Frequently Asked Mortgage Questions

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.

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 savingsDivide 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.

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.

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.

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.

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.

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.

A loan estimate is a document that provides details about a proposed mortgage loan, including the estimated interest rate, monthly payment, and closing costs.

A loan eligible for purchase by the two major Federal agencies that buy mortgages, Fannie Mae and Freddie Mac.

A mortgage larger than the maximum eligible for conforming purchase by the two Federal agencies, Fannie Mae and Freddie Mac.

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.

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.

The Mortgage Loans process takes from several days to a few weeks. Pre-approval can be quick, but the final approval, which involves underwriting and appraisal, depending on the program and lender, typically takes up to three weeks.

We pride ourselves on finding the perfect solutions for all of our clients. By answering a few simple questions, we'll explore your options and find a program that's right for you.

The specific documents vary by loan type and purpose, but generally include proof of income, credit history, and personal identification. Our team will provide you with a detailed checklist.

To figure out how much you can borrow, we look at what you earn, your other debt obligations, your credit score, and the value of the property you want. Let’s chat about your finances to give you a clear idea of what’s possible. It’s a simple process, and we’ll help you through every step to make sure you find a loan that fits your budget.

Yes, besides your income, existing debts, credit score, and the property's value, there are a few other factors that can affect how much you can borrow: Interest Rates: Higher interest rates might reduce the amount you can borrow because they increase your monthly payment. Loan Term: The length of the loan can also impact your borrowing capacity. Longer terms can lower monthly payments, potentially allowing you to borrow more. Type of Loan: Different loan types have various borrowing limits. For example, government-backed loans might have different limits compared to conventional loans. Down Payment: The amount you can put down up front affects your borrowing amount. A larger down payment can reduce the loan amount. Market Conditions: Economic factors and housing market conditions can influence lending standards and how much you can bore. Financial Stability: Lenders may consider your overall financial stability, including savings and investment balances, which can reflect your ability to manage financial emergencies without defaulting on your loan. Understanding these factors can give you a more comprehensive view of your borrowing capacity. We take all of this and more into consideration when we review your information and provide you with a detailed assessment.

Being self-employed does add a twist to the borrowing process, but it’s nothing you can’t handle! Lenders just want to see a clear picture of your income, so you'll likely need to share a bit more paperwork, like tax returns or bank statements, for the past couple of years. Since your income might vary more than someone with a salary, having a strong credit score or a good chunk saved for a down payment can really work in your favor. Just think of it as gathering a few extra pieces of the puzzle to help lenders see the whole picture. If you’re organized and ready, you’ll be all set!

Got a big income but can only borrow a little? It might be because of a few things: Lots of Debts? - If you've got other big debts, lenders might worry about adding more to your plate. Credit Score - Even with good income, a lower credit score can limit how much they'll lend. Income Ups and Downs? - If your income bounces around, lenders might be cautious. Loan Terms & Property Value - Sometimes, it's about the loan details or the property's value. Different Lenders, Different Rules - Lenders have their own ways of deciding, so it can vary. The good news for you is we don't work with only one lender and one set of rules! Checking these areas and comparing lenders could help you borrow more. Let's find the best fit for you!

A big deposit is awesome, but there might be a few reasons you can't borrow more: maybe it's about your monthly income and expenses balance, your credit score, or just the lender's own rules. Don’t worry, though—your big deposit still puts you in a great spot. If you have any questions or want to explore your options, we are here to help!

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A conventional loan is a mortgage that isn't backed by the government. It typically requires a higher credit score, a larger down payment, and lower debt-to-income ratios than government-backed loans. An FHA loan is insured by the Federal Housing Administration and is designed to help first-time or lower-income buyers with more lenient credit and down payment requirements (as low as 3.5%). However, FHA loans require mortgage insurance premiums (MIP) for the loan’s life, while conventional loans might not require insurance once sufficient equity is built.

Unless we are going to explore a traditional loan (such as conventional, or if you are buying a 2–4 unit and intend to reside there and rent out the other units), you do not typically need to provide income documentation for an investment property. Instead, we will look at your FICO, the projected rent from the property, and your available assets.

That's a great question! The easy answer is no. However, lenders will unlock options with the more experience you have (maybe less money down, or more elaborate renovations, or better rates). Experience is a snapshot in time of the past three years, and the more you have the less risky your application is. However, there are options we have available for our clients with no prior experience.

We work with a wide array of lenders. Some absolutely do require you to be an LLC, or to have an LLC formed prior to the close of the transactions. Others do not have the same requirement. So whether you are a business or an individual, we have options available for you!

A property’s ARV refers to its 'After Repair Value.' Learning how to accurately calculate a property’s ARV is a skill that even the best investors still strive to perfect. In order to determine whether or not a specific property is a good deal, investors must first, keep in mind the price of the property; second, be able to inspect the property and estimate the cost of repairs; and ultimately, analyze the numbers to verify whether or not the ARV will be greater than the initial cost of the property plus the repairs. The lender will also require an appraiser to present the ARV in their appraisal.

If you are purchasing an impoverished home, knowing your exit strategy is key. There are two primary approaches: 'Fix and Flip,' or 'Fix and Hold.' When using a 'Fix and Flip' approach, you are purchasing a property, renovating it, and then when done you are intending to sell the property for a profit. If for some reason you do not sell it right away, or you may want to hold onto the property for whatever reason, we can also explore a 'Bridge Loan' to get your money back out so you can apply it towards a new flip, and then sell this property at a later date. When using a 'Flip and Hold' approach, when the property is renovated, you will refinance it into a long term rental property loan and have the units of the property available for tenants to rent.

That's a loaded question, but it'll come down to the numbers and programs. If you are building up your rental portfolio using Conventional mortgages, then your income plays a huge part in answering this question, as your 'debt to income' is very important. The projected rent can be captured, as well as existing rents (proven through tax returns, lease agreements, and deposits), but the more properties an investor gets, the less this strategy is utilized. These loans typically are limited to 1-4 unit properties. Instead, investors go for DSCR (Debt Service Credit Ratio) or Investor Loans. Under these loans, income is no longer the primary part of the equation. Instead it's FICO, available assets, and the projected income from the unit itself. It is possible that some of our lenders may limit the number of loans you can have at one time (usually more for Fix and Flip than rental properties), others will look at each individual deal. But essentially, if your numbers work, we can find a solution to expand your portfolio.

Depending on how we are financing the purchase there are different options and guidelines. If, for instance, you are looking at traditional financing, you're limited to 1 to 4 units. Even some of our investment lenders put a cap on their options with a 4-unit Multi-Family. Most investment lenders will fund up to 8-units per property, some will do 9, some will do 10, and some will do up to 12. We have some options that will go beyond that and to 100 units or more. Each tier (1-4 units, 5-8 units, 9+) begins to reduce our options with available lenders to fund a property (which impacts fees and rates that a lender will charge) and becomes more limited. We do still have options to fund these properties as well, but if for whatever reason the lenders do not like the proposal, funding these can become more difficult, or more expensive, with fewer options to make them work.

Yes. We do have options available to fund both commercial and mixed use properties. For these, we would need to fully understand what the proposal and intended use may be, and depending on your plan, there may be additional conditions we would have to clear in order to proceed.