What is the difference between pre-approval and pre-qualification?
When does it make sense to refinance?
What is a rate lock?
What's the difference between a mortgage broker and a lender?
Will I save money going directly to a mortgage lender?
What is a full documented loan?
What are the other types of loans?
What is a good faith estimate?
What is a conforming loan?
What is a jumbo mortgage?
What are points?
What is a pre-qualification?
Q. How much can I borrow for my home?
The amount you can borrow will depend on your income and current debts as well as the value of the home you're purchasing, the amount of your downpayment and the current mortgage rates.
If you haven't yet selected the home you'd like to purchase, you can receive a free estimate of the maximum housing payment you may be able to afford by contacting us at info@MatchMyLoan.com. With your estimate in hand, your real estate agent should be able to provide a reasonable price range for homes you can consider.
Generally, your monthly mortgage payment for principal, interest, taxes and insurance should not exceed 36 percent of your monthly pre-tax income. Monthly payments on other debts, such as car loans, school loans or credit card payments, should not exceed an additional 9 percent of your monthly income.
These percentages can be higher or lower depending on the type of loan you apply for, but they're a good place to start.
Loans obtained during times of high interest rates will have higher monthly payments. Consequently, the lower the interest rate at the time you get your mortgage, the lower your monthly payments and the more you may be eligible to borrow.
Q. Can my credit be pre-approved for a mortgage loan before I select my home?
Yes! And credit pre-approval will help you and your real estate agent a great deal during your search. Not only will it put your mind at ease that your credit has already been reviewed, but pre-approval also lets sellers know that you are a serious buyer and that a sale shouldn't be held up by mortgage problems down the line. We will supply this free of charge!
Naturally, final loan approval will be subject to a completed sales contract, a satisfactory appraisal of the property and any other commitment conditions of Match My Loan.com related to your situation.
Q. How do I choose between fixed and adjustable rate loans?
The choice of fixed or adjustable rate loans depends on your personal preference. "Fixed" means that your loan is based on an interest rate that stays the same throughout the life of the loan. "Adjustable" mortgages usually have rates that are initially lower than fixed rates, but the rates, and the monthly payments, adjust up or down as the economic indicator on which the loan is based rises or falls.
Many lenders will require that an escrow account be established from which to pay taxes and insurance as these become due each year. Your escrow payments will change during the loan term regardless of which program you choose because the portion of your monthly payment that is set aside for escrow will fluctuate with local tax or insurance changes.
Many borrowers prefer the lower initial rates of adjustable rate mortgages (ARMs) especially in times of high rates. ARMs may also allow some borrowers to qualify for a larger mortgage because of the reduced starting rate. They are also popular among homebuyers who don't expect to remain in their home very long or who anticipate that their income will increase soon.
On the other hand, fixed rate loans offer the security of knowing that the portion of the monthly payment for principal and interest wil not change. Many borrowers prefer this more predictable type of loan.
Q. How can I compare interest rates?
To determine your best finance options, compare not only the interest rates, but also other related charges. Lenders are required by the federal government to provide you with the annual percentage rate (APR) in order to help you make comparisons.
The APR is the cost of your credit expressed as a yearly rate, and is generally higher than the note rate. This is because the APR includes the interest rate on which your monthly payments will be based plus related costs such as points, fees for processing the loan and other pre-paid charges.
Points are also an important part of your comparison. One point is usually equal to one percent of the mortgage amount. Points are a one-time cash payment usually made at settlement. Lenders charge points so they're able to offer lower rates while still receiving a fair return on their investment. With most loan types, borrowers can choose to pay fewer points if they are willing to accept a higher rate.
Remember, there are factors to consider when selecting your lender other than interest rates. It is true that a lower rate will give you a lower payment. But the stability of the lender, mortgage types and customer service are also important.
Q. How is applying on-line different from a regular application?
The only physical difference is that the information is taken electronically. This has an enormous advantage compared to a hand-written application. Namely it saves time and allows Match My Loan.com to rapidly process your application. This is due to the elimination of transit time (i.e. sending the application via U.S. mail, etc) and the ability to instantaneously send your information to an appraisal company, credit bureau, and other parties that are involved with the approval process. It also eliminates the possibility of typographical errors, such as the interpretation of someone's hand-writing. Lastly, it allows the customer to apply at their leisure, in the comfort of their own home or office.
Q. After I apply for a loan, what should I expect?
You should expect to receive a ruling on your application within 1to 3 business days, when applying electronically. However, depending of the type of loan (i.e. FHA or FreddieMac), results could be known as soon as a few hours.
Q. Who do I contact for information once my loan is in process?
After applying on-line, you will receive an e-mail immediately, confirming that your application was successfully transmitted and providing contact information (i.e. phone # and e-mail of processor).
Q. Who do I contact for general information and questions on using Match My Loan.com's service?
You may contact our mortgage professionals at on-line at info@matchmyloan.com.
Q. What documents will I need once my loan is in process?
We have put together a "Mortgage Checklist" specifically to help you through the process as easily as possible. You will find a link to the checklist on our main page as well.
Q. Does Match My Loan.com share client information with other companies?
Rest assured, Match My Loan.com will never share any of your personal information without your prior consent. This is true with ALL information we gather from our web site as well as through non-web site based business.
Q. Is Match My Loan.com faster than other brokers?
Yes! Our experience and customer service are unmatched. Our clients and the realtors we service tell us daily that they have never worked with a company as professional, fast and efficient as Guranteed Mortgage. We look forward to working with you soon!
What is the difference between pre-approval and pre-qualification?
The pre-approval process is much more complete than pre-qualification. For pre-qualification, the loan officer asks you a few questions and provides you with a pre-qual letter. Pre-approval includes all the steps of a full approval, except for the appraisal and title search. Pre-approval can put you in a better negotiating position, much like a cash buyer.
Back to Top
When does it make sense to refinance?
Usually people refinance to save money, either by obtaining a lower interest rate or by reducing the term of the loan. Refinancing is also a way to convert an adjustable loan to a fixed loan or to consolidate debts. The decision to refinance can be difficult, since there are several reasons to refinance. However, if you are looking to save money, try this calculation:
- Calculate the total cost of the refinance
- Calculate the monthly savings
- Divide the total cost of the refinance (#1) by the monthly savings (#2). This is the "break even" time. If you own the house longer than this, you will save money by refinancing.
Since refinancing is a complex topic, consult a mortgage professional.
Back to Top
What is a rate lock?
A rate lock is a contractual agreement between the lender and buyer. There are four components to a rate lock: loan program, interest rate, points, and the length of the lock.
Back to Top
What's the difference between a mortgage broker and a lender?
A mortgage broker counsels you on the loans available from different wholesalers, takes your application, and usually processes the loan which involves putting together the complete file of information about your transaction including the credit report, appraisal, verification of your employment and assets, and so on. When the file is complete, but sometimes sooner, the lender "underwrites" the loan which means deciding whether or not you are an acceptable risk.
Back to Top
Will I save money going directly to a mortgage lender?
Not necessarily. In fact, if you are a reasonably astute shopper, you will probably do better dealing with a mortgage broker. Mortgage brokers do not add any net cost to the lending process, because they perform functions that would otherwise have to be done by employees of the lender. Furthermore, because mortgage brokers deal with multiple lenders -- in a typical case, 25 to 30, sometimes more -- they can shop for the best terms available on any given day. In addition, they can find the lenders who specialize in various market niches that many other lenders avoid, such as loans to applicants with poor credit ratings, loans to borrowers who do not intend to occupy the property, loans with minimal or no down payment, and so on.
Back to Top
What is a full documented loan?
Both income and assets are disclosed and verified, and income is used in determining the applicant's ability to repay the mortgage. Formal verification requires the borrower's employer to verify employment and the borrower's bank to verify deposits. Alternative documentation, designed to save time, accepts copies of the borrower's original bank statements, W-2s and paycheck stubs.
Back to Top
What are the other types of loans?
Stated income/verified assets: Income is disclosed and the source of the income is verified, but the amount is not verified. Assets are verified, and must meet an adequacy standard such as, for example, 6 months of stated income and 2 months of expected monthly housing expense.
Stated income/stated assets: Both income and assets are disclosed but not verified. However, the source of the borrower's income is verified.
No ratio: Income is disclosed and verified but not used in qualifying the borrower. The standard rule that the borrower's housing expense cannot exceed some specified percent of income, is ignored. Assets are disclosed and verified.
No income: Income is not disclosed, but assets are disclosed and verified, and must meet an adequacy standard.
Stated Assets or No asset verification: Assets are disclosed but not verified, income is disclosed, verified and used to qualify the applicant.
No asset: Assets are not disclosed, but income is disclosed, verified and used to qualify the applicant.
No income/no assets: Neither income nor assets are disclosed.
Back to Top
What is a good faith estimate?
It is the list of settlement charges that the lender is obliged to provide the borrower within three business days of receiving the loan application.
Back to Top
What is a conforming loan?
A loan eligible for purchase by the two major Federal agencies that buy mortgages, Fannie Mae and Freddie Mac. The loan limits are currently $333,700 for a single family house.
Back to Top
What is a jumbo mortgage?
A mortgage larger than the maximum eligible for purchase by the two Federal agencies, Fannie Mae and Freddie Mac, currently $333,700.
Back to Top
What are points?
It is an upfront cash payment required by the lender as part of the charge for the loan, expressed as a percent of the loan amount; e.g., "2 points" means a charge equal to 2% of the loan balance.
Back to Top
What is a pre-qualification?
This is the process of determining whether a customer has enough cash and sufficient income to meet the qualification requirements set by the lender on a requested loan. A pre-qualification is subject to verification of the information provided by the applicant. A pre-qualification is short of approval because it does not take account of the credit history of the borrower.
Back to Top
