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Questions on how to get approved for a mortgage loan?
Don’t worry. We’re here to help.

The Loan Process

The first step in the loan process is to contact one of our knowledgable mortgage professionals to determine your mortgage eligibility. He or she can then discuss your options, current interest rates, and loan amounts you qualify for based on your income, assets, and credit history.

Apply for a loan and get pre-approved
Next you will complete a 1003 application and sign disclosures allowing our company to assist you in your lending needs and review your credit history. During the loan process it is important to not change the status of your financial accounts or take out any new lines of credit.

Then you will need to provide documentation for your income, assets and any properties you own.
Please review our list of required documents.
(Note: More documentation may be required on a case by case basis)

Purchasing a home? We can provide a pre-approval in less than 24 hours!

Compare Loans and Rates
There are many loan programs available to suit individual needs. You will need to decide what loan amount, interest rate and time period of your loan you want. You can choose a fixed rate or adjustable rate mortgage. We have access to conventional, FHA and VA programs. Your choice will determine what fees and discounts you receive.

Lock your rate
Work with us to lock in your rate. You may be required to submit additional documentation before the loan can be approved. Your loan application will go through the final approval process which includes verifying the information submitted on your application. It is important to postpone making any major purchases or changing the status of your financial accounts. Large deposits and withdrawals must be documented. If you make any significant changes in your application information, please let us know as soon as possible.

Close your Loan
Review and sign loan documents. Check the documents carefully for the correct interest rate, loan amount, names and addresses. You may be required to bring a cashier’s check or to wire funds. Refinance loans on primary residences have a mandatory three-day rescission period.

If at any point you have questions about your loan, don’t hesitate to call.
We’re here to help!

Terminology

Here are some of the most common mortgage terms that you will come across

Annual Percentage Rate (APR): The rate of interest on a yearly basis which includes charges on the mortgage loan and the interest payment.

Adjustable Rate Mortgage (ARM): A home loan program in which the interest rate and the monthly payment are adjusted at regular intervals according to the changes in a specified index.

Credit Score: A numerical quantity reflecting a borrower’s credit worthiness. Used by lenders to find out the risk in approving a home loan.

Closing: The final step in the loan process when the seller transfers title to the buyer, the buyer signs the loan documents and receives the loan amount from the lender.

Closing Costs: Fees paid by the borrower at closing. These include charges for originating and processing the loan.

Down Payment: The amount of cash which the home buyer pays towards the purchase price at closing.

Debt-to-income ratio (DTI): The ratio of the monthly debt to the pre-tax gross monthly income.

Escrow Account: Bank account into which lender deposits part of the monthly payments made by borrower. The deposits include payments towards property taxes, homeowners insurance and mortgage insurance.

Fixed Rate Mortgage: A home loan program on which the interest rate does not vary throughout the life of the loan.

Housing Ratio: The ratio of the monthly housing costs to the pre-tax gross monthly income.

Mortgagee: The lender offering the loan.

Mortgagor: The borrower.

Mortgage: A legal process by which you can take out a loan against your own property – residential or commercial. The same property is held as the security for the repayment of the debt.

Mortgage Note: It is your written promise to pay off the loan amount on certain terms and conditions. The note also mentions what the lender is likely to do if you default.

Private Mortgage Insurance: Insurance policy offered by an insurance company in order to protect the lender from losses if the borrower defaults on his payments.

Rate lock/Lock-in: A written commitment which guarantees a fixed rate on your loan for a certain time period before closing. Usually, rates are locked for 30, 45 or 90 days till the closing date.

What is included in a credit report?

A credit report is a person’s credit history as reported by the three major repositories: Equifax, Trans Union and Experian. This includes the credit accounts obtained through banks, retailers, credit card issuers, etc. The report includes any public records such as judgments, tax liens, foreclosures or bankruptcy. The credit report will also show inquiries: the names of companies who have obtained a copy of the borrower’s credit report for any reason. A consumer’s inquiry into his or her own credit report will not be reflected.

What will not appear on a credit report is any information pertaining to race, religion, personal assets, medical history or criminal record. Not all credit grantors report to all three bureaus. Some do not report to the bureaus at all. Because of this, some information may not be included or may differ in each bureau’s version of the report.

Payment History
Creditor grantors supply payment history on your credit file. This includes both open and closed accounts. Payment in full does not remove your payment history. The length of time information remains in your credit file is as follows:

Credit and Collection Accounts
Open accounts paid as agreed may remain on your credit profile indefinitely.
Negative credit history is removed after 7 years.
Collection accounts remain 7 years from the date placed with the agency.
Charged off accounts remain for 7 years from the date of last activity.

Court Records
Bankruptcies remain for up to 10 years.
Paid tax liens remain for up to 7 years from the date released; Unpaid tax liens remain
indefinitely.
Judgments remain for 7 years from the date filed

Reported Balances
Is the balance on the date the credit grantor reported the information. Credit grantors supply information on a periodic basis, so the balance shown may not be the balance you know it is currently.

Inquiries
Inquiries will remain for up to two years, will impact a person’s credit score for one year, and will only appear on a mortgage credit report for 90 days.

Credit Report Usage
The Fair Credit Reporting Act (FCRA) is the law that governs the repositories and credit reporting agencies. The Federal Trade Commission enforces the FCRA. The FCRA outlines permissible reasons for inquiring into a person’s credit:
In connection with extending credit
Review or collection of an account
Response to a court order, in accordance with written instruction
Insurance underwriting, or otherwise legitimate business need.
Employment Purposes
To determine eligibility for a license or other benefit granted by a governmental
instrumentality.

Divorce Decree
A divorce decree does not supercede an original contract with a creditor nor does it release you from legal responsibility on any accounts. You must contract with each creditor individually and seek their legal binding release of your obligation. Here are some tips for divorcées:
Communicate with creditors – ask the company to transfer the debt into one spouse’s name.
If creditor won’t transfer debt – Close out all joint accounts – move balances from joint
accounts to individual accounts, refinance mortgages and car loans; close credit cards
to further charges.
Keep joint bills current, even if it means picking up spouse’s share of the debt – if you don’t
creditors will be less likely to release one party from joint liability.
Get a copy of your individual credit report so you know exactly what debts are owed, and
continue to check on a regular basis to confirm changes are made.

Credit Denied
If you have been denied credit, employment or insurance based upon a credit report, you have the right to receive a free copy of your credit report. You must provide to the repository a letter that proves you’ve been declined.

Disputes
You have the right to request any/all bureaus investigate any item you feel is being reported inaccurately. The repository will contact the creditor to confirm the data in their records. If the information is inaccurate, or if the creditor does not respond to the inquiry within the allowed 30-day time frame, then the information on the credit report will be corrected or deleted. You will be notified in writing upon completion of the investigation. Your credit report will not be changed if the information is verified as accurate. Only inaccurate or outdated information can be removed from a person’s credit file. Accurate credit information, even if it is negative, must remain. Beware of offers of “Credit Repair”. Only time can heal bad credit! However, if you still disagree with the information reported you do have the right to add a dispute statement to your credit file. You can request the repository provide a revised copy of your credit report to any creditor that reviewed your file in the previous six months, or two years if the inquiry was made for employment purposes.

What is a Good Faith Estimate?

Click for GFE

HUD requires lenders to use a Good Faith Estimate form or GFE. This is important because whether you buy a mansion or a cottage, you want to know how much your mortgage is going to cost — not just the interest rate but all the fees and charges you’ll have to pay to close the loan.

The standard form for all lenders assures that borrowers actually understand what’s being charged for their loans, why and by whom.

First, it’s a three-page document that every lender uses — meaning that offers from lenders will be the same and can readily be compared whether you are looking for a Conventional, FHA, VA or Jumbo Loan.

Second, the document is not just a list of fees and charges, it also explains in basic terms the purpose of each expense.

Third, mortgage brokers have to show their yield-spread premiums (YSPs), which a mortgage broker is paid or discounts the borrower.

Fourth, it goes together with the government’s HUD-1. This is the three-page form which all closing and settlement agents must use. It is easy to compare the GFE with the HUD-1, thus assuring borrowers are not overcharged at closing.

Fifth, the GFE ensures that no fees are paid for an application.

Page One

The first page is actually a summary of loan costs — the specifics are found on page two.

Item 1 tells you how long the quoted rate and terms last. Items 3 and 4 concern loan lock-ins — how long the rates and terms will last if you lock them in at the time the GFE is issued.

The loan summary tells you the amount of the loan, the initial loan rate and monthly payment. IMPORTANT: If you have an ARM the next few items will tell you:

How high the interest rate can go.
When the interest rate can first rise.
The maximum monthly payment you can expect.
If a prepayment penalty is allowed and, if yes, how much it will cost.
Whether there is a balloon payment at the end of the loan terms.
Next the form will tell you whether the lender will create an escrow or “trust” account to collect money each month for property taxes and insurance. Generally, if you buy with less than 20 percent down an escrow account is required by the lender.

Finally, the form adds your origination charges (the “A” items on page two) with other settlement costs (the “B” items on page two). Be aware that you can have additional costs at closing, depending on how the sale agreement is written.

Page Two

The second page is divided into two parts, A and B. Part A looks at “origination” fees, the cost to buy your mortgage.

First, the form shows your origination fee in a dollar amount, including any yield spread premium (YSP). Under the old rules, the yield spread premium could be shown as either a dollar amount or as a percentage of the loan. Now, the entire cost of the loan, including any YSP, is shown as a single dollar amount.

Next, the form shows if your interest rate is being impacted by the origination fee. In other words, let’s say you can borrow $100,000 at 6 percent interest over 30 years with no points. This is called the par pricing for this loan. But, let’s say that you could also borrow $100,000 at 5.75 percent — if you were willing to pay 1 point at closing. A point is equal to 1 percent of the loan amount or $1,000 in this case. The form shows if you are paying for any reduction of the interest rate OR any increase in the rate by paying a smaller origination fee.

Next we go to part B. This part of the form shows the cash costs you can expect to pay at settlement (or escrow) when the loan closes. As the bottom of part B is a total which shows “Your Charges for All Other Settlement Services.”

The totals for parts A and B are then shown at the bottom of the page and on the bottom of page one as well.

HUD encountered considerable opposition from the lending industry, especially with regard to the question of how yield spread premiums should be disclosed. In an important decision which reviewed 14 years of effort to update the good faith form, a court found in 2009 that HUD had acted fairly and in the public interest with the form it produced.

Page Three

The last page should really be the first page because it contains instructions for understanding the form.

The first section lists charges that the lender cannot increase, charges that can rise by as much as 10 percent, and charges that change prior to settlement. This is important information, it means that you should check the numbers on your good faith estimate with the final figures presented to you at closing.

Next, HUD gets into the issue of higher or lower settlement fees. In the same way that mortgage loans have par pricing, so does the settlement process. In other words, if you are willing to pay a somewhat higher interest rate you may be able to lower your cash costs at closing. Indeed, you may not have to bring any cash to closing.

In the third section HUD offers borrowers the opportunity to compare loan offers from different lenders. This is important because borrowers should look at different loan offers to find the rates and terms which best meet your needs.

Lastly, HUD notes that your loan may be sold in the future. If so, after settlement “any fees lenders receive in the future cannot change the loan you receive or the charges you paid at settlement.” Translation: A contract is a contract.

HUD estimates that the new form will save typical borrowers $700 each time they finance or refinance a home. That’s a lot of money, but more could be done to cut borrower costs — and it shouldn’t take 14 years to make additional changes.

IMPORTANT: Always keep your GFE in a safe place to assure that your loan terms are actually the same as disclosed. For questions regarding GFE issues, speak with your real estate broker and mortgage lender.

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