What is the difference between Pre-Qualified and Pre-Approved?
Pre-Qualified means client has provided basic information to determine the loan programs and rates which he or she may qualify for including credit history. Pre-Approved means client has provided all or some of the required documents and is waiting for underwriter's review and decision.
What are closing costs?
Closing costs are all the costs associated with the loan such as documentation fees, origination fees, credit report, appraisal, etc. Costs are vary among borrowers due to the different loan programs and services offer for each loan.
What are point charges?
Point charges are costs of locking a rate lower than the current market rate.
Why does SiliconSage Mortgage call my employer? Landlord?
SiliconSage Mortgage will provide disclosures to what information is needed in order to process the loan. Verification of employment and rent are required documents. Underwriters will make the decision if they are needed or not. If the verifications are needed, they must be completed prior to loan closure.
Do I need a great credit to get a mortgage?
Not necessary, according to Fannie Mae, the minimum credit score requirement is 620. However, having a high credit score can be a great benefit such as a lower interest rate.
How much of a down payment do I need?
The minmum down payment is different among the type of mortgages. An FHA loan has a minimum down payment of 3.5% and a VA or USDA loan has no money down at all. However, a conventional loan with a down payment less than 20% of the home purchase price, you'll have to pay a private mortgage insurance or PMI. The PMI payment won't be permanent. Once the loan-to-value ratio on your mortgage falls to 80%, you can ask your lender to drop it.
Should I "Lock" my interest rate?
Locking your rate will guarantee the rate for some predetermined period, typically 15, 30, 45 or 60 days. Interest rates fluctuate daily; if they have been trending upward, it is best to lock your rate before it goes up. Locking for a longer period will cost points or interests. If the lock expires and the loan is not ready, an extension is available for a cost.
What documentation should I gather?
Each individual has their own specific documents request by the underwriter, but in general the following documents are mostly requested: ID, Income and assets.
What is an escrow account?
An escrow account is handle by an escrow officer who is the settlement agent for the mortgage transaction. When you apply for a mortgage loan, you will be asked to put your money in a lump sum in an escrow account. The money could be taxes, insurance, and or closing costs. It will be collected when the loan is at closing.
What is included in my monthly mortgage payment?
The mortgage payment is divided into 4 parts: Principal, Interest, Taxes and Insurance (PITI)
Principal and interest are the main parts, and they will always include in the mortgage payment. Principal paymment is the repayment of your balance, and interest is the payment of interest charge on the outstanding balance.
Taxes and Insurance are optional if you do not want them to be included in the mortgage payment, you can opt for an escrow waiver. If you do want to be included, an escrow account will be set up to collect them both or just taxes only.
Will my monthly payments change during the loan term?
The payment may change even if you have a fixed loan. If taxes and insurance increase, and they are included in your mortgage payment. The lender will ask for a higher payments. As for the ARM loans, payments are fixed for a certain period, then they may increase or decrease annually after the fixed period.