FAQs

What types of problems generally cause closing delays?

Closing delays are commonly related to a failure to satisfy loan conditions or a buyer's delay in setting up their homeowner's insurance. The most common loan condition that will cause a delay is a borrower’s lack of documentation regarding the source of funds for the down payment and closing costs.

What is APR and how is it calculated?

APR stands for the Annual Percentage Rate and is a tool used to provide a standard of comparison for loans offered by competing lenders. APR takes into account the loan's interest rate, closing costs, and other fees such as points. An APR lets you see the total cost of a loan, including fees and points over the life of the loan, not just the interest due.

Will an appraisal be required for the property?

The simple answer to this question is yes. Whether you are buying a new home, selling your home, or refinancing your current mortgage lenders will almost always require an appraisal.

What is mortgage insurance and am I required to have it?

Mortgage insurance is paid for by the borrower and is designed to protect the lender against payment default. In most cases if the loan is being taken out for more than eighty percent of a property the lender will require mortgage insurance.

Can funds be borrowed to pay for a down payment?

Yes it is possible to borrow the money for your down payment. You could borrow money from your 401 K, or even another home that you may own. If you are borrowing the money for your down payment even if it is from your friends or family you should disclose this information to your lender. There are some cases were keeping this information private has been considered a breach of the loan agreement.

What is a fixed rate mortgage?

With this type of mortgage your interest rate will remain fixed for the entire life of the loan. This type of loan will provide you with the same payment amount every month until the loan is paid off.

What is an adjustable rate mortgage?

An adjustable rate mortgage is a loan in which the interest rate can move either up or down over the life of the loan. With this type of mortgage the interest rate will generally start low and increase the longer you have the loan.

What is a prepayment penalty and should I have one?

A prepayment penalty allows the lender to charge the borrower a fee if they close their low within a certain period, usually the first five years of the loan. This fee is usually equal to about six months worth of interest payments on a loan. In some cases you may be able to get a lower rate if the lender includes a prepayment penalty, but it is usually better to try and avoid it.

What is the difference between pre qualification and pre approval?

Pre qualification is when a prospective buyer discloses, either verbally or by providing documentation of, their income, assets and credit so that a lender can determine how much a borrower will be likely to afford in loan payments. A pre approval involves an underwriter and is a more formal review of your credit and income. A prequalification will commonly only provide you with an idea of what you can afford while a pre approval will actually guarantee you a loan of a certain amount.

Am I required to get financing from the lender that my real estate agents recommends?

A recommendation is just that, a suggestion, you are never required to choose the lender that anyone suggests to you. The best way for you to find a lender is to shop around and compare deals.