How will you decide the maximum loan amount I can afford?
Surety Financial considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Housing expense includes the principal and interest on your loan plus your real estate taxes and insurance. Non-housing expenses include credit cards and such long-term debts as car or student loan payments, alimony, or child support.
According to the FHA, monthly mortgage payments should be no more than 31% of gross income, while the mortgage payment, combined with non-housing expenses, should total no more than 43% of income. Surety Financial also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum loan amount.
How long will it be before we will know if the loan is approved or not?
After your application has been completed we can give you a preliminary pre-approval within 1 to 3 business days. However, this is dependent on your credit scores and the completeness of the overall file which can extend the time required.
How long will it take to close the loan?
The normal processing time for a real estate loan is typically 30 days. The specific issues of your loan and market factors can shorten or increase this time period. Ask you Surety Financial loan agent about your loan and the time it will take to close it.
How will my credit score affect my loan application?
Credit scoring plays a significant role when you apply for a loan. Higher credit scores help you to be eligible for more loan options. If you have had credit difficulties in the past, there are still mortgage programs available, but they will usually cost more and will vary depending on the severity of your credit problems.
Should I refinance?
The most common reason for refinancing is to save money. Saving money through refinancing can be achieved in two ways:
- 1. By obtaining a lower interest rate that causes one's monthly mortgage payment to be reduced.
- 2. By reducing the term of the loan, thus saving money over the life of the loan. For example, refinancing from a 30-year loan to a 15-year loan might result in higher monthly payments, but the total of the payments made during the life of the loan can be reduced significantly.
You may also refinance to convert your adjustable loan to a fixed loan. The main reason behind this type of refinance is to obtain the stability and the security of a fixed loan. Fixed loans are very popular when interest rates are low, whereas adjustable loans tend to be more popular when rates are higher. When rates are low, homeowners refinance to lock in low rates. When rates are high, homeowners prefer adjustable loans to obtain lower payments.
A third reason why you may want to refinance is to consolidate debts and replace high-interest loans with a low-rate mortgage. The loans being consolidated may include second mortgages, credit lines, student loans, credit cards, etc. In many cases, debt consolidation results in tax savings, since consumers loans are not tax deductible, while a mortgage loan is tax deductible. Any of Surety Financial’s qualified loan agents can assist you in evaluating whether or not refinancing your loan will benefit you.
What are points?
Typically a loan point is an amount equal to 1% of the principal amount of a mortgage loan. For example, one percent of a $100,000 loan is equal to $1,000. The loan point is the fee associated with the interest rate you choose. Surety Financial has loans available with points and loans without points.
What does it mean to “lock a rate”?
“Rate locks” are a way of protecting from a possible rise in interest rates during the processing of your loan. Loans are typically locked for a 30 or 60 day period. Generally speaking, if you choose to lock for an extended period of time, the cost of the loan goes up. If rates increase during the processing of your loan, you will still get the rate you locked.
What if I have little or no credit?
A credit score and current lines of credit are important to show a history of your use and timely repayment of debt. If you have no credit you should start to develop a history of repayment with a lender who reports in order to obtain a credit score with the credit reporting bureaus. If you have limited reported credit you may be able to use your good payment history on rent and utilities, as well as credit obtained through family members or friends. Provide a year’s worth of canceled checks to validate consistent monthly payments. This information will become part of your application for the mortgage loan.
What if I have a credit problem because of an unusual situation?
If you have a credit problem because of an unusual situation, write a letter of explanation. A unique or "one time" credit problem in an otherwise good credit history may be overlook if you can give a good well documented reason.
What is Annual Percentage Rate (APR)?
The total finance charges for a loan that is expressed as a percentage. APR takes into account the total cost of a mortgage, including interest, closing fees, lender points, and other charges over the life of a loan.
What is a Conventional Loan?
A mortgage or deed of trust that is not insured or guaranteed under a government insured program.
What is an FHA Loan?
The Federal Housing Administration, generally known as “FHA,” provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. The loan is partially guaranteed by the Department of Housing and Urban Development and a private lender.
What is a FICO score?
A FICO score is a credit score developed by Fair Isaac & Company. It is a credit scoring method to determine the likelihood of credit users paying their bills. It’s a widely accepted and reliable scoring method used by lenders in credit evaluation.
A credit score attempts to condense your credit history into a single number. Credit scores analyze your credit history by considering numerous factors such as:
• Late payments
• The amount of time credit has been established
• The amount of credit used versus the amount of credit available
• Length of time at present residence
• Employment history
• Negative credit information such as bankruptcies, charge-offs, collections, liens, etc.
Credit scores are calculated by using scoring models and mathematical tables that assign points for different pieces of information which best predict future credit performance.
What is a Good Faith Estimate?
When you file your application for a loan, the lender must, under the terms of RESPA, provide you with a Good Faith Estimate of settlement services that will likely incur.
What is an Adjustable Rate Mortgage (ARM)?
Mortgage loans under which the interest rate is periodically adjusted to more closely coincide with current rates. The amounts and times of adjustment are agreed to at the inception of the loan.
What is a Convertible ARM?
The Convertible ARM has traits similar to the ARM loan, but offers an option forthe borrower to change the mortgage to a fixed-rate loan during an earlyinterest rate adjustment period.
What is Hazard Insurance?
A policy that protects the insured against loss due to fire, wind or certain natural disasters in exchange for a premium paid to the insurer. It is also known as home owner's insurance or fire insurance. If a catastrophe does happen, hazard insurance should cover the costs to rebuild your home. Most Lenders often require you to get a policy before you buy or refinance a home and usually require you to pay the first year’s premium at settlement.
What is an Origination Fee?
A fee or charge for work involved in evaluating, preparing and submitting a proposed mortgage loan. For VA loans this fee is limited to 1% of the loan amount.
What does the origination fee cover?
The origination fee is the fee lenders charge to cover some of the costs of making the loan and is calculated by multiplying the total mortgage loan amount by the percentage shown. This fee is typically 1% or lower but may also be influenced by market conditions or the type of loan being originated.
What is Prepaid Interest?
This amount represents the interest that accrues between the close of your loan and the last day of the month in which the loan closes. Interest on your loan after that date is included in your regular monthly payments.
What is Private Mortgage Insurance (PMI)?
Insurance written by a private company that protects the lender against loss if you default on the mortgage..
What is Title Insurance?
Insurance policy that is issued by a company regarding title to real property..
What is a VA Loan?
An independent agency of the federal government that offers benefit programs to veterans. These programs encourage mortgage lenders to offer long-term, no down payment financing to eligible veterans by guaranteeing the lender against any loss.