What is the difference between pre-approval and pre-qualification?
The pre-approval process asks for more information than the pre-qualification. For pre-qualification, the loan officer asks a few questions and provides you with a “pre-qual” letter. Pre-approval includes all the steps of a full approval, except for the appraisal and title search. What’s the advantage of a Pre-approval? It can put you in a better negotiating position.
When does it make sense to refinance?
Most people refinance to save money on the monthly mortgage, 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, it could be a very cost effective solution for you.
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.
What’s the difference between a mortgage broker and a lender?
A mortgage broker counsels you on the loans available from different wholesalers, takes your application, and usually processes the loan. This involves putting together the complete file of information about your transaction. When the file is complete, the lender “underwrites” the loan which entails deciding whether you are an acceptable risk for their portfolio.
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.
What is a good faith estimate?
A list of settlement charges that the lender is obliged to provide the borrower within three business days of receiving the loan application.
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 $333,700 for a single family house.
What is a jumbo mortgage?
A mortgage larger than the maximum eligible for purchase by the two Federal agencies, Fannie Mae and Freddie Mac, currently $333,700.
What are points?
It is an upfront cash payment required by the lender as part of the charge for the loan, expressed as a percent of the loan amount; e.g., “2 points” means a charge equal to 2% of the loan balance.