Frequently Asked Questions
Here are answers to questions that many home buyers most frequently ask us:
When you are pre-approved for a mortgage loan, it means a lender has looked closely at your credit report and validated your income and assets, determining that you qualify for a loan. The lender will provide you with a written commitment, telling you the maximum amount of a loan you qualify for, which loan programs you qualify for, and will discuss the interest rates they will offer for different types of loans. Agents and sellers view a pre-approval as a start to the home buying process. Loan pre-qualification does not typically include an analysis of your credit report or an in-depth look at your true ability to buy a home. You can be pre-qualified by a lender, by a real estate agent or you can do it yourself. The term means that someone has taken a general look at your income and expenses and plugged them in to a debt-to-income ratio formula. Pre-qualifying yourself before you start looking for a home gives you a general idea of the price range you can afford.
How much of a down payment you're required to make will depend in part on the type of mortgage loan you apply for. Some home buyer programs require as little as 3 percent of the selling price of the property as a down payment. Generally speaking, most conventional lenders want a minimum of 5 percent. To avoid having to purchase private mortgage insurance (PMI), you'll need a down payment of at least 20 percent of the home's selling price.
The Loan Estimate (LE) provides a summary of key loan terms and estimated loan and settlement costs. The form must be provided to the borrower within three business days after he\she submits certain minimum required information to the lender. Borrowers can use this new form to compare the costs and features of different loan programs.
The five-page Closing Disclosure form sums up the terms of your loan and what you pay at closing. The CD must be provided to the borrower three business days before closing. In addition to summarizing the final loan terms and costs, the CD provides borrowers with a detailed accounting of their transaction.
The Know Before You Owe mortgage disclosure rule replaces four disclosure forms with two new ones, the Loan Estimate and the Closing Disclosure. The new forms are easier to understand and easier to use. The rule also requires that you get three business days to review your Closing Disclosure and ask questions before you close on a mortgage.
The CFPB’s (Consumer Financial Protection Bureau) mortgage initiative is designed to help consumers understand their loan options, shop for the mortgage that’s best for them, and avoid costly surprises at the closing table. The CFPB's website provides more information on these new rules, plus sample LE's (Loan Estimates) and CD's (Closing Disclosures). You can view them at http://www.consumerfinance.gov/know-before-you-owe/.
We have fully integrated the new rule and disclosures into our systems, and we are here to help make sure you fully understand everything about your specific mortgage process.
If your interest rate is locked, your rate won’t change between now and closing as long as you close within the specified time frame and there are no changes to your application. Rate locks are typically available for 30, 45 or 60 days and sometimes longer.
Private Mortgage Insurance protects the lender against a loss if a borrower defaults on the loan. It is usually required for loans in which the down payment is less than 20 percent of the sales price.
Points are mortgage interest fees paid up front. This one-time fee reduces the initial interest rate on your home loan. Points are a percentage of your loan amount, with one point being equal to one percent of your loan. If you are purchasing a home, the amount of your points is generally tax deductible in the year you buy. This is true even if the seller is paying for them. Keep this in mind while buying a new home.
Costs associated with the purchase of a home that must be paid at the loan closing. This may include (but not limited to) attorneys fees, fees for preparing and filing a mortgage, fees for title search, taxes, and insurance. Closing costs usually are about 3 percent to 6 percent of the mortgage loan amount.
You can apply over the telephone, via mail or in person. You can also request more information or begin a consultation with no obligation, on our website. A loan officer will be available to assist you so that completing the application takes very little of your time. We can be available after hours to make it easier and more convenient for you to complete the information.
Mortgage Network utilizes closing attorneys and title companies located in each of the states where we conduct business. The closing location and time are established between the borrower and the closing agent at a time and place that’s mutually convenient.