understanding your mortgage presented by: fidelity national financial
TRANSCRIPT
Understanding your Mortgage
Presented by:Fidelity National Financial
Content:1. Key Terms2. Important Questions3. The Loan Process
Equity
Value of a property minus the debt
Back to terms page
Lock-inA lock-in, also called a rate-lock or rate commitment, is a lender's promise to
hold a certain interest rate and a certain number of points for you, usually for a
specified period of time, while your loan application is processed.
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LTV
Loan to ValueThe amount you will borrow
compared to the total purchase price.
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MortgageTransfer of property rights as
security for a loan. The mortgage assigns property rights to the bank who lets you
borrow money against it.Back to terms page
Mortgage Broker
One who, for a fee, places loans with investors, such as banks and
savings and loan, but does not fund or service those loans.
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PITI
The total sum of a mortgage payment, including:
Principal, Interest, Taxes & Insurance
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2. Important Questions To Ask Your Lender
1. What are your credentials? Why should I chose you??
2. How many points will your company charge me?
3. How long will the financing process take?
4. What interest rate do I qualify for?5. When will I be able to ‘lock-in’ the intere
st rate on my loan? 6. Can you GUARANTEE the lowest closing
costs?
1. Why should I chose you to be my mortgage
broker?The truth is that ALL mortgage companies
should offer you decent service at low costs.
Your goal: to discover “What can this mortgage company offer me that nobody
else can?” Expect nothing less than “Exceptional”
service.
2. How many points will your company charge
me?The right lender must answer honestly and without hesitation. Simplified, points are mortgage fees that are paid upfront to
reduce the initial interest rate. Ask your lender to be very clear on how many points he is charging you on the loan he is offering
you.
3. How long will the financing process
take?Once you have applied for the loan and it’s approved, the truth is that the loan process has just begun. Between this step and the
estimated time of closing, it’s identified as the “loan in process”. It is here that your loan
documents will be prepared, verified, underwritten and finally closed. The average “in process” period is approximately 30 days.
4. What interest rate do I qualify
for?Keep a watchful eye on
advertisements that offer interest rates that are extremely low! Though everything is possible, it will come at a cost paid by you, the borrower. The suitable lender will be able to answer
that “as a professional, he/she will insightfully analyze your complete history”. Furthermore, the interest
rate will totally depend on each individual’s financial facts.
5. When will I be able to ‘lock-in’ the
interest rate on my loan? A really important point: the market will
continue to fluctuate until you agree to an interest rate lock-in. The more diligently you submit your application and fulfill all your lender requirements, the faster you will be ‘locked-in’. Traditionally, a lock-in within 30 days of your estimated closing
date is made at no additional cost. Return to questions page
6. Can you GUARANTEE the
lowest closing costs?As an educated and confident
homebuyer, don’t forget to request a “good faith estimate”- it’s the law!
In this fashion, you are able to compare all lenders under
consideration.
Return to questions page
3. Loan Process Summary
Interview a few lenders Select lender based on your criteria
satisfaction Complete an application (referred to
as a 1003) Based on the information provided
on this application, lender can provide a pre-approval status, as well as offer a variety of loan programs
Select the loan most convenient compared to your re-payment goals
Loan Process Continued…
You will be asked to gather a series of documents for
verification (process known as documentation)
These are most common: Last 2 years of tax returns Last 2 years of W2’s Business tax returns Last 30 days of pay stubs Last 3 months of personal business bank
statements Pension award letter Etc.
Loan Process Continued The lender now verifies all
documentation submitted and loan goes through underwriting process (the average process is 30 days)
Mortgage APPROVAL takes place Lock-in of your rate may be suggested.
However, it is your responsibility to request an interest rate lock-in to take place.
Lender finalizes “lender’s package”
Loan Process Continued
Lender sends package to title company
Title company prepares final documentation, as directed by lender instructions
Closing date and time is set Closing takes place
Congratulations!
Your loan transaction has closed