This is the process of determining whether a customer has enough cash and sufficient income to meet the qualification requirements set by the lender on a requested loan. A pre-qualification is subject to verification of the information provided by the applicant. A pre-qualification is short of approval because it does not take account of the credit history of the borrower.
The pre-approval process is much more complete than pre-qualification. For pre-qualification, the loan officer asks you a few questions and provides you with an opinion of your loan qualifications based on verbal information you provide. Pre-approval includes documentation of all information provided verbally in the pre-qualification process, including verification of credit history. A property appraisal and title search are generally not done at this stage.
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 looking to save money, try this calculation:

  • Calculate the total cost of the refinance
  • Calculate the monthly savings
  • Divide the total cost of the refinance (#1) by the monthly savings (#2). This is the ‘break even’ time.

If you own the house longer than this, you will save money by refinancing.
Since refinancing is a complex topic, consult a mortgage professional.

A rate lock is a commitment between the lender and consumer to provide financing at specific terms for a specific period of time. There are four components to a rate lock: loan program, interest rate, points, and the length of the lock.
Points are an optional upfront cash payment that is used to permanently reduce your interest rate. Expressed as a percent of the loan amount; e.g., ‘2 points’ means a charge equal to 2% of the loan balance.
Whether or not you should pay one or more points depends on several factors. First, can you afford the cash outlay? If the answer is yes, the next question is how long you will be in the property. Generally, if you will only be there for four years or less, you will not get the point back in that amount of time. If you can afford one or more points, and you believe you will be in the property for a while, you may benefit from the improved loan terms. Make sure that you compare the terms of your loan with and without paying points. If you are getting a fixed rate loan with one or more points, you can figure where, in time, the break-even point is. The break-even point is the point in time when the cumulative savings from the lower interest rate and faster amortization are greater than the dollar amount of the point(s) paid.

There are two types of closing costs, recurring and non-recurring. Non-recurring closing costs include loan points and origination fees, broker fees, lender fees, appraisal and credit report charges, and the costs of title insurance and escrow. Recurring costs include prepaid interest, insurance premiums, and property taxes. Your agent can provide you with a good faith estimate of closing costs for the loan you have chosen.
Generally not. Mortgage bankers/brokers do not add any net cost to the lending process, because they perform functions that would otherwise have to be done by employees of the bank. Furthermore, because mortgage bankers/brokers deal with multiple lenders they can shop for the best terms available on any given day. In addition, they can find the lenders who specialize in various market niches not offered by all lenders.
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. Due to changes in the lending industry, full documentation is required for most of our programs. Please ask one of our mortgage professionals for more information.
An FHA loan is a loan that is insured by the Federal Housing Administration, allowing buyers to purchase homes with as little as 3.5% down. There are programs within FHA for rehabilitating homes and for down payment programs. Ask your loan professional for more details.
A loan eligible for purchase by the two major Federal agencies that buy mortgages, Fannie Mae and Freddie Mac. There are two loan levels for Conforming loans: Agency and Agency Jumbo. Agency loans have a maximum loan amount of $417,000; Agency Jumbo loans are capped at $729,750, subject to geographic restrictions. Ask your loan professional for more information.
A mortgage larger than the maximum eligible for conforming purchase by the two Federal agencies, Fannie Mae and Freddie Mac. It generally refers to a first or second mortgage in excess of $729,750, subject to certain geographic restrictions.