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Look below to find the answers to some of your most common questions, if you cannot find an answer here, please contact us!
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| What are the differences between pre-qualification, pre-approval, and final approval? |
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A pre-qualification provides you with an idea of how much you can borrow based on the income and debt information you provide the home mortgage specialist. At this stage, the information you provide the home mortgage specialist may not be verified, and the pre-qualification serves only as an estimate of what you might borrow. In some cases, if you present proof of your income and liquid assets used for closing, a pre-approval subject to an appraisal can be issued before you leave the application. In other cases, employment, asset, and credit are verified after the application is taken. A pre-approval can give you more bargaining power when you are ready to make an offer on a home because the seller can be confident that you will actually be able to buy the house. A pre-approval can also give you the peace of mind that you will be able to obtain the loan you need in order to purchase the property you have selected. Final approval occurs when the property is appraised, all required documentation is collected, all conditions are met, and the underwriter states that a loan can be made for the property you have chosen. |
| What factors determine if my mortgage gets approved? |
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| Several factors are considered when determining if your loan will be approved: |
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Funds - Do you have enough money to cover closing costs? Do you meet reserve requirements (money left after closing to cover your immediate expenses)? Do you need gift money? |
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Income - Do you have the income to cover your mortgage and other debts each month?
· Credit history - Does your credit history show that you pay your obligations on time? |
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Appraisal - Is the property you want to purchase worth the amount of money you are trying to borrow? |
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| How long will it take for my loan to be approved? |
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In many cases, loans are approved the day of the application, subject to an appraisal. How you prepare for the application can have an impact on how long it takes the lender to approve your loan. See Application Checklist for details about the information you will need to provide. |
| How much down payment do I need? |
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NONE. We offer many programs that require low or no down payment. |
| I don't have a lot of money for a down payment. Can I still get a loan? |
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Yes, we offer many programs that require little or no money down. |
| What documents will I need to provide with my application? |
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You will need to provide information about your assets and debts, employment information, and information about the property you want to buy. This information is necessary for us to evaluate your loan file and make a final approval. For a complete list of information you should be prepared to provide, see the Application Checklist. |
| What is the difference between a fixed-rate and an ARM mortgage? |
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A fixed-rate mortgage offers an interest rate that is steady throughout the life of the loan. Fixed-rate mortgages offer the security of always knowing exactly what your monthly payment will be. An Adjustable Rate Mortgage (ARM) offers an opportunity to save on interest costs. The interest rate on ARMs can fluctuate (up or down) periodically. However, you are protected from rates getting too high, because ARMs have annual and lifetime rate caps, which limit how high your rate may go. |
| How do I know if it is best to lock my rate or let it float? |
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This is a decision you must make. We do not give advice on the "lock now or lock later" question. No person or institution knows for sure which direction, if any, rates will move at a particular time. Here is one way of looking at the question: If you can afford the payment and are comfortable with all the other terms, it makes sense to go ahead and firm it up IN WRITING. Do not be concerned if rates fall after you lock and before you close. If your objective is to purchase a property, you should be pleased that you have eliminated one more uncertainty. If you are refinancing, you should be pleased that you have either reduced your monthly payments or obtained the cash you need for home improvement or any other worthwhile purpose. |
| When can I lock my rate? |
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You can lock your rate at application, while your loan is being processed and approved, or any time before the closing. At Eustis Mortgage, you can even lock your rate for three business days while a purchase agreement is under negotiation. When you apply, the rate you locked before the purchase agreement will apply. |
| What are my rate lock options at Eustis Mortgage? |
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Eustis Mortgage offers lock periods up to six months on some loan programs. We also offer a Float Down Option, which protects you from rising rates but lets you benefit if rates fall. Under the Float Down Option Lock, you can exercise your Float Down Option anytime until one business day before closing. For the Float Down Option, we require a non-refundable deposit of 1% of the loan amount due when you lock in. This deposit is CREDITED at closing |
| What is PMI (private mortgage insurance)? |
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Private mortgage insurance (PMI) is required for borrowers who put up a down payment of less than 20% of the value of the home. PMI is designed to protect lenders from the risk of lending to a borrower with less than 20% equity. On a positive note for the borrower, PMI provides an opportunity for you to get a mortgage with less cash upfront, allowing you to purchase a home sooner than you might if you had to save the 20% for a down payment. |
| How can I avoid PMI? |
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Private mortgage insurance (PMI) is required for borrowers who put up a down payment of less than 20% of the value of the home. You can avoid paying PMI by putting up a down payment of 20% or more of the value of the property you want to buy. |
| When can I cancel PMI? |
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Single-family owner occupied dwellings for which loans were made after July 29, 1999 are protected by the Homeowners Protection Act. This means that PMI will be automatically terminated when the loan-to-value ratio is scheduled to reach 78% assuming all payments are current. Borrowers can request cancellation of PMI when the loan reaches an 80% loan-to-value ratio, assuming the loan is current. |
| Do you finance mixed-use/multi-family properties? |
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Yes. This is where our experienced home mortgage specialists and underwriters prove their worth. We are able to determine quickly if a property is eligible. Sometimes, we will have to obtain an appraisal to make a definitive decision. |
| How do I know whether the house is in a flood zone, and if so, how can I determine how much my premiums will be? |
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We will order a flood certification before loan closing, as required by Federal law. However, if you would like to find out if the property you are purchasing is in a flood zone, you can contact your insurance agent or check the local library for updated flood maps. FEMA determines flood risk by comparing your lowest floor elevation to flood levels over the past 100 years. FEMA bases flood insurance premiums on this information. You may need to get a slab elevation if you are unable to obtain this information from the seller or your local permit office. |
| What is APR and how is it figured? |
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Annual Percentage Rate (APR) is a calculated interest rate that reflects the overall cost of a loan on an annual basis. APR includes interest payments, origination fees, discount points, and other costs of getting a loan and is, therefore, usually higher than the interest rate. APR can be useful for comparing different types of loans. However, while all lenders are required to calculate APR based on the guidelines provided by the Truth in Lending Act, not all lenders include the same costs in the calculation. This can make it difficult to compare the APR for loan programs from different lenders. |
| What are points? |
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Points, also known as "discount", is money paid at closing so that you can get a lower interest rate for the life of the loan. For example, you may be quoted a rate of 7.375 with 0 points or 7.000 with 1 point. One point is equal to 1% of the mortgage amount. |
| What are closing costs? |
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Closing costs are expenses paid, by both buyers and sellers, at the closing meeting. Closing costs include the down payment, prepaid taxes and insurance, points, title insurance and other fees that may apply to your loan. |
| What are pre-paids and how are they calculated? |
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Pre-paid items are hazard/homeowners insurance, taxes, and pre-paid interest. Most insurance is paid in advance, so, you will be required to pay for your homeowners and flood (if required) insurance policy for the first year in advance. Also, the lender will require you to make a deposit of up to 2 months in order to establish an escrow account. |
| Can I pay my own taxes and insurance? |
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Many loan programs require that the lender pay the taxes and insurance on behalf of the borrower. Your loan officer can determine if the option to pay taxes and insurance yourself is available on the loan program that is best for you. |
| What is credit scoring? |
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A credit score, or FICO score, is a single number supplied by credit bureaus that is useful for predicting a person's ability to repay a loan. Credit score calculations are based on a model developed by Fair Isaac Company, hence the term FICO. The FICO score is determined by your credit history - previous performance, current level of debt, how long you've had credit, how much credit you are currently seeking, and what types of credit you have available. Your FICO score is one factor the underwriter considers when evaluating your loan file. |
| Can a person who has had a bankruptcy get a home loan? |
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Yes. Some programs require a waiting period as little as one year from the date of discharge before you can obtain a mortgage. |
| Does my credit have to be perfect in order to get a home loan? |
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No. We work successfully with many customers who have had minor credit blemishes. Also, we have access to programs for those who have had major life changes resulting in serious credit issues. |
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