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FINANCIAL
FREQUENTLY ASKED QUESTIONS
What
is the difference between "prequalified" and "preapproved"?
A
prequalification consists of a discussion between a home
buyer and a loan officer. The loan officer collects basic information
regarding the customer's income, monthly debts, credit history
and assets, and then uses this information to calculate an estimated
mortgage amount for the home buyer. The prequalification is not
a full mortgage approval, but estimates what a home buyer can
afford.
A
preapproval, on the other hand, is a comprehensive approach
using basic information as well as electronic credit reporting.
Preapprovals, in most cases, are true mortgage commitments. The
lender commits to financing your home and indicates the total
mortgage amount available to you.
What
types of mortgage programs are offered?
Currently
there are over 50 different mortgage products available, including:
- 15,
20 and 30-year fixed rate loans
- adjustable
rate loans
- new
construction financing
- VA
and FHA loans
- 5
and 7-year balloon loans
- and
many more!
How
long does it take to process a mortgage application?
Usually
about 45 to 60 days, although it can take as few as seven days
and as long as 90 days for some transactions. The actual time
depends on how quickly the lender can get an appraisal of the
property, a credit report and verification of employment and bank
accounts.
What
documents will I have to provide?
Be
prepared to provide verification of income (including a pay stub
and recent tax returns), bank account numbers and details on your
long-term debt (credit cards, auto loans, child support, etc.).
If you're self-employed you may also be required to provide financial
statements for your business. In recent years, lenders have been
required to obtain more specific information from borrowers in
order to package and sell loans to investors. If you were lending
someone such a large amount of money, you'd want detailed financial
information.
What's
included in my house payment?
Principal
and interest on your loan. Depending on the terms of your loan,
the payment also may include hazard (homeowners) insurance, mortgage
insurance and property taxes.
What
do the closing costs include?
Closing costs cover processing and administration of your loan.
In addition to a loan fee, you'll usually be asked to prepay interest
charges, to cover the partial month in which you close, and impounds
for property taxes, hazard insurance and mortgage insurance.
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