Frequently Asked Questions

Q: Do you lend to people with less than perfect credit?  

Yes! We work with borrowers with perfect credit and not-so-perfect credit.

Q: Am I Obligated to Accept an Offer? 

No, you are under no obligation to accept an offer that is presented to you.

Q: What is Better and Why – a Bank or Mortgage Broker?

Depends on your loan needs and situation. Some banks can be either to restrictive or can have more flexible underwriting conditions. With a bank you only get one shot. A broker can shop lots of lenders for either better rates or different underwriting guidelines.

Q: What is APR?

The APR or Annual Percentage Rate reflects the cost of your mortgage loan as a yearly rate. This rate may be higher than the rate stated in your mortgage or note because the APR includes, in addition to interest, loan discount or points, and other credit costs. Unfortunately, the interpretation of the Federal Truth in Lending Act is vague at best. The best way to shop and compare is to obtain a detailed Good Faith Estimate (GFE) in writing from your lender. If your actual interest rate does not change from the initial GFE (must be given within 3 days from time of loan application), then your final APR should not change by much.

Q: Do I shop for low APR or low rates?

I would say rates first. The reason is although the APR was designed to help the consumer shop for the better home loan, unfortunately the APR is misinterpreted and all factors being the same, you will get 10 different APR's from 10 different lenders. So shop for the lowest rate first, then get a Good Faith Estimate in writing and compare the closing costs.

Q: How is the additional % calculated once the additional charges are determined?

APR is the interest rate that would amortize the original balance. APR calculation pretends that we amortize points and certain other fees over the life of the mortgage. Because of this, it is unwise to compare APR's on mortgages with different terms.

Q: How much should my closing costs be?

Closing costs will vary from state to state, however some basics do apply. There are credit reports ranging from $40 to $60, appraisals from $200 to $500 depending on the value of the property could be higher, loan processing from $200 to $400, title charges vary and depend on the loan amount and will also differ if purchase or refinance. Other charges include escrow or closing attorney fees and lender fees which can run from $300 to $700. Points or origination fees can also be added to the list. Those fees are all considered non-recurring fees since they are unique to getting the loan. The recurring fee would be things like property taxes, insurance, interest and private mortgage insurance. So get a quote in writing and compare.

Q: Who pays the closing costs?

On a purchase, the custom is to split most costs of title. Closing, attorneys or escrow and the lender fees are the responsibility of the purchaser. On a refinance the borrower is responsible for the costs unless something has been worked out with the lender to have them pay for some of the closing costs. In most cases, the responsible party for closing costs can be negotiated.

Q: I am looking to buy soon. Where is a good site to find accurate closing costs by states?

Unfortunately closing costs are not done by state. Each lender has its own closing costs. The loan amount will determine some things, such as escrow/attorney fees and title fees. Origination and discount points are also based on loan amount. The rest of the fees should be fairly routine, such as credit, appraisal, processing, and administration, if any. These are determined by the actual broker. The underwriting, tax service, flood certification and document fees are all the actual lender fees.

Q: What are pros and cons of 15 year loan vs. 30 year loan?

A 15 year loan will have a lower rate and higher payments than a 30 year loan. If you can afford it, a 15 year loan it is great since you will build up equity quicker and pay the loan off sooner and save thousands in interest. However this is not an option for everyone. Since the payments are higher, it can make qualifying more difficult for some.

Q: Is the lock agreement a legal binding contract for borrower?

I have never heard of it being legally binding. Typically nothing is signed when a loan is locked. However, if a loan has been processed and submitted to a lender and approved and a loan is locked and then you cancel, you may have a problem getting the broker to submit your loan to another lender for you. Often the broker is charged if they try to get the loan package back and that cost will be passed on to you. Also, if an appraisal and/or credit report have been obtained, you could be responsible for payment on those.

Q: What is the difference between being pre-approved, or pre-qualified for a home loan?

Pre-Qualified is usually what a loan officer does first. They run your income to debt ratios, check your credit, and find a loan program that meets your needs to get pre-qualified. Once a complete loan package has been put together, it can be submitted for approval. If you are looking to buy, getting a pre-approved loan is great since you and your real estate agent will know what the lender is willing to lend you and any conditions that may apply. A pre-approval is usually an approval of the borrower’s credit package and subject to the property appraisal, escrow, title and purchase contract. It can really save a lot of time in a high stressed situation of purchasing a home.

Q: If I co-sign for a friend to buy a car will it reduce my borrowing power for a mortgage?

Yes, Yes, Yes! If you co-sign for anyone, it will appear on your credit report as a debt obligation. If it shows you as a co-signer, you maybe able to show 12 months (or more) copies of cancelled checks from the other party showing that they are making the payments (warning - not from a joint account). And they better be current, if they go late at anytime, it will reflect on your credit. Remember, as a co-signer, you are ultimately responsible for that debt.

Q: Is there a company that has no closing costs to refinance?

There are lots. When you get a loan with no closing costs, or no points and no closing costs, you will get a higher rate than what is available to someone who is willing to pay points and costs, since the lender has to absorb the costs involved with the transaction. The market and your needs will determine which option is best for you.

Q: When is a good time to refinance?

When you are reducing your monthly payment at minimal cost. Several issues apply. If you have a small balance, like under $100,000, it might cost you more to refinance than you would save. So what’s a person to do? Look at the big picture, regardless of what the rate savings will be. Like how much will the actual payment be reduced each month? How much will it cost to get those lower payments? How long will it take to re-coup the closing costs? You need to know how long you plan on staying in the property. Then once all of these questions have been answered, you can make the decision if refinancing is right for you. So if you plan on staying in the home for at least another 3-4 years and the closing costs are minimal and can be recuperated in say 12 months and your bottom line monthly payment is reduced comfortably, then it must be a good time to refinance. On the other hand if you only plan on staying in the home for another year, even if the rate is reduced by 2% and the closing costs would take 24 months to recuperate, then it would not be wise to refinance. Another scenario is a no cost loan, (no points, no origination, no closing costs, no lender or broker costs), you won’t get the bottom line lowest rate, but if your payments are still dropping significantly then go ahead and make the move.

Q: Can you refinance your home with it listed on the market for sale?

Usually no lender will lend on property if it is for sale because the loan will not be on the books long enough for them to make any money on the deal. It is also not beneficial for you since you will have to pay closing costs, go through all the time and running around to close a loan and it does not do the buyer any good since they cannot assume your loan.

Q: Should I exchange my 30yr for a 15yr mortgage? Rob M., Garden City, New York

Rates on 15 years loans are less than 30 years. So already this is a plus. However, there are several factors to this decision. First of course is can you afford the higher payment? Shorter term means higher payment. Next, are the closing costs low enough that the savings in interest will exceed the costs in say 6-8 months? Also compare would you be better off by making 1-2 additional principal reduction payments per year vs. refinancing.

Q: How soon can a home be refinance if just purchase? Alvarado, Fort Lupton, Colorado

If the rates have gone down enough to make it worth your while, then anytime. (Read your note to make sure you do not have a pre-payment penalty clause) Remember all those closing costs you paid will have to be paid again so most people don't want to use up their equity by refinancing too soon after a purchase. Really sit down and compare what you have just paid with what you will have to pay again and look at what the savings will be to decide if it is really worth it.

Q: I purchased my home last June. My wife and I have about $23,000 in credit card debt. Which is better to get a lower interest rate and pay off this revolving debt, refinancing w/cash out, a 2nd mortgage, or debt consolidation? Franklin H., Memphis, Tennessee

If you are truly getting a lower rate, even with the closing costs and consolidating the debt it is better to refi since your over all monthly out going payments will be considerably less. So this is a good thing. The nice thing about a second is they usually don't cost to much, often credit unions do it only for the cost of the appraisal but they carry a much higher interest rate.