• The Loan Process

  • How is the lending decision made?

    When reviewing your application information, an underwriter examines your credit history, your property value, and your debt-to-income ratio. These are the main factors which describe you as a mortgage applicant. This perceived level of risk determines your loan decision as well as your interest rate in some cases.
  • What will my rate be?

    Rates are based on a variety of factors such as the loan purpose, your credit history and ability to repay, the value of the collateral, and the loan amount, to name a few.
  • How much money can I get?

    The two main factors in answering this question are your debt-to-income ratio, and the amount of equity you have in your home. To calculate your debt-to-income ratio, write down all of your monthly debts (don't worry about utilities or your television service), then divide that amount by your monthly gross income. The underwriter will take a look at the percentage that results and determine how much you can afford to pay per month. Then, within the amount of equity you have available to you, it can be determined how much you could borrow and still be within what you can afford.
  • Do I have to have perfect credit?

    While it is true that if your credit score is high you may receive better rates and have more options available to you, this doesn't mean you can't obtain a mortgage if you've had some slips in the past. Credit is only one factor in the underwriting process, so don't think that this alone will stop you from getting a loan; however, your credit history needs to demonstrate both willingness and ability to repay on time.
  • Cost and Fees

  • What are points?

    Points are a one-time fee that a borrower pays to lower the interest rate. One point equals one percent of your loan amount.
  • What is the difference between interest rate and APR?

    The interest rate is the cost to borrow the money disbursed in the loan. The APR is the total cost of the loan over its life, including costs, points and fees
  • Why do I pay pre-paid interest?

    When you close your loan, interest accrues in between the closing date and the last day of that calendar month. This amount is added to the closing costs for your loan rather than making your first monthly payment larger in order to absorb the extra that would be due.
  • Should I pay my fees out of pocket?

    If you are refinancing, you can either pay the fees in advance or roll them into the closing costs. For refinance loans only - if you have extra funds, like you would for a down payment on a car, for example, then it makes sense to consider paying them out of pocket as you will have a lower monthly payment. If you don't have the extra funds, it makes sense to roll the fees in. The difference in payment and total cost of the loan is usually nominal. (If you are purchasing, first lien mortgages typically do not permit fees to be included in the loan amount.)
  • What are the closing costs?

    Closing costs include items like appraisal fees, title insurance fees, attorney fees, pre-paid interest and documentation fees – to name a few. These items are usually different for each customer due to differences in the type of mortgage, the property location and other factors. You will receive a good faith estimate of your closing costs in advance of your closing date for your review
  • Which amounts are included in my monthly payments?

    If you have a fully amortizing first lien mortgage, portions of your monthly mortgage payment go toward loan principal and interest. Interest-only first lien mortgage payments include only the interest that is due on the outstanding principal balance. If your first lien mortgage carries mortgage insurance, a portion of your monthly mortgage payment will pay this also, unless the lender has paid your mortgage insurance or you have paid your mortgage insurance upfront. If you have set up an escrow account for your first lien mortgage, then portions also go toward your property taxes and homeowners insurance. Home Equity Lines of Credit require monthly payments of the interest due on the outstanding principal, while Home Equity Loans are fully amortized payments that contain both principal and interest. HELOCs and HE Loans do not require mortgage insurance. No matter the type of mortgage product you have, you can always make additional payments toward principal, which will help you pay off your loan more quickly.
  • What is PMI?

    Private Mortgage Insurance (PMI) protects lenders against losses that can occur when a borrower defaults on a mortgage. PMI is required on first mortgage purchase transactions when the borrower has less than a 20% down payment. Likewise, it is required on first mortgage refinance transactions when the borrower has less than 20% equity in the property being refinanced. The cost of the mortgage insurance is typically added to the monthly mortgage payment.