Frequently Asked Questions

Lenders consider many factors in evaluating your loan application, but they usually focus on four areas:

• Income and debt. How much money you make and what other bills you have to pay helps the lender determine whether you can afford to make mortgage payments.
• Assets. The lender needs to make sure you have enough money to cover the costs of buying a home.
• Credit. Your history of financial repayment of obligations help the lender predict whether you will repay your mortgage.
• Property. The home you want to buy has to be worth enough to act as collateral for the mortgage.

Getting pre-approved means you receive a loan commitment from your mortgage company before you have found a home, based on a review of your credit and finances. Having your credit pre-approved shows sellers that you're a qualified buyer and helps you establish a clear price range. The process is the same as a typical mortgage application, except that your application doesn't include property information.

Your credit history is only one factor in qualifying for a loan, and having made some late payments doesn't necessarily keep you from buying a home. Someone who has consistently made payments on time in the past may have more financing options than someone who has not, but that doesn't mean a mortgage is off-limits if you've had credit problems. Many loan programs allow late payments, collections, and judgments but may want them to be paid current before loan closing or settled.

There is generally no minimum down payment required for buying a home. Many first-time buyers believe they must put down as much as 20% of a home's purchase price in cash. That may have been true in the past, but many of the mortgage options available to today's home buyers require little or no down payment. With housing prices as high as they are, homeownership would be impossible for many people if not for these low down payment options. Programs such as USDA require no down payment but have income limitations and the home to be in a rural area approved by USDA. FHA has as little as 3.5% down and may even have a program for as much as 3% for a second. Check with your lender and see what options are available before you consider making an offer on a home.

Private Mortgage Insurance (PMI) provides your lender with a way to recoup its investment if you are unable to repay your loan. PMI is usually required when the mortgage amount is higher than 80% of the home's value. This means that if you buy a home with a down payment of less than 20%, you will probably have to pay for PMI.

Closing costs vary based on a number of factors, including the lender, mortgage type, purchase contract, and location, but they usually include the following:

• Lender fees. Your mortgage company may charge for expenses related to making the loan, including an appraisal fee, a credit report fee, processing, and origination points.
• Third party fees. Charges for services not provided by your lender often include the settlement fee, title insurance, and attorney's fees, credit reports, and appraisal fee.
• Prepaid items. Certain mortgage costs must be paid to your lender in advance. The most common of these are pre-paid interest, hazard insurance, and deposits to set up an escrow account.

Discount points are a fee paid to the lender at closing in exchange for a lower interest rate on your mortgage. Paying discount points, each of which is equal to 1% of the loan amount, is often called "buying down" your rate.

So does paying points make sense for you? The answer depends primarily on how long you plan to stay in your home. First, find out how much lower your monthly payments will be if you pay points. Then, calculate how long it will take for those monthly savings to add up to the cost of the points. If it would take five years to break even and you're planning to live in your home for 10, paying discount points may be a good choice

Most mortgage loans have either a fixed interest rate or an adjustable interest rate. With a fixed-rate mortgage, the interest rate never changes and your payments remain stable throughout the life of your loan. With an adjustable-rate mortgage (ARM), the interest rate changes at regular intervals, usually once every year, based on a formula that uses a market index. For most ARM options, rate adjustments begin after an initial period, usually between three months and ten years, during which the rate is fixed.

A fixed rate is usually recommended if you plan to stay in your home for the long term and are buying at a time when rates are relatively low. An ARM is usually recommended if you plan to move before the rate adjustments begin, or if you are buying when rates are relatively high.

Locking your interest rate means your lender guarantees the rate on your loan even if the market rates change before closing. Most lenders will allow you to lock your rate for 30 days at no cost, with the option to extend the rate-lock period for an additional fee.

So how do you know whether to lock your interest rate? It depends on whether you expect rates to rise or fall before you close on your home. No one knows for sure which direction rates will go at a given time, so it's difficult to make a reliable prediction.

For most borrowers, each monthly mortgage payment goes toward the following:

• Principal, which is the total outstanding balance of the loan
• Interest, which is the cost of borrowing money
• Taxes, which are levied on the property by the local government
• Insurance, which protects the owner and the lender from losses caused by fire and natural hazards
• PMI (private mortgage insurance) if applicable

1. Latest 2 years Federal tax return
2. Two most recent pay stub
3. Latest 2 months bank statements, all accounts, all pages
4. Investment accounts and/or 401K, all pages of most recent
5. Copy of Drivers License
6. Copy of Social Security Card

1. Most recent mortgage statement
2. Fire Insurance ( Hazard Insurance) deck page with agent name, number and premium amount
3. If it is an FHA loan you are refinancing, you will need a copy of the original "NOTE"

People refinance their existing home loans for a number of reasons including obtaining a lower interest rate, to save on monthly payments and to change the term of the loan.

People also choose to refinance if they want to switch from an adjustable rate to a fixed rate or to consolidate debt by refinancing for a higher loan amount and using the difference to pay off other debt, or make home improvements.

You may pay an application fee as well as the appropriate closing costs. You may also choose to pay discount points if you want to buy down the interest rate.

If you have enough equity in your property, you can refinance with a loan amount greater than your current mortgage and keep the difference! You can use the money for whatever else you would like.

Roll-in refinancing means you roll the closing costs into the new loan, allowing you to avoid paying the fees up-front. It can be particularly appropriate if the monthly payments of the new loan are lower than your current loan and if you plan on selling your home in a few years because the higher loan balance may matter less than the immediate benefit of lower monthly payments. This can be done if there is sufficient equity, LTV (loan to value) to incorporate the fees.

Yes in most cases, some loan programs do not require a full appraisal or some only an AMV (Average Market Value). You can call your loan officer for details.

1. Latest 2 years Federal tax return
2. Two most recent pay stub
3. Latest 2 months bank statements, all accounts, all pages
4. Investment accounts and/or 401K, all pages of most recent
5. Copy of Drivers License
6. Copy of Social Security Card
7. Most recent mortgage statement
8. Fire Insurance ( Hazard Insurance) deck page with agent name, number and premium amount
9. If it is an FHA loan you are refinancing, you will need a copy of the original "NOTE"

Reverse mortgages are designed for homeowners at least 62 years of age with moderate to significant equity in their homes who want to eliminate their mortgage payment and/or receive additional cash. There are a few reverse mortgage options to which to choose from.

Definitely! Any existing mortgages will be paid off at closing. Then you're free to enjoy the financial freedom that comes along with eliminating your mortgage payment.

Vacation homes or other secondary residences, and rental properties of more than four units do not qualify.

Currently the IRS treats monies received from a reverse mortgage to be loan advances and not taxable income. We recommend a tax advisor for specific questions.

A homeowner who has put the home in a living trust can usually take out a reverse mortgage, subject to review of the trust documents.

The proceeds from a Reverse Mortgage do not affect these benefits; however, if you are on Medicaid, any reverse mortgage proceeds that you receive must be used immediately. Funds that you retain would count as an asset and could impact Medicaid eligibility. We recommend that you consult your financial advisor.

The interest accrues and is deductible when the loan balance and interest is repaid when the borrower permanently leaves the property. We recommend that you consult a tax advisor.

Most of the costs can be financed as part of your new reverse mortgage, including origination fee, closing costs, and charges incurred by the title and escrow companies. The only out of pocket expenses the borrower must pay during the actual process is the counseling fee and our upfront appraisal deposit. The counseling fee is approximately $125 and can vary by state and location. Our upfront appraisal deposit of $375 is used to cover the appraiser's expenses.

The borrower will pay back the cash advances they have received plus accumulated interest. Any upfront costs that were financed initially will also be added to the loan balance.

All reverse mortgages are "non-recourse" loans which means that the original borrower (s) will never owe more than the home is worth, regardless of the loan balance. Once the owner(s) passes away or moves out of the home permanently, the heirs can sell the property and pay off the existing mortgage balance or they can refinance the property. If the heirs choose to keep the property, they will have to refinance the entire amount of the existing mortgage balance regardless of home's appraised value.

No, the title remains in the name of the borrower(s), however, taxes and insurance must be kept current and the property must be maintained in order to avoid early repayment of the entire loan amount.

You are required to pay your property taxes, keep current the property insurance in place, maintain the home and notify the lender if you will be away from the property for an extended period of time.

The loan is due and payable when the last remaining borrower sells the property, permanently leaves the home, or passes away. Until these events take place you live in the home and make no payments to the lender.

No, repayment can be accomplished by refinancing the existing reverse mortgage to a conventional mortgage loan. The choice is theirs to make! If the heirs sell the property and the proceeds exceed the amount of the home, they can keep the difference. For cases where the proceeds are not sufficient to pay off the loan, then the bank absorbs the difference. If the heirs choose to keep the property, they will have to refinance the entire amount of the existing mortgage balance regardless of the home's appraised value.