speed up the process of getting a mortgage loan:

1. Have everything ready and in one place. On our website, you'll find a list of things you might need in support of your mortgage application. If you get them all together and keep them in a safe, portable place like a special pouch or folder, you can cut down on time spent rooting around for things we may need. Also, you'll help cut down on your own anxiety and confusion.
2. Be honest and complete when you fill out your application. "Fudging" your employment or residence history or omitting open credit accounts you'd rather not have considered doesn't increase your chances of getting a favorable loan. In every case, fudging or omitting information make getting a loan more difficult and time consuming.
3. Respond promptly to requests for additional information. During processing, we may need additional information. Provide it as soon as you get the request, or return the call as soon as you get the message.
4. Be prepared to explain derogatory items in your credit report. This is really part of number 2 above. If you had an illness or a divorce where you missed or made late payments, or you have other instances of late payments or delinquencies on your credit report, be prepared to explain them. Be honest, and don't be nervous! The loan processor isn't judging you; they're trying to fill in all the blanks in their paperwork.
5. Let the appraiser in! The appraisal is one of the lengthiest parts of the mortgage loan process. Studies have shown that the single biggest factor in appraisal "lag time" is the appraiser's inability to reach the homeowner to make an appointment. If you're refinancing and the appraiser calls to make an appointment, make it as soon as convenient for both of you.

And remember that the appraiser doesn't want to buy your house. He or she will say what the house is worth clean and tidy and in reasonable repair, even if you have some dirty laundry on the laundry room floor or dirty dishes in the sink. Cleaning doesn't get you a higher appraisal! However, letting the appraiser in as soon as possible helps get a loan faster!

Should you talk to a mortgage professional before house hunting?

Absolutely! Even if you haven't so much as picked out houses to visit yet, it's important to see your mortgage professional first. Why? What can we do for you if you haven't negotiated a price, and don't know yet how much you want to borrow?

When we pre-qualify you, we help you determine how much of a monthly mortgage payment you can afford, and how much we can loan you. We do this by considering variables such as your income, your employment and residence situations, and your available funds for down payment and required reserves. It's short and to the point, and we keep the paperwork to a minimum!

Once you qualify, we give you what's called a Pre-Qualification Letter (your real estate agent might call it a "pre-qual"), which says that we are working with you to find the best loan to meet your needs and that we're confident you'll qualify for a loan for a certain amount.
When you find a house that catches your eye, and you decide to make an offer, being pre-qualified for a mortgage will do a couple of things. First, it lets you know how much you can offer. Your real estate agent will help you decide on an appropriate offer, but being pre-qualified gives you the confidence to know you can follow through.

More importantly, to a home seller, your being pre-qualified is like you walked into their house with a suitcase full of cash to make the deal! They won't have to wonder if they're wasting their time because you'll never qualify for a mortgage to finance the amount you're offering for the home. You have the clout of a buyer ready to make the deal right now!

You can always use the calculators available on our website to get an idea of how much of a mortgage you can afford – but it's important to meet with us. First and foremost, you'll need a Pre-Qualification Letter! Additionally, we may be able to find a different mortgage program that fits your needs better.

What information will be needed for the application? How is this information kept private?

Any loan application you submit over our website is 100 percent, fully secure. And we never, ever share it with anyone except by permission – that is, if you're giving us information you want us to use to get you the best loan. In turn, we are bound by federal law to keep your information secure.

Here is a list of the information our underwriters may need in order to review for your loan application.

FOR MOST LOANS:

• Social Security Number, for borrower and co-borrower if any
• Employment History: for the last two years, employment dates, addresses, salary
• Current pay stubs or W-2 forms.
• Checking and Savings Accounts and Certificates of Deposit: location of bank accounts, account numbers and balances, address of bank if out of town, last 2 months' statements
• Stocks, Bonds, and Investment Accounts: broker's name and address, description of stocks, bonds, etc., last 2 months' statements or copies of stock certificates
• Life Insurance Policies: insurance company, policy number, face amount, cash value, if any
• Retirement Plan: approximate vested interest value, copy of latest statement
• Other Assets: market value of personal and household property
• Liabilities and Other Non-Mortgage Debt: creditors names, addresses, account numbers, monthly payments and balances
• For All Financing: evidence of Social Security Number and photo identification

If you're self-employed: Two years tax returns, profit and loss statements (both company and personal if separate), current balance sheet and profit and loss statement if more than two months into the new fiscal year.

If you have income from:

• Commission
• Overtime
• Bonus
• Partnership
• Rental Property
• Trust
• Notes Receivable
• Interest/Dividends

You may need two years' personal federal tax returns

If employed in family business: personal federal income tax returns and all schedules for the past two years

If divorced or separated: complete executed divorce decree and settlement agreement, payment history of alimony/child support over the past 12 months, if it is a financial obligation. If you choose to have this be considered as part of your income (you don't have to), be prepared to provide 12 months canceled checks or bank statements reflecting income deposits.

IF YOU OWN REAL ESTATE:

Name and address of all mortgage lenders for the past 24 months, account numbers, monthly payments and balances

If you've sold your home but not closed: A copy of the sales contract.

If you've sold your home, closed, and you will use the proceeds for your new down payment: A copy of the HUD-1 Uniform Settlement Statement.

IF YOU RENT:

• Name, address and phone number of landlords for the past 24 months

IF YOU'RE BUYING A HOME:

• Purchase sales contract or offer to purchase and all addenda: furnish contract with original signatures of buyer and seller
• If a source of your down payment is a gift: name, address and relationship of donor. Gift funds will be verified in both the donor and recipient's accounts. Note: Not all loan programs allow gifts to be part of your down payment.
• For VA Financing: DD214 and Certificate of Eligibility.
• For Construction/Perm Loan: signed construction with cost breakdown, builder plan and specifications.

What are the advantages of fixed rate versus adjustable rate loans?

With a fixed-rate loan, your monthly payment of principal and interest never changes. Your property taxes may go up (we almost said down, too!), and so might your homeowner's insurance part of your monthly payment, but generally with a fixed-rate loan your payment will be very stable.

Fixed-rate loans are available in all sorts of shapes and sizes: 30-year, 20-year, 15-year, even 10-year. Some fixed-rate mortgages are called "biweekly" mortgages and shorten the life of your loan. You pay every two weeks, a total of 26 payments a year -- which adds up to an "extra" monthly payment every year.

During the early amortization period of a fixed-rate loan, a large percentage of your monthly payment goes toward interest, and a much smaller part toward principal. That gradually reverses itself as the loan ages.

You might choose a fixed-rate loan if you want to lock in a low rate. If you have an Adjustable Rate Mortgage (ARM) now, refinancing with a fixed-rate loan can give you more monthly payment stability.

Adjustable Rate Mortgages – ARMs, as we called them above – come in even more varieties. Generally, ARMs determine what you must pay based on an outside index, perhaps the 6-month Certificate of Deposit (CD) rate, the one-year Treasury Security rate, the Federal Home Loan Bank's 11th District Cost of Funds Index (COFI), or others. They may adjust every six months or once a year.

Most programs have a "cap" that protects you from your monthly payment going up too much at once. There may be a cap on how much your interest rate can go up in one period – say, no more than two percent per year, even if the underlying index goes up by more than two percent. You may have a "payment cap," that instead of capping the interest rate directly caps the amount your monthly payment can go up in one period. In addition, almost all ARM programs have a "lifetime cap" – your interest rate can never exceed that cap amount, no matter what.

ARMs often have their lowest, most attractive rates at the beginning of the loan, and can guarantee that rate for anywhere from a month to ten years. You may hear people talking about or may have read about what are called "3/1 ARMs" or "5/1 ARMs" or the like. That means that the introductory rate is set for three or five years, and then adjusts according to an index every year thereafter for the life of the loan. Loans like this are often best for people who anticipate moving – and therefore selling the house to be mortgaged – within three or five years, depending on how long the lower rate will be in effect.

You might choose an ARM to take advantage of a lower introductory rate and count on either moving, refinancing again or simply absorbing the higher rate after the introductory rate goes up. With ARMs, you do risk your rate going up, but you also take advantage when rates go down by pocketing more money each month that would otherwise have gone toward your mortgage payment.

What is the difference between the interest rate and the A.P.R.?

You'll see an interest rate and an Annual Percentage Rate (A.P.R.) for each mortgage loan you see advertised. The easy answer to "why" is that federal law requires the lender to tell you both.

The A.P.R. is a tool for comparing different loans, which will include different interest rates but also different points and other terms. The A.P.R. is designed to represent the "true cost of a loan" to the borrower, expressed in the form of a yearly rate. This way, lenders can't "hide" fees and upfront costs behind low advertised rates.

While it's designed to make it easier to compare loans, it's sometimes confusing because the A.P.R. includes some, but not all, of the various fees and insurance premiums that accompany a mortgage. And since the federal law that requires lenders to disclose the A.P.R. does not clearly define what goes into the calculation, A.P.R.'s can vary from lender to lender and loan to loan.

The A.P.R. on a loan tied to a market index, like a 5/1 ARM, assumes the market index will never change. But ARM's were invented because the market index changes and makes fixed rate loans cheaper or more expensive to make – that's why there are variable rates in the first place!
So, A.P.R.'s are at best inexact. The lesson is that A.P.R. can be a guide, but you need a mortgage professional to help you find the truly best loan for you.

Note: you'll see that A.P.R.'s on 15-year loans will carry a higher relative rate due to the fact that points are amortized over a shorter period of time.