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Frequently Asked Questions
1. What is the difference between pre-qualification and pre-approval?
Pre-qualification
is a lender's opinion of your ability to purchase a home, and is based on your
income, employment history and available down payment.
Pre-approval is a lender's underwriting decision that you are
qualified, subject to the conditions noted in your pre-approval, and is based
upon the lender's review of your completed application, credit check, appraisal
and home inspection.
When it comes to writing an offer for a home, a
pre-approval letter contains stronger language to the seller and the listing
agent than a pre-qualification. You, the buyer, have the increased negotiating
leverage of cash buyer status, because the mortgage is already in place.
A
pre-approval can often be a determining factor in winning the contract in a
competitive bid situation.
You will receive a conditional pre-approval shortly after applying for
your Homeland Capital Mortgage, and it is made unconditional when you return the
financial documentation we request after your application.
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2. What is the difference between APR and the interest rate?
APR
- the Annual Percentage Rate will be outlined on your Truth In Lending
disclosure - also known as the TIL - that you receive after your application.
The
APR is often higher than the quoted interest rate, or note rate.
The APR is different than your note rate, or the rate that you were
quoted, because the APR includes, in addition to interest, some of the
additional costs of obtaining your financing. This is a common practice in
mortgage lending.
Simply stated, if there were no costs in obtaining
financing, your note rate and the APR would be the same.
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3. What are points?
A point equals one percent of the loan.
Points are usually paid at closing. If your loan amount is $100,000…then
one point would equal $1,000…one percent.
Discount Points are fees
paid by the buyer to the lender to reduce the loan's interest rate. If you plan
to keep the residence for five or more years, it may be worthwhile to pay
discount points to reduce your monthly payment and achieve greater savings over
the life of the mortgage.
The number of discount points required to buy
down your interest rate will vary based on loan type. Consult your Homeland
Mortgage consultant for details on your specific transaction. Generally
speaking, points are tax deductible when you are buying a primary residence,
however we recommend you consult your tax advisor for information on limitations
to tax deductibility.
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4. What is meant by the term "locking my interest rate"?
And then, when and how do I lock my interest rate?
When a lender "locks"
your interest rate, this means you are guaranteed a specific interest rate for a
specific period of time. That period of time is called the lock period.
The
lock guarantees your rate as long as your loan closes and funds prior to the
expiration date of your lock. If your closing is delayed beyond your lock
expiration date, you could be exposed to higher market rates. It is good advice
to lock for a period longer than you need, or a period beyond your actual
closing date. This will protect you in case unforeseen circumstances arise.
Typical
lock periods are 15, 30, 45 and 60 days. In a stable rate environment, shorter
lock periods provide you the potential for a better interest rate. However, the
market can be volatile and rates move with market activity, up and down. Let's
look quickly at the four possibilities for rates:
1) Rates can go up
slightly
2) Rates can go down;
3) Rates can stay the same, or
4)
Rates can go way up.
If you believe rates may go up slightly, you might benefit by waiting
to lock because of the shorter lock commitment period. If you believe rates will
go down, you would definitely benefit by waiting to lock. If you believe rates
will stay the same, you may also do better to wait. Of the four scenarios, you
benefit from a longer lock only when rates go up significantly after you lock.
For that reason, and generally speaking, we advocate shorter lock periods.
If
you have a feeling that rates are going to go up significantly, by all means,
call us and let's lock your rate.
The bottom line is this: Homeland
Mortgage works for you and will do exactly what you wish concerning your rate
lock. Advice is always readily available, but the final decision is yours.
If
you have not locked in when you receive your application, you may notice that
the rate on the application is somewhat higher than the market interest rate.
You are not committed to that interest rate. Your mortgage consultant has
intentionally used a higher rate with which to qualify you in the event that
rates do go up prior to locking in.
You are still approved, and we do not have to re-approve you, so you
are not exposed to any more paperwork.
Once you have a property under
contract, you can then lock your rate by simply requesting a lock term. We will
fax or e-mail a confirmation to you and request you sign and return the document
within 24 hours.
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5. Is it okay to use Internet statements, instead of actual hard copy
bank statements, to verify my bank and investment accounts?
Currently
Internet statements are not allowed because they have not yet been proven as a
reliable source of unalterable financial documentation by the agencies that
govern lending. Also, an important side note: Bank and investment statements
always designate the number of total pages. For instance, your statement may say
one of three, or one of five pages.
Please include all pages for each statement, even if there is nothing
on the last page, and even if the first page is an advertisement. We do need
back portions of any statements when printed on. Standard mortgage guidelines
require all pages of a statement to verify accounts. If you have applied for an
FHA or VA loan, we will need original bank statements. Copies are not
acceptable. Missing pages always present a problem - even if you think the
information is not relevant! Please include ALL pages! This will avoid
unnecessary delays and frustration.
Getting partial statements is probably the greatest reason Homeland
Mortgage has to come back to clients and ask for additional documentation.
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6. Who orders the appraisal and survey, and when is it ordered?
Homeland
Mortgage orders the appraisal, and the attorney or title agent orders your
survey. You will receive a copy of the appraisal at closing. Surveys determine
whether there has been an encroachment to the property lines, building lines, or
easements. If your home is new construction, the builder may order the survey
just after completion, or just before closing.
To answer the question:
When is the appraisal and survey ordered?
Homeland Capital Mortgage orders your
appraisal within 48 hours of your loan application unless you request otherwise.
On conventional and FHA mortgages, the appraiser has 10 business days to return
the appraisal to Homeland Capital Mortgage.
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7. How will I be kept updated on the status of my loan?
An Homeland Capital Mortgage consultant will make an
introductory call to you within 48 hours of your application and will be
available to answer questions throughout the process. You will be dealing with
one service specialist throughout your transaction. If any of the qualifying
information you submitted to Homeland Capital Mortgage changes, please let your service
specialist know immediately.
You are always welcome to contact your
Homeland Capital Mortgage consultant who took your application directly especially if
your question is related to interest rates, but your customer service
specialist's responsibility is to keep you updated on the status of your
appraisal, your survey, your loan approval, homeowners insurance and title
insurance. So feel free to call your customer service specialist at any time.
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8. Once I sign my application, am I committed to borrow the money?
Some
people feel like once they have signed the application, they are obligated to
borrow. That is absolutely not the case. In fact, none of the documents you have
received are contractual until you are actually at closing and sign your note.
All Homeland Capital Mortgage is doing with your application is approving you
and putting you in a position to make an offer, purchase a home and close a
mortgage loan. You are not obligated for the loan transaction until you sign
your closing documents.
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9. What key items help ensure a smooth closing?
There are several key items you need to have addressed to
ensure a smooth closing.
Homeowners Insurance, or Hazard Insurance, is
coverage that compensates for physical damage to the property by fire, wind or
other natural causes. It is very important for you to obtain your Homeowners
Insurance at the earliest possible date so that there are no delays in your
closing or in obtaining the necessary closing funds.
The Declaration
Page of your Homeowners Insurance policy with proof of payment must be sent to
your Homeland Capital Mortgage consultant at least 5 days prior to your closing date. The
responsibility to order and produce a clear Termite Certification depends on the
terms in your contract. Check with your Homeland Capital Mortgage consultant for details.
Before closing, original documents which were requested must be received by
Homeland Capital Mortgage.
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10. Where will I be closing? How much do I have to
bring to closing, and can I bring a personal check?
Closing costs are
the other charges the buyer must pay to obtain a loan. These usually included
taxes, which are charged in most states, and title insurance. When applying for
your mortgage, your Homeland Capital Mortgage consultant will provide you with a Good
Faith Estimate of the closing costs as part of the application package you
receive. Your Homeland Capital Mortgage consultant will call you within 72 hours of your
closing date, and will provide you with a preliminary Settlement Statement or a
HUD-1 indicating the required cash to close. This ensures that you have ample
time to arrange for the necessary funds.
At closing, you will be
required to have certified funds in the form of a cashier's check. Although we
don't anticipate any variation from the HUD-1, you should bring your personal
checkbook to closing in case there are last minute adjustments. If you are due a
refund at closing, the attorney or title agent will issue you a check.
Closing will typically take place at an attorney or title agent's
office. The attorney or title agent represents the lender - not the seller, real
estate agent or you - the buyer. You will be given instructions on where the
closing will be conducted, along with a phone number and a fax number for the
closing attorney in case you have any questions you wish to direct to them. All
borrowers associated with the mortgage loan transaction will be required to
bring Picture Identification to closing…driver's license, passport, etc.
are suitable.
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11. What is the Customer Service Satisfaction Guarantee?
Homeland Capital Mortgage is absolutely committed to excellent Customer Service
and is one of the few mortgage lenders who provide a 100% Customer Service
Satisfaction Guarantee. If, at any time during the loan process, our service
does not meet your needs, immediately contact any Homeland Capital Mortgage consultant.
We are determined to make it right! If your experience with Homeland Capital Mortgage did
not meet your expectations after closing your loan with us, we will gladly
refund your application fee.
Get started today and apply online! It's fast and easy, with no obligation.
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MORTGAGE 101
FAQs
