FAQs

What documents do I need to provide when applying for a mortgage?

To make the process go more smoothly, and to get the most complete picture of your financial situation, prepare the following:

• -Bank information, including account numbers and three months of statements.
• -Three months of statements from investment accounts.
• -W-2s, pay stubs, proof of employment, and any documentation demonstrating two years’ income.
• -Tax returns, if self-employed.
• -Debt currently owed, including amounts due and account numbers.
• -Documentation related to divorce, alimony, or child support, if applicable.

What is the difference between pre-qualified and pre-approved?

When a homebuyer is pre-qualified, he or she has provided basic information which helps the lender determine which loan program the homebuyer may qualify for. However, when a homebuyer is pre-approved, the lender has collected, verified, and presented the information needed for underwriting and approval.

What is the difference between the interest rate and APR?

Simply put, the annual percentage rate (APR) reflects the mortgage interest rate plus other charges.

Your interest rate is the cost you will pay each year to borrow the money, expressed as a percentage rate. It does not reflect fees or any other charges you may have to pay for the loan.

The APR is a broader measure of the cost to you of borrowing money, also expressed as a percentage rate. The APR takes into account both your interest rate and any additional costs or prepaid finance charges, such as the origination fee, points, private mortgage insurance, underwriting, and processing fees. This is why your APR is usually higher than your interest rate.

While your interest rate is the rate at which you will make your monthly mortgage payments, the APR is a universal measurement that can assist you in comparing the costs of mortgage loans offered by different mortgage lenders.

Note: the APRs of adjustable-rate mortgage loans do not reflect the maximum interest rate of the loan.

What are the closing costs?

The term "closing costs" includes a variety of expenses above the purchase price of your property. These generally include fees for an attorney, a title search, title insurance, taxes, lender costs, and some upfront housing expenses, such as homeowner’s insurance.

Some of those costs are nonnegotiable, such as recording or transfer taxes charged by your state or local government. Others, such as your lender's fee, can be negotiated. You may also be able to negotiate with the home seller or your lender to cover some of your closing costs. Real estate agent commissions are considered a closing cost and are usually paid by the seller.

Note: while first-time homebuyers typically focus on saving money for the down payment for a home, they also need to budget for closing costs. Your lender provides an estimate of closing costs in a document called a closing disclosure.

Which amounts are included in my monthly payments?

Unfortunately, a monthly mortgage payment isn’t just about paying off your mortgage. Four factors play a role in the calculation of the monthly payment: principal, interest, tax, and insurance—collectively known as PITI.

The principal is the portion of the payment dedicated to the repayment of the principal balance—the money you borrow from the lender to buy a house. Interest is the percentage of the principal that you must pay the lender for taking a risk and loaning you money.

Taxes are used to pay for local municipal services, such as schools, police, and fire, or public works, like roads. Taxes are calculated by the government on a per-year basis, but you can pay these taxes as part of your monthly payments. The lender collects the payments and holds them in escrow until the taxes have to be paid.

Insurance payments, like taxes, are also included with the monthly payment and held in escrow until the bill is due. There are two types of insurance coverage that may be included in a mortgage payment. One is property or homeowner’s insurance, which protects the home and its contents from fire, theft, and other disasters. The other is private mortgage insurance (PMI), which is mandatory for people who buy a home with a down payment of less than 20% of the cost. This type of insurance protects the lender against loss in the event the borrower defaults. PMI coverage can be dropped once the borrower has at least 20% equity in the home.

Note: you can opt for mortgages that do not include taxes or insurance as part of the monthly payment. With this type of loan, you have a lower monthly payment, but you must pay the taxes and insurance on your own.

When do I lock in my interest rate?

Mortgage rates are constantly moving up and down. During the underwriting and processing of a mortgage, rates can fluctuate enough to potentially cost or save you thousands of dollars over the life of the loan.

A mortgage rate lock is an offer by a lender to guarantee the interest rate of your loan for a specified period of time. The lock period usually extends from initial loan approval, through processing and underwriting, to loan closing.

What will my rate be?

Rates are based on a variety of factors such as the loan purpose, your credit history, your ability to repay, the value of the property, and the loan amount.

How does my escrow account work?

An escrow account is a separate account that holds funds for the purpose of paying expenses such as property taxes and insurance. The lender collects the funds to be deposited into the account each month along with your monthly payment and then pays the bills on your behalf when they come due.

By taking the annual costs for homeowner's insurance, property taxes, and other items and dividing them by 12, a monthly payment amount is determined and added to your monthly principal and interest payment. Spreading the cost of these expenses over 12 months makes it easier for you to budget those expenses so you won't have to come up with additional cash when bills are due. While including taxes and insurance in your monthly payment isn’t mandatory for most loans, for some types of loans, escrow accounts are a requirement.

When is my due date?

Your mortgage payment due date is listed on your monthly billing statement. A late charge is assessed if the payment has not been received and processed by the date noted. It is very important that you make sure your payment reaches us by the due date each month in order to maintain good credit. Late payments can negatively affect your credit record.

Can I pay more than the amount of my monthly mortgage payment?

Yes, you can. In order to pay off a mortgage faster, many homeowners opt to make additional payments, either regularly or in a lump sum. It is important to determine if there are any pre-payment penalties for paying off a mortgage sooner. Contact us to determine if this might be the case for your mortgage.

How do I know how much home I can afford?

Use our complimentary mortgage calculator to see how much house you can afford.

How do I start the application process for a mortgage?

Visit us, call us at (267)415-3900, or access our Online Application.