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Frequently Asked Questions
Your question not here? Please call us or go here for our contact form for an answer.
Answers to Your Questions
What are your interest rates?
Different Kinds of Interest Rates
There are two main classes of interest rates:
- Conforming
- Non-Conforming
Conforming Interest Rates: The interest rates reflected on the Today's Rates page are conforming market rates. These can change several times throughout the day. Generally speaking, conforming interest rates are lower (cheaper) than non-conforming interest rates. Fannie Mae and Freddie Mac purchase the majority of the conforming loans in the industry and which can provide for cheaper financing. Qualifying for the rates the correspond with the loan programs are generally more rigid and straight arrow. You either qualify, or you don't, so to speak.
Non-Conforming Interest Rates: The other half of the industry is full of lenders who cater to needs of people that do not fit nicely into the guidelines of Fannie and Freddie. These investors on wall street buy in pools thousands of notes of homeowner's mortgages that meet a general fit. Their underwriting is more lenient and their commitments to buy are generally longer, making non-conforming interest rates more stable to not change higher or lower earlier than sometimes a whole month.
These interest rates, though based on the same index like the LIBOR, Treasury, and PRIME indices, have a higher lender margin added to them then Fannie or Freddie may, thus making them more expensive, and conversely more short-term.
When should I lock my interest rate?
Lock your interest rate before its too late...
It is not advisable to consider watching the market in order to get a more favorable interest rate. If you are getting financing in the non-conforming arena it probably wont change soon enough to make the wait worth it. If you qualify for a conforming loan, waiting for the rates to go down will only leave you disappointed because of its unpredictability. It is always best to lock what ever the market it when you are ready to move forward.
For information on how to lock in your interest rate follow this link.
Rate Buy-Downs
Buying interest rates down is always a possibility. As a rule of thumb, with conforming rates it may cost as much as a full discount point (1% of the loan amount in cost) to go down just a .25% in rate (6.375% to 6.125%) which may only be $25 difference in your monthly payment.
With non-conforming rates it usually cost 1 point to buy the interest rate down by 30-50 basis points. Thus, it would cost 1% of the loan amount to buy the rate down from 7.00% to 6.50-6.70%.
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What is a jumbo and super jumbo home loan?
If a loan, being too large, does not meet conforming loan limits of loans secured by government sponsored entities or GSE's such as Fannie Mae and Freddie Mac they fall into jumbo and super-jumbo parameters. Loans are generally considered "jumbo" if they are larger than $417,000, and no greater than $1,000,000. Super-jumbo loans generally are any residential loans greater than $1,000,000.
Loans that are above conforming loan limits set by GSE's usually have limitations on the percentage of financing that will be allowed. Most lenders do not lend up to 100% of the home's value when the loan amount exceeds the conforming loan limit. Niche lenders specializing in jumbo and super-jumbo loans have a higher mark-up on their mortgage rates due to the higher risk in lending out more money to larger investments (hence, reducing their portfolio diversification). Additionally, these types of loans are not bought and sold as much as conforming loans are adding to their risk and availability.
In general, Fannie Mae and Freddie Mac's single family, first mortgage loan limit is $417,000 in 2006. This limit is reviewed annually and, if needed, changed to reflect changes in the national average price for single family homes. The current loan limit applies to all conventional mortgages delivered after January 1, 2006.
2006 Conventional Loan Limits
First mortgages
- One-family loans: $417,000
- Two-family loans: $ 533,850
- Three-family loans: $ 645,300
- Four-family loans: $ 801,950
- Note: Maximum original loan amounts are 50 percent higher for first mortgages on properties in Alaska, Hawaii, Guam and the U.S. Virgin Islands.
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Which are you doing?
Buying a home
- Purchase Contract (if a home is under contract)
- Realtor contact information
- Contact information for any other applicable third parties: appraisers, inspectors, surveyors, insurance agents, HOA manager
Refinancing a Home
- Recent Moorage Statement(s)
- Home Owner Insurance declarations page
- Copy of note and settlement statement for 1st or 2nd mortgage if you: 1) have a 1st and a 2nd mortgage, but are only refinancing one of them, or 2) have owned the home less than 1 year
- Contact information for any other applicable third parties: appraisers, inspectors, surveyors, insurance agents, HOA manager
Which are you?
*These minimum document requirements are based on a full documentation loan
Wager Earner Income Documents
- Income- 2 years W2, 2 years of personal tax returns, and one full-month pay stubs
- Assets- recent banks statement or money asset statement, and/or verification of deposits
- Employment- contact information for your employer if not present and legible on the pay-stub or W2.
- Other (if applicable)- Divorce decree, bankruptcy discharge papers, letters verifying deferment for student loans, documentation showing debts not owed, letter of credit explanation, letter of gaps in employment history explanation
Self Employed Income Documents
- Income- 2-3 years of personal and/or business tax returns, and/or 1044's
- Assets- recent banks statement or money asset statement, and/or verification of deposits
- Employment- minimum 2 years business licenses, CPA letter.
- Other (if applicable)- Divorce decree, bankruptcy discharge papers, letters verifying deferment for student loans, documentation showing debts not owed, letter of credit explanation, letter of gaps in employment history explanation
Commissioned Income Documents
- Income- 2 years 1099, and/or 2 years of personal tax returns, and one full-month pay stubs
- Assets- recent banks statement or money asset statement, and/or verification of deposits
- Employment- contact information for your employer if not present and legible on the pay-stub or 1099.
- Other (if applicable)- Divorce decree, bankruptcy discharge papers, letters verifying deferment for student loans, documentation showing debts not owed, letter of credit explanation, letter of gaps in employment history explanation
Wager Earner & Commissioned Income Documents
- Income- 2 years 1099 and W2, and/or 2 years of personal tax returns, and one full-month pay stubs
- Assets- recent banks statement or money asset statement, and/or verification of deposits
- Employment- contact information for your employer if not present and legible on the pay-stub or 1099.
- Other (if applicable)- Divorce decree, bankruptcy discharge papers, letters verifying deferment for student loans, documentation showing debts not owed, letter of credit explanation, letter of gaps in employment history explanation
Retired Income Documents
- Income- 2 months bank statement showing deposits, and award letter or note for receivable regarding income source, and/or 2 years of personal tax returns all schedules
- Assets- recent banks statement or money asset statement, and/or verification of deposits
- Other (if applicable)- Divorce decree, bankruptcy discharge papers, letters verifying deferment for student loans, documentation showing debts not owed, letter of credit explanation, letter of gaps in employment history explanation
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It generally takes 3 to 6 weeks to fund loans from application to funding depending on your individual situation. The general process of how your loan process will work with us is as follows:
Initiating the Loan Inquiry Process
- Good Faith Estimate (GFE): We email (or issue in person if in Utah) a preliminary GFE to you; you will review, sign and fax back to us a copy upon agreement of the initial terms of the loan
- Pre Qualification: we order a tri-merged credit report, email a copy to you, and issue a pre qualification based on the credit and preliminary application information taken over the phone.
Working towards getting a loan Pre-Approval
- Initial Loan Package: We will email or courier by mail a loan package out to you (unless in person- in which case you will need to set up an in-office appointment and bring documents and ID with you). You will review its contents and then fax and/or courier the package to us signed and dated appropriately. Additionally you may send any or all needed documentation needed for pre-approved underwriting with the package.
- Appraisal and Preliminary Title Report: The appraisal and title report are both ordered the day the initial loan package is sent out or done in person. The appraisal will need to be paid up front upon inspection to the appraiser directly.
- Rate Lock: We only lock interest rates once you have committed to us you are willing to move forward with the application. Usually this occurs at the time of receiving the loan package back in our possession. Additionally we will often require a rate-lock form be signed and sent back to us in affirmation of the interest rate lock and duration.
- Pre-Approval Submission: Once we have all required documentation for underwriting, including an adequate appraisal and title report (unless you are doing a purchase and the property is still to be determined), we submit your full application for pre-approval. Underwriting for a pre-approval can varies in time, but usually takes 1-3 business days. The underwriter then issues a conditional approval based on their findings of the application and documentation submitted.
Preparing for Closing and Signing
- Final Approval (Commitment to Lend): In order to have a clear-to-close the loan and send the lender's instructions to the title company to sign with the escrow agent/attorney/notary, all stipulations and conditions musts be met the underwriter has requested in the pre-approval. The process of actually preparing the documents and instructions to be sent to the title company usually takes 1 business day.
- Preliminary Settlement Statement: Once title has the instructions from the lender they draw up a preliminary settlement statement that revisits the fees found on the initial Good Faith Estimate. We email and/or review the items found on this form with you to ensure accuracy and to eliminate surprises at signing. If there are incorrect items we get them corrected until it is ready for the final issue of the HUD-1 Settlement Statement.
- Signing at Closing: You will be contacted by a processor when the final signing will occur. We will coordinate with you and the escrow agent/attorney/notary when and where the signing will take place. Often we have signing take place right in your own home for convenience. For purchases a local title company will often be selected so the real estate agent can also attend if they choose. For long-distant closings we are available by phone to answer any additional questions you may have while signing.
Right of Precision / Funding / Dispersing Funds
- Right of Rescission: For purchases and investment refinances the lender must wait 1 day before funding. For refinances the lender must wait 3 days before funding.
- Funding: Pending all funding stipulations are met by the title company, broker (if applicable), and borrower, the lender usually wires all funds to the title company one day following the Rescission period.
- Dispersing Funds: In order for the title company to disperse funds to the applicable parties involved (i.e. the borrower, the seller, broker, title, etc.) they are usually required to record the note and debt instruments with the local county court house first. Disbursing the funds often happen on the same day of recording. The funds can be wired directly to the your bank account if arrangements are made previous. Otherwise a check will be made out to you which can be picked up directly or mailed out to your residence.
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How much will my loan cost?
A homeowner should plan on paying an average of 3 to 6 percent of the outstanding principal (in a refinance) or the priciple balance being financed (in a purchase), plus any prepayment penalties and the costs of paying off any second mortgages that may exist.
Because costs may vary significantly from area to area and from program to program, the following are estimates only. Your actual closing costs may be higher or lower than the ranges indicated below.
| Appraisal Fee |
$150 |
to |
$600 |
| Survey Costs |
$125 |
to |
$300 |
| Homeowner's Hazard Insurance |
$300 |
to |
$1000 |
Lender's Attorney's
Review Fees |
$75 |
to |
$200 |
Title Search and
Title Insurance |
$450 |
to |
$3400 |
| Home Inspection Fees |
$175 |
to |
$350 |
| Loan Origination Fees |
0% |
to |
2% |
| Mortgage Insurance |
0.5% |
to |
1.0% |
| Points |
.5% |
to |
3% |
| Credit Report |
$15 |
to |
$30 |
| Title/Escrow Doc Fees |
$100 |
to |
$450 |
- Loan Origination Fees and Points:
The origination fee is charged for the lender/broker work in evaluating and preparing your mortgage loan. Points are prepaid finance charges imposed by the lender at closing to increase the lender's yield beyond the stated interest rate on the mortgage note. One point equals one percent of the loan amount. For example, one point on a $75,000 loan would be $750. In some cases, the points you pay can be financed by adding them to the loan amount (with refinances). The total number of points a lender charges will depend on market conditions and the interest rate to be charged.
- Appraisal Fee:
This fee pays for an appraisal, which is a supportable and defensible estimate or opinion of the value of the property. On loan amounts over $600,000 often times the lender will require two appraisals from different appraisers to support the value, but not always.
- Prepayment Penalty:
A prepayment penalty on your present mortgage could be the greatest deterrent to refinancing. The practice of charging money for an early pay-off of the existing mortgage loan varies by state, type of lender, and type of loan. The mortgage documents for your existing loan will state if there is a penalty for prepayment. In some loans, you may be charged interest for the full month in which you prepay your loan.
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Where is your office located?
138 East 12300 South #C109
Draper, UT 84020
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Short answer: Yes. Long answer, your actual credit history will need to be reviewed in light of what type of mortgage financing you are trying to achieve. We have helped people buy and refinance their homes with credit scores as low as 500 with foreclosures, bankruptcies, and any other type of derrogatory you could imagine on your credit history file. The only thing that will need to be paid off before financing can occur with certainty is IRS tax liens unless documentation can be shown the lien has been satisfied or is erroneous.
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Yes, we will meet or beat any offer you can show us in writing another lender or broker has offered you. We only ask that we compare apples to apples, meaning you get an up-to date offer and are asking from us exactly what you have asked from them; therefore, the loan amount, documentation type, amount of cash-out (with refinances), your credit ratings, and the condition of the market all need to be the same or similar in order to get comparable results.
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No. While some lenders do not discriminate whether you want to add an escrow account or not, most do. The difference are some may require a higher interest rate or an added fee in order to waive escrow accounts.
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What if I already have an appraisal, can I use it?
It depends on how old your appraisal is and who did it.
Appraisal Udate
Most lenders require appraisals to be "updated" if it is 4 months old. Updating requires your appraiser to make sure all the data is still accurate. If it is 4 to 6 months old the lender may require you to get a "re-certification" from the appraiser. Re-certification means the appraiser has reviewed, added, deleted any pertinent data from the appraisal to bring it current, and certifies it is accurate.
Appraisal Re-Certification
Appraisals older than 6 months usually are not accepted and a new order will have to be placed, however this does not mean your same appraiser couldn't redo the appraisal at a discount.
Appraiser Black List
Most lenders have a list of appraisers that they will not do business with due to previous unprofessional conduct or any fraudulent activity. If your appraiser is not on that list, you have no need to worry.
Size of Loan
Many lenders may require you to get a second appraisal done to re-verify the work done by the other appraisal when the loan size is greater than conforming loan limits ($417,000 for single family resident homes currently).
Equity Stripping
If a lender has reason to suspect the borrower intends on getting cash-out shortly after they had puchased the home (under 12 months) they may scrutinize the loan closer to protect against equity stripping. Equity Stripping is a fradulent activity where the homeowner intends on buying low, and shortly thereafter increasing the loan amount with a cash-out refinance without having done any work to improve the value of the home. While some transactions are legitimate low purchases- due to a bank repossession, short sale, or a motivated seller to sell fast, lenders are weary of those that seek to artifically inflate values of homes simply to strip it of its equity.
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