Answers to the most commonly asked mortgage questions:
Why should I choose Skyline Home Loans?
We guarantee what you expect: We will handle every detail of your transaction with integrity and courtesy while maintaining the security of your confidential information. We understand that timing can be everything so we promptly pursue and secure every financing and rate advantage for you.
Why should I consider refinancing my home loan?
Most people refinance to restructure debt and monthly payments, make purchases or reorganize their monthly budget. Refinancing can give you more available cash and monthly payment flexibility so your equity and credit can work to make or save you more money.
When should I consider refinancing my home loan?
When you want to lower your interest rate, lower your payments, pull cash out, convert from an adjustable rate to a fixed rate loan, restructure high interest debt, invest, start up a business, or help family and friends.
How do you know I am getting the best interest rate when I refinance?
Interest Rates are determined by 5 core factors:
Your previous credit history.
Your home’s loan to value (the un-used equity left after borrowing against the value).
The number of days until you can sign the new loan documents (the faster you go, the lower the new rate can be locked in for you).
Income and Employment verification (can they be proven easily or is it better to just state what they are).
Your new forecasted debt to income ratio (how much income is coming into your household versus how much will be going out on a monthly basis, after the refinance).
Can I receive cash back at time of closing my refinance?
As long as the value of the home warrants the amount you are looking to borrow. One thing you need to be aware of is how this might affect your interest rate and you may need mortgage insurance. If it is going to push your LTV over 80%, more than likely your are going to be charged a higher interest rate.
Why do I need a good faith estimate?
A good faith estimate must be provided by a mortgage lender or broker in the United States to a customer, as required by the Real Estate Settlement Procedures Act (RESPA). The estimate must include an itemized list of fees and costs associated with your loan and must be provided within three business days of applying for a loan.
These mortgage fees, also called settlement costs or closing costs, cover every expense associated with a home loan, including inspections, title insurance, taxes and other charges.
A good faith estimate is a standard form which is intended to be used to compare different offers (or quotes) from different lenders or brokers.
Note: The good faith estimate is only an estimate. The final closing costs may be different.
At My Home Loan Helper, we believe in full disclosure. We show you the fees upfront (before you sign) and pass the lowest interest rate you qualify for straight through to you.
What is a prepayment penalty?
A prepayment penalty is a provision of your contract with the lender that states that in the event you pay off the loan entirely, you will pay a penalty. Penalties are usually expressed as a percent of the outstanding balance at time of prepayment, or a specified number of months of interest. Usually, prepayment penalties decline or disappear over time. Rarely do they apply after the fifth year. Partial prepayments of up to 20% of the balance usually are allowed in any one year without a penalty. A penalty that applies to a home sale as well as a refinancing, is a “hard” penalty; if it applies only to a refinancing, it is a “soft” penalty.
What does pre-qualified mean?
Pre-qualification is a process by which a potential home buyer qualifies for a home mortgage before making an offer or writing a contract on a house. A lending institution agrees to make a loan in the specified amount to the person it has pre-qualified.
My Real Estate Agent recommended that I get a pre-approval letter. What is a pre-approval letter, and why should I get one?
The lender issues a commitment letter that states the lender agrees to provide a mortgage to the home buyer. Commitment letters help you set realistic goals while you are house-hunting, provide the same negotiating ability as a cash buyer and enable you to move quickly once the perfect home is found.
When mortgage lenders refer to “PITI” - what are they referring to?
PITI is principal, interest, taxes and insurance – the components of a monthly mortgage payment.
When my loan officer asks me if I want to waive escrows, what exactly does she mean?
When you waive escrows, you take the responsibility of paying your taxes and insurance rather than having them included in your monthly payment. Waiving escrows may add a small fee to your closing costs. You can only waive escrows if your loan to value is 80% or less on your first lien.
How does the annual percentage rate differ from the interest rate?
The annual percentage rate (APR) is the effective rate of interest for a loan if the calculation is based on the original loan amount less the closing costs. This is the rate that will appear on your preliminary Truth-In-Lending. Please note that the APR is higher than the interest rate on your Real Estate Lien Note.
How do I know what my interest rate will be?
Upon your request, your loan officer will search for the lowest rate and “lock” your rate. The “lock-in” guarantees the home buyer an interest rate provided the loan closes with that buyer and specified property within a set period of time. The property lock-in also specifies the number of points to be paid at closing.
Do I need to have a certain amount of money left after I buy my home?
Most loan programs require a cash reserve sufficient enough to make the first two mortgage payments (PITI).
What is DTI / debt-to-income ratio?
A ratio used by lending institutions to determine whether a person is qualified for a mortgage. Debt-to-income is the total amount of debt, including credit cards and other loans, divided by total gross monthly income.
What is the difference between an FHA and A VA Loan?
An FHA loan is a loan guaranteed by the Federal Housing Administration. FHA issues specific guidelines for mortgages. A VA loan is a loan guaranteed by the Veterans Administration. To obtain a VA loan, the borrower must have served in the Armed forces.
What Is private mortgage insurance (PMI)?
PMI is insurance required to cover the lender should the borrower default on the loan. PMI is sometimes tax deductible.
Do I always have to have PMI on my loan?
PMI can be eliminated by having a down payment of at least 20%.
Will I have two separate payments if I have a second lien?
The second lien is often from a different lender than the first lien. Therefore, borrowers with a second lien will make two separate payments each month—one on the first lien and one on the second lien.
What does my lender mean by “Paper Trail”?
A “paper trail” is copies of all paperwork necessary to prove a financial transaction: copies of all checks, deposit slips, loan paperwork, forms to liquidate assets, etc.
Why did I receive a Truth-In-Lending?
A Truth-In-Lending is sent to all borrowers after a loan application has been made, regardless of whether they have a contract on a property. The Truth-In-Lending Act is a federal law requiring lenders to reveal all of the terms of a mortgage. The APR that appears on the Truth-In-Lending will be higher than the interest rate on your Real Estate Lien Note.
Will I get A copy of my appraisal?
The appraisal will be sent to the customer before closing.
What inspections are required by the lender?
The lender requires an appraisal on all transactions. A clear termite report is only required by FHA if the contract being signed calls for it, otherwise, it is not required. If the appraiser recommends repairs or if repairs are mentioned in the contract, the lender will require that those repairs be done before closing. The appraiser will then perform a final inspection to assure that the repairs were completed. Appraisers seldom require repairs. If the termite report recommends treatment, treatment is required. We will need a receipt showing the name and amount of chemicals used.
Where do I go for closing?
Your closing will take place at the title company. The name and address will be given to you by your loan consultant and/or attorney when your loan is clear to close.
Where do I send my first mortgage payment?
Refer to your “First Payment Letter” in your closing documents to determine where to send your first mortgage payment. If you receive a statement from your new lender prior to the due date of your first payment, send your payment to the new lender. Otherwise, send your payment to the lender as detailed in your “First payment letter”. Remember to include your loan number on your check.
What if I want to file a complaint against a company or residential mortgage loan originator?
CONSUMERS WISHING TO FILE A COMPLAINT AGAINST A COMPANY OR A RESIDENTIAL MORTGAGE LOAN ORIGINATOR SHOULD COMPLETE AND SEND A COMPLAINT FORM TO THE DEPARTMENT OF SAVINGS AND MORTGAGE LENDING, 2601 NORTH LAMAR, SUITE 201, AUSTIN, 78705. COMPLAINT FORMS AND INSTRUCTIONS MAY BE OBTAINED FROM THE DEPARTMENT’S WEBSITE AT WWW.SML..GOV. A TOLL-FREE CONSUMER HOTLINE IS AVAILABLE AT 1-877-276-5550. THE DEPARTMENT MAINTAINS A RECOVERY FUND TO MAKE PAYMENTS OF CERTAIN ACTUAL OUT OF POCKET DAMAGES SUSTAINED BY BORROWERS CAUSED BY ACTS OF LICENSED RESIDENTIALMORTGAGE LOAN ORIGINATORS. A WRITTEN APPLICATION FOR REIMBURSEMENT FROM THE RECOVERY FUND MUST BE FILED WITH AND INVESTIGATED BY THE DEPARTMENT PRIOR TO THE PAYMENT OF A CLAIM. FOR MORE INFORMATION ABOUT THE RECOVERY FUND, PLEASE CONSULT THE DEPARTMENT’S WEBSITE AT WWW.SML..GOV
Are you ready to move forward with a purchase or refinance? Please give us a call at 888-810-1459 and let us help you secure financing for the purchase of a new home or save you money on the refinance of your existing home. Be sure to ask your loan officer about our closing costs incentives and our low rate guarantee!
Disclaimer: The information contained in this article has been prepared by an independent third party and is distributed to consumers for educational purposes only. The information is considered reliable but not guaranteed to be accurate. The opinions expressed in this article do not represent the opinions of Skyline Home Loans. Please consult with a licensed loan officer for expert advice regarding financing or refinancing a home.