Here, we will cover many of the questions we have heard in the past from our customers. Do you have a question you would like us to answer? Click here .

1. What information do I need when I apply for my loan?
2. I am only putting 5% down on a Conventional Loan. Is there any way to avoid PMI?
3. Can I qualify if I have late payments on my credit?
4. I am self-employed and have a lot of deductions, so I don’t show a lot of income on my tax returns. Can I get approved?
5. What’s the difference between you and going to my local bank? Don’t you all do the same thing?
6. I’ve heard that if you go through a mortgage broker your loan will be sold more often. Is this true?
7. Why are second mortgage/home equity debt-consolidation loans and home improvement loans so popular?
8. How is Debt-to-Income(DTI) Ratio calculated?
9. How is Loan-to-Value (LTV) calculated?
10. The Loan Process, how long does it take?
11. What is the difference between interest rate and the A.P.R.?
12. What are homeowner’s insurance, private mortgage insurance, and title insurance?

1. What information do I need when I apply for my loan?

     The lender will want to see the following items. Please keep in mind that we can give you an approval if you do not have these items at the time of application, but the sooner we have everything, the smoother your file will go.

• Social Security Number, for borrower and co-borrower (if any)
• Employment History- For the last two years; employment dates, addresses, salary, current pay stubs or W-2 forms (Tax Returns for self-employed borrowers)
• Assets- Statements on checking and savings accounts, Certificate of Deposit, stocks, bonds, and retirement plan
• Divorce Decree (if applicable)
• Bankruptcy papers (if applicable)

     If it is a purchase transaction loan, a fully executed copy of the purchase contract including all the addendums will also be needed. If it is a refinance, information on your current mortgage(s) will be required (unless it is on the credit report)..

2. I am only putting 5% down on a Conventional Loan. Is there any way to avoid PMI?

     Yes, you can! The 80/20 (or 75/15)… that means you pay NO PMI! The bank gives you 2 loans, a first mortgage to cover 80% (or 75%) of the purchase price and a second mortgage to cover 15% (or 20%) of the purchase price. You can forget about the PMI and save hundreds of dollars a year! You can even put the second mortgage on a 15 year term to help you build your equity faster!

3. Can I qualify if I have late payments on my credit?

     Generally speaking, yes, we can qualify you for a purchase, refinance, or second mortgage even if you have late payments! However, your credit must be looked over before an exact answer can be given.

4. I am self-employed and have a lot of deductions, so I don’t show a lot of income on my tax returns. Can I get approved?

     As long as Debt-to-Income Ratio is within the guidelines, you can qualify.

5. What’s the difference between you and going to my local bank? Don’t you all do the same thing?

     Believe it or not, no, we don’t. Banks have limited programs available. We deal with many different banks and lending institutions. Many banks will charge you an application fee upfront. If they can’t approve you, you lose that money! We get customers approved all the time that were turned down by another bank or mortgage broker/banker. Experience and knowledge play a key part.

6. I’ve heard that if you go through a mortgage broker your loan will be sold more often. Is this true?

     The selling of mortgage loan servicing is a given with modern banking. This DOES NOT mean that your payments or terms change. The only thing that can ever change is the name you write on your check and the address you send it to. We also work with banks that do not sell their loans. If you prefer to stay with the same bank, let us know.

7. Why are second mortgage/home equity debt-consolidation loans and home improvement loans so popular?

     For one reason, tax-deductibility. In most cases, you can deduct 100% of interest on second mortgage/home equity loans that cover up to 100% of your house’s value. Of course, you should always check with your accountant to make sure.

8. How is Debt-to-Income (DTI) Ratio calculated?

     Assume your total monthly expenses for mortgages, car payments, other personal loans, and minimum payments to your credit cards equals $1,500/month and that your gross pay equals $3,000/month. $1,500 divided by $3,000 equals 50%. Your debts are 50% of your income; therefore you have a 50% DTI Ratio.

9. How is Loan-to-Value (LTV) calculated?

     Assume you are borrowing $75,000 against your house that has an appraised value of $100,000. $75,000 divided by $100,000 equals 75% LTV. You are borrowing 75% of your home’s value; therefore you have a 75% LTV.

10. The Loan Process, how long does it take?

     This frequently asked question is probably the one borrowers control the most. It normally takes 3 to 5 business days to get your title work and appraisal completed. If the borrower provided all the necessary income, insurance, and personal documentation required, the loan could close on the 7th to 9th business day. Often this process takes 15 to 20 business days due to scheduling or documentation complications. The tougher/complicated the loan, the longer it will take.

11. What is the difference between interest rate and the A.P.R.?

     You’ll see an interest rate and an Annual Percentage Rate (A.P.R.) for each loan you see advertised. The easy answer to “why” is that federal law requires the lender to tell you both.

     The A.P.R. is a tool for comparing different loans, which will include different interest rates but also different points and other terms. The A.P.R. is designed to represent the “true cost of a loan” expressed in the form of a yearly rate. This way, lenders can’t “hide” fees and costs behind low advertised rates.

     While it’s designed to make it easier to compare loans, it’s sometimes confusing because the A.P.R. includes some, but not all, of the various fees and insurance premiums that accompany a mortgage. And since the federal law that requires to disclose the A.P.R. does not clearly define what goes into the calculations, it can vary from lender to lender and loan to loan.

     So, A.P.R.s are at best inexact. The lesson is that A.P.R. can be a guide, but a mortgage professional can help you find the truly best loan for you.

     Note when you’re browsing for loan terms that the A.P.R. will not tell you the balloon payments, pre-payment penalties, or how long your rate is locked. You can see that the A.P.R. on a 15 year loan will carry a higher relative rate because it is amortized over a shorter period of time.

12. What are homeowner’s insurance, private mortgage insurance, and title insurance?

     A homeowner’s insurance policy is a package policy that combines four types of insurance coverage in a single policy: dwelling and personal property, liability, medical payments, and additional living expenses. Homeowner’s insurance, as the name suggests, protects you from damage or loss to your home or the property in it.

     Remember that flood insurance and earthquake damage are not covered by the standard homeowner’s policy. If you buy a house in a flood-prone area, you may pay for a flood insurance policy that costs an average of $400 a year. The Federal Emergency Management Agency provides useful information on flood insurance. Visit their website at www.fema.gov. A separate earthquake policy is available from the insurance companies. The cost of the coverage will depend on the likelihood that earthquakes will occur in your area.

     Private mortgage insurance and government mortgage insurance protect the lender against default and enable the lender to make a loan which the lender considers a higher risk. Lenders often require mortgage insurance for loans in which the down payment is less than 20% of the sales price. You may be charged monthly, annually, by an initial lump sum, or some combination of these on your mortgage insurance premium. Mortgage insurance should not be confused with mortgage life, credit life, or disability insurance which protect you and are there to pay off a mortgage in the event of your death or disability.

     You may also encounter “lender paid” mortgage insurance (LPMI). With these plans, the lender purchases the mortgage insurance and pays the premium. The lender will increase your interest rate to pay for the premium. LPMI may reduce your settlement costs. You cannot cancel LPMI or mortgage insurance during the life of your loan. However, you may be able to cancel private mortgage insurance at some point, such as when your loan is reduced to a certain amount.

     Title insurance is usually required by the lender to protect the lender against fraud resulting from claims by others against your new home. In some states, attorneys offer title insurance as part of their services in examining the title and providing opinion. The attorney’s fee may include the title insurance premium. In other states, a title insurance company or title agent directly provides the title insurance.

     A lender’s title insurance policy does not protect you. If you want to protect yourself from claims by others against your house, you will need an owner’s title policy. When a claim does occur, it can be devastating to an owner who is uninsured. If you buy an owner’s policy, it is much less expensive if you buy it at the same time with the same insurance lender’s policy.