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What is the difference between pre-approval and pre-qualification?
The pre-approval process is much more complete than pre-qualification. For pre-qualification, the loan officer asks you some questions and provides you with an opinion based upon information you provide. Pre-approval includes verifying your information and all steps of a full approval, except for the appraisal and title search. Pre-approval can put you in a better negotiating position, much like a cash buyer, especially when the housing market is tight.
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Which loan is right for me?
| Years you plan to stay in the house: | Recommended Programs: | | 1-3 | 3/1 ARM; 1 year ARM or 6 month ARM | | 3-5 | 5/1 ARM or 5 year Balloon | | 5-7 | 7/1 ARM; 5 year Balloon or 7 year Balloon | | 7-10 | 10/1 ARM; 15 year, 20 year or 30 year fixed | | 10+ | 15 year, 20 year or 30 year fixed |
This grid was prepared to give you an idea of some of your options. Visit our Loan Programs to learn more about these programs, including their advantages and disadvantages. Each situation is different and we welcome the opportunity to discuss your individual needs and goals. Our goal is to find a loan that's perfect for you.
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When does it make sense to refinance?
Usually people refinance to save money, either by obtaining a lower interest rate or by reducing the term of the loan. Refinancing is also a way to convert an adjustable loan to a fixed loan or to consolidate debts. The decision to refinance can be difficult, since there are several reasons to refinance. However, if you are refinancing solely to lower your payment and save money, try this calculation:
• Determine the total cost of the refinance
• Calculate your monthly savings
• Divide the total cost of the refinance (#1) by the monthly savings (#2). This is the "break-even" point. At the break-even point, the savings from refinancing equals the cost involved. If you own the house longer than this, you will save money by refinancing.
Since refinancing is a complex topic, consult a mortgage professional.
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What is a rate lock?
A rate lock is a contractual agreement between the lender and buyer. There are four components to a rate lock: loan program, interest rate, points, and the length of the lock.
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What are points?
A fee paid to the lender at closing to obtain a lower interest rate on your mortgage. Each point is equal to 1% of the loan amount.
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What is a full documented loan?
Both income and assets are disclosed and verified, and income is used in determining the applicant's ability to repay the mortgage. Formal verification requires the borrower's employer to verify employment and the borrower's bank to verify deposits. Alternative documentation, designed to save time, accepts copies of the borrower's original bank statements, W-2s and paycheck stubs.
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What are the other types of documentation?
We offer many specialized loan programs that include low documentation and even no documentation – all depending on what you’re willing and able to provide.
Stated income/verified assets: Income is disclosed and the source of the income is verified, but the amount is not. Assets are verified, and must meet a minimum standard, for example, 6 months of stated income plus 2 months of expected monthly housing expense. Stated income/stated assets: Both income and assets are disclosed but not verified. However, the source of the borrower's income is verified. No income/no assets: Neither income, employment nor assets are disclosed or verified.
No ratio: Amount of income is not disclosed, but source of income is. Generally, a 2-year employment history is required. The standard qualifying ratios are ignored. Assets are disclosed and verified.
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What is a good faith estimate?
It is the written list of settlement charges the lender is obliged to provide the borrower within three business days of receiving the loan application. The estimate includes all costs expected to be incurred for services necessary to complete the transaction.
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Why is the APR higher than the rate I was quoted?
The annual percentage rate refers to the cost of the loan, including interest rate and certain loan fees, stated as a yearly rate. This is not the same as your Note Rate which is the rate from which your payment is calculated. The APR is typically higher than the Note Rate because it considers costs a buyer would NOT incur if they were paying cash for the property, referred to as Prepaid Finance Charges. Federal Regulation Z, also known as the Truth-In-Lending Act, regulates which loan fees are considered to be ‘Prepaid Finance Charges’.
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What is a conforming loan?
A loan eligible for purchase by the two major Federal agencies that buy mortgages, Fannie Mae and Freddie Mac. The loan limits are currently $417,000 for a single family house.
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What is a jumbo mortgage?
A mortgage amount larger than $417,000, which is the current conforming maximum loan amount.
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What's the difference between a mortgage broker and a lender?
A mortgage broker counsels you on the loans available from different wholesale lenders, takes your application and processes the loan. Processing involves verifying all informaion about your transaction including the credit report, appraisal, verifications of employment and assests, and so on. When the file is complete, the broker submits to the lender for underwriting. The underwriter is responsible for reviewing the package and evaluating whether or not your loan meets the guidlines and is an acceptable risk.
Kings Mortgage Services is a full-service mortgage lender. This means we not only take the application and process it, but we also have onsite underwriters and funders to speed up your approval and funding times.
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