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Top mortgage questions answered! Many first-time homebuyers have the same questions you may be asking yourself now. Even if you've done this before, it's hard to know everything about the home-buying process. We're here to help you through the mortgage process. If you have a question that's not answered, please reach out to your local Fairway loan officer and they will gladly assist!
Private mortgage insurance is a fee paid by the Conventional mortgage homebuyer to protect the lender's financial interests in case there is a loan default. The homebuyer is required to pay PMI if the down payment is less than 20%. This fee can be removed from the monthly payment once the loan-to-value ratio (LTV) reaches 80%.
These are expenses, over and above the price of the property, that are incurred by buyers and sellers when transferring ownership of a property. Closing costs normally include an origination fee, property taxes, charges for title insurance and escrow costs, appraisal fees, etc. Closing costs will vary according to the location of your property and the lenders used.
Fairway will keep in contact with you throughout the completion of your application and after the loan has been originated. Once your loan is approved and the appraisal is in, we will contact you regarding any pertinent information. Finally you will be contacted seven to 10 days prior to closing for confirmation of details and three to five days before closing to go over final figures.
The contract will specify where you will be closing. Three to five days prior to closing, Fairway will contact you regarding how much to bring and how to bring it (usually in the form of a cashier's check made payable to the title company). You can use a personal check for up to $1,000.00 for any difference in the amount you are told and the actual amount needed.
A point is equal to one percent of the principal amount of your mortgage. For example, if you get a mortgage for $165,000, one point means $1,650 to the lender. Points usually are collected at closing and may be paid by the borrower or the home seller, or may be split between them.
No, you are not committed to us because you've signed or reviewed a loan application. We would love for you to do business with Fairway, and if there are any problems, please consult with your mortgage loan officer. The only commitment you have is when you have completed the signatures on the closing documents and the loan funds.
Your target rate is the rate we will discuss to be the original optimal rate of interest for your mortgage.
Yes, we do sell off your mortgage loan. It is called transferring, and it is done at closing. Fairway will provide all the information about your investor.
Mortgage rates are constantly changing and can even change throughout a single day, but on a typical day, rates do not move very much. This is why it is important to employ Fairway to assist you in making the determination of when to lock your loan. Things that will affect the movement of interest rates are strong swings in the equity or stock market and indications from our economic position in not only the U.S. market but the world market as well.
Locking a mortgage interest rate means that Fairway and the associated investor have committed to a specific interest rate on your behalf. Your loan officer watches the market on a daily basis to make sure that when we lock your interest rate, it is in your best interest.
It's OK to use online bank statements only if the statements have the bank logo and name and correctly reflect your account number.
Both provide you with an estimate of what you can afford as you begin the home-shopping experience. However, the pre-approval is generally stronger and positions you as a more serious buyer as it requires verification of your financial claims with things like bank statements and pay stubs.
Lenders are required by law to provide the information on this statement to you in a timely manner. Your signature merely indicates that you have received this information and does not obligate either you or the lender in any way.
This means that you will be charged interest for the period of time in which you used the money loaned to you. Your prepaid finance charges are not refundable. Neither is any interest which has already been paid. If you pay the mortgage loan off early, you should not have to pay the full amount of the finance charges shown on the disclosure. This charge represents an estimate of the full amount the loan would cost you if the minimum required payments were made each month through the life of the loan.
The total of payments figure indicates the total amount you will have paid, including principal, interest, prepaid finance charges and mortgage insurance if you were to make the minimum required payments for the entire term of the loan. This figure is estimated on the disclosure statement.
The finance charge is the total amount of interest calculated at the interest rate over the life of the loan plus prepaid finance charges and the total amount of mortgage insurance charged over the life of the mortgage loan. This figure is estimated on the disclosure statement
The disclosure statement only discloses your estimated mortgage payments. The interest rate determines what your monthly principal and interest payment will be.
The amount financed is lower than the amount you applied for because it represents a net figure. If someone applied for a mortgage of $50,000 and their prepaid finance charges total $2,000, the amount financed would be shown as $48,000, or $50,000 minus $2,000. The APR is computed from this lower figure, based on what your proposed payments would be. In a $50,000 loan with $2,000 in prepaid finance charges, and an interest rate of 14%, the payments would be $592.44 (principal and interest) on a loan with a 30-year loan term. Since the APR is based on the net amount financed, rather than on the actual mortgage amount, and since the payment amount remains the same, the APR is higher than the interest rate. It would be 14.62%. If this applicant's loan were approved, he would still receive a $50,000 loan for 30 years with monthly payments at 14%, or $592.44 a month.
The amount financed is the mortgage amount applied for minus prepaid finance charges and any required deposit balance. Prepaid finance charges include items such as loan origination fees, commitment or replacement fee (points), adjusted interest, and initial mortgage insurance premium. The amount financed represents a net figure used to allow you to accurately assess the amount of credit actually provided.
The annual percentage rate, or APR, is the cost of your credit expressed in terms of an annual rate. Because you may be paying points and other closing costs, the APR can be compared to other loans for which you may have applied and give you a fair method of comparing price.
The new loan estimate (LE) replaces the good faith estimate (GFE) and the initial Truth-in-Lending disclosure (TIL). The LE provides borrowers with clearer information on loan terms and estimates of loan and closing costs. This will facilitate comparison shopping. It will be provided to the borrower within three business days after they have submitted their mortgage loan application.
