Frequently Asked Questions

What are the different types of mortgage loans?

• Rates are fixed for the life of the loan and are available for various amortization periods: 15 years, 20 years, 25 years, 30 years.

Adjustable Rate Mortgages (ARM)

• 6-Month ARM: Rate adjusts each six months
• 1-Year ARM: Rate adjusts annually
• 3/1 ARM: Rate fixed for 3 years then adjusts annually
• 5/1 ARM: Rate fixed for 5 years then adjusts annually
• 7/1 ARM: Rate fixed for 7 years then adjusts annually

Two-steps

• 5/25: Rates adjust once at end of first 5 years then remains fixed for 25 years
• 7/23: Rates adjust once at end of first 7 years then remains fixed for 23 years

Balloons

• 5/25 or 7/23: Rate is fixed for first 5 years or 7 years

How do I know what my loan rate will be?

Rates vary primarily based on the type and purpose of the loan, your credit history and income, loan amount, value of the property and the number of points you are willing to pay.

How do I calculate my-loan-to-value ratio(LTV)?

The loan-to-value ratio (or LTV) is one of the most important factors in your loan process. It is used to determine the limits within which your housing and debt ratios must fall for you to be approved. It can also determine which fees you will be charged for your loan and the amount of these fees. It will also determine whether you must pay Private Mortgage Insurance (PMI) and use an impound/escrow account.

Your LTV is simply the amount you are borrowing divided by the value of the subject property you are purchasing or refinancing. This gives you a simple ratio. For example, a house valued at $100,000 which you intend to purchase with an $80,000 loan (and a $20,000 down payment of your own cash) is said to have an LTV of 80 percent ? that is, the loan represents 80 percent of the value of the house.

The value of your property is its appraised value OR the amount you pay for the property (the market value), whichever is lower. In the initial stages of qualification and approval, your property's value is understood to be an estimate. It will be confirmed, if necessary for your particular loan, by a professional appraiser.

What is a credit score?

Before deciding on what terms lenders will offer you on a loan (which they base on the "risk" to them), they want to know two things about you: your ability to pay back the loan, and your willingness to pay back the loan. For the first, they look at your income-to-debt obligation ratio. For your willingness to pay back the loan, they consult your credit score.

The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. (and they're named after their inventor!). Your FICO score is between 350 (high risk) and 850 (low risk).

Credit scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality or marital status. In fact, the fact they don't consider demographic factors is why they were invented in the first place. "Profiling" was as dirty a word when FICO scores were invented as it is now. Credit scoring was developed as a way to consider only what was relevant to somebody's willingness to repay a loan.

Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Different portions of your credit history are given different weights. Thirty-five percent of your FICO score is based on your specific payment history. Thirty percent is your current level of indebtedness. Fifteen percent each is the time your open credit has been in use (ten year old accounts are good, six month old ones aren't as good) and types of credit available to you (installment loans such as student loans, car loans, etc. versus revolving and debit accounts like credit cards). Finally, five percent is pursuit of new credit -- credit scores requested.

Your credit report must contain at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.

Should you talk to a mortgage professional before house hunting?

Absolutely! Even if you haven't so much as picked out houses to visit yet, it's important to see your mortgage professional first. Why? What can we do for you if you haven't negotiated a price, and don't know how much you want to borrow?

When we pre-qualify you, we help you determine how much of a monthly mortgage payment you can afford, and how much we can loan you. We do this by considering your income and debts, your employment and residence situations, your available funds for down payment and required reserves, and some other things. It's short and to the point, and we keep the paperwork to a minimum!

Once you qualify, we give you what's called a Pre-Qualification Letter (your real estate agent might call it a "pre-qual"), which says that we are working with you to find the best loan to meet your needs and that we're confident you'll qualify for a loan for a certain amount.

When you find a house that catches your eye, and you decide to make an offer, being pre-qualified for a mortgage will do a couple of things. First, it lets you know how much you can offer. Your real estate agent will help you decide on an appropriate offer, but being pre-qualified gives you the confidence to know you can follow through. More importantly, to a home seller, your being pre-qualified is like you walked into their house with a suitcase full of cash to make the deal! They won't have to wonder if they're wasting their time because you'll never qualify for a mortgage to finance the amount you're offering for the home. You have the clout of a buyer ready to make the deal right now!

You can always use the calculators available on our site to get an idea of how much mortgage you can afford -- but it's important to meet with us. For one thing, you'll need a Pre-Qualification Letter! For another thing, we may be able to find a different mortgage program that fits your needs better.

How long will it take to get prequalified for a mortgage?

You can get a response in minutes when you prequalify for a mortgage. There are five easy steps involved in the prequalification process with an easy form to complete.

When will I receive my year-end statement of interest paid for tax purposes?

Year-end interest-paid statements (IRS Form 1099) are mailed out by the end of January. You should expect to receive your statement in early February. Contact us  if you do not receive it by February 15.