Frequently Asked Questions
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1)
Q: I've never had credit before. I've been told I can't qualify for a mortgage unless I pay a really high interest rate.
A: First of all, let us run your credit to find out for sure. We order credit through all three bureaus thus it's always important to check. If you have no credit at all, we suggest you get a department store credit card or a secure credit card. You can also get a small loan over a short term (6 months to a year) from your trusted bank or credit union. Pay regularly and on time. In as little as a couple of months you can establish a good credit history. While you are establishing your credit history be sure to be saving for a down payment! When you come back to the housing market you should have better luck.
If you can't wait you may have to pay an interest premium. That's because the lender has no idea how you will handle the credit they are giving you! Don't despair. Get the best deal you can, with your credit as it is. As a mortgage broker, we may be able to show your stability (good job, regular pay, possibility of advancement) and work with your around the problame.
2)
Q: What are credit scores?
A. A credit score is a snapshot of an individual’s credit history and is subject to regular fluctuation. Higher credit scores are typically favored by lenders. Negative influences to your credit score include delinquencies, high balance to available credit, bankruptcy and foreclosure. We use your middle score and sometimes your high score from the three bureaus (Experian, TransUnion and )
3)
Q: I've never bought a house before. Help!
A: While there is a lot to know and there are lots of people who can help.
If you are buying, get a good real estate agent who can negotiate great prices and seller paid closing costs. We work with loyal and knowledgeble agents we can recommend. They'll each have some tidbits of information to share.
Talk to us! We'll have useful and good information for you. While you are here, get pre-approved for a mortgage! This will help you figure out your budget and whether you are ready for this important step; including whether you can afford to buy at this time. Always find out how much you can afford before you start looking!
Just found the property of your dreams and you're in a hurry? Read our section on Buying a House. We've got some tips and tidbits there for you. It will give you some information that you can keep in mind, while you speak to a lender or a real estate agent.
In general, it's worth it to take your time and understand what you are getting into. This is likely the single biggest purchase you will ever make. You can't afford not to talk to someone who has excessive knowledge like our company.
4)
Q: I've heard bad things about my lender. What now?
A: If you haven't signed papers then don't. We take some time and compare the consumer feedback on our 30 lenders. We check with financial rating companies to be sure the lender is financially stable. Unfortunately, bad customer service can be the result of financial pressures inside an organization. That's why we'd much rather deal with the lenders than bring a migrane to you.
5)
Q: What's a “non-conforming” mortgage?
A: A non-conforming mortgage is a mortgage that doesn't conform to standard underwriting practice. In most cases this could be because of no credit history or bad credit.
6)
Q: How long does it take to process and close a mortgage loan?
A. Usuall two to three weeks. The amount of time varies depending on the transaction. Discuss your projected closing date with your loan officer during your initial consultation. Palmetto State Mortgage will work closely with you, your real estate agent, the seller and attorney to schedule your closing date and time.
7)
Q. What can I do to ensure a smooth mortgage transaction and expedite the process?
A. Provide the requested documentation, such as pay stubs and bank statements, as soon as possible during the loan application process. If any of your qualification information changes, please notify your loan officer immediately.
8)
Q. What is the difference between pre-qualification and pre-approval?
A. Mortgage pre-qualification is the lender’s opinion of your ability to obtain a loan. Pre-approval is based on the lender’s underwriting decision after a thorough review of your complete loan application and supporting documentation.
9)
Q. Who or what determines the interest rate on my loan?
A. Generally, the interest rate may be locked in for a period of 30 - 60 days at the time of application or at some point during the loan application process. Consult with your loan officer to determine when to lock in on your loan rate. Various economic indicators affect mortgage rates.
10)
Q. How often do rates change?
A. Mortgage rates change daily – sometimes more than once a day. Rates are not locked until the loan officer is instructed by the customer to do so. Consult with your loan officer to determine the best time to lock in your loan rate. A change in the prime rate does not typically affect mortgage rates.
11)
Q. What are discount points?
A. Discount points are the costs associated with buying down your interest rate. One point is equal to one percent of the loan amount. Discount points are paid at closing.
12)
Q. What is the difference between the Annual Percentage Rate (APR) and the note rate?
A. The APR will always be slightly higher than your note rate unless there are zero closing costs on your loan. The APR is the cost to finance your loan on an annual basis.
13)
Q. What costs are involved in closing a mortgage loan?
A. Closing costs vary but most of the time are approximately 2-3% of the loan amount. A GFE will show approximately how much yours will be. Typical costs include an origination fee, attorney’s fees, title insurance, recording fees, appraisal fee, credit report fee and underwriting fees. Costs also associated with the closing that are considered separate from closing costs include prepaid expenses for taxes and insurance. Prepaid expenses vary greatly depending on the value of the property.
14)
Q. What is an escrow account?
A. An escrow account is an account established by the lender at closing to disburse taxes and insurance on your behalf. Once this account is established at closing, the lender makes these payments for you when due.
15)
Q. Am I required to have an escrow account?
A. You must establish an escrow account for taxes and insurance on government loans. You may waive the escrow account requirement on conventional loans if your loan to value is 80% or less, and usually for an additional fee.
16)
Q. What do I have to bring to closing?
A. You will need to have sufficient certified funds at closing and also proof of insurance (we will prepare that for you with your HOI agent). Your loan officer and the closing attorney will provide you with the exact amount of funds needed to close once a closing package has been released by your lender.
17)
Q. What insurance am I required to have at closing?
A. Homeowner’s insurance is required to protect against loss or damage to property. Different types of policies available include hazard insurance, flood insurance and condominium insurance. It is the borrower’s responsibility to have adequate homeowner’s insurance coverage at closing. Check with your loan officer to obtain the correct mortgage clause for your insurance policy.
18)
Q:Should I refinance my home loan?
A: What to consider:
Have interest rates gone as low as you think they will in the near future? Ask us! We'll tell you whats going economically.
Check articles in The Wall Street Journal, the business section of newspapers, and business magazines for expert opinions on economic trends.
Compare your existing interest rate with current market rates.
Do you plan to remain in your home long enough to recapture the costs involved in refinancing? Even though there are up-front costs involved in refinancing, you will save money over time because your new interest rate is lower. Contact a loan officer at Palmetto State Mortgage to analyze the numbers for your own situation.
19)
Q:What documents do I need to provide my broker with?
A: Every loan varies, however, most of the time the following documents are needed, unless you're doing a stated program.
- Last year's W-2 forms.
- One to two months' current pay stubs.
- Two months of current bank statements
- A list of current "liquid" assets and balances, such as checking and savings accounts.
- And if you are self-employed, we will need federal tax returns from the past two years.
20)
Q. What should I do after the closing?
A. Refer Palmetto State Mortgage to a friend!
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