Financial Frequently Asked Questions (FAQ)
Rates and Fees
How can I compare rates and fees when shopping for a mortgage?
When comparison shopping, look at points, fees and the Annual Percentage Rate (APR). The APR includes the fees that are charged on your loan. Although one lender may have a slightly lower rate, they may charge more fees, and hence have the same APR as a lender with the slightly higher rate.
What is the difference between APR and interest rate?
The APR reflects the cost of your mortgage loan as a yearly rate. It also incorporates the cost to obtain the loan, such as discount fees and loan origination fee. The interest rate is the actual note rate.
Why is the APR on the Truth-in-Lending disclosure higher than the rate shown on my mortgage note?
The rate reflected on the APR shows the cost of the credit as a yearly rate. This rate is generally higher than the rate stated on your mortgage note because, in addition to the interest rate, APR includes other costs such as origination fee, loan discount points, pre-paid interest, and mortgage insurance. The APR allows you to compare, in addition to the interest rate, the total cost of financing your loan, among various lenders.
Applying and Qualifying
Will there be a fee charged at the time of application?
Application fees vary according to each lender. This fee is generally used to cover the cost of the appraisal and credit report and other items required to process the loan.
Do I need to fill out an application?
Yes, but some lenders will allow you to complete the application verbally right over the phone. A copy of your application will be provided at the closing, which you will need to review and sign at that time.
What documents will typically be requested when I make application for a first mortgage loan?
Frequently lenders will request: W2s, paystubs, bank statements, and the purchase contract on the home you are buying. Documentation requests vary by loan type and lender.
Closing
How quickly can a lender close on my home loan?
Many lenders can facilitate closing 2 to 3 weeks after you have agreed on a purchase contract for a home. If you need more time, you can take as long as you need, while still closing prior to any rate lock expiration dates. Many lenders require 30-60 days from purchase contract and application to closing.
How much money will be required at closing?
You should consult with your individual lender and closing agent; however, the amount of money needed for cash to close is comprised of your down payment, closing costs, as well as the prepaid items for your initial taxes and insurance escrow accounts. A lender is required to provide you with a good faith estimate of settlement costs at the time of application. Also, typically within 24 hours prior to your closing, the closing agent will provide you with the final sum of money required for the closing.
Does the lender require title insurance for purchase transactions?
Yes, a Mortgagee's Title Insurance Policy will be required on purchase transactions.
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