Frequently Asked Questions

Frequently Asked Questions

Below are some frequently asked questions. Hopefully you will find the answer to your question here, but if you do not please don't hesistate to contact me.

Frequently Asked Questions

My real estate agent recommended that I get a pre-approval letter. What is a pre-approval letter, and why should I get one?
What is the difference between the interest rate and the annual percentage rate (APR)?
When I apply for a mortgage, what documents will I need?
If I am a non-citizen, can I qualify?
Is it still possible to qualify for a loan even if I have past credit problems?
When mortgage lenders refer to "PITI" what are they referring to?
What amount is required for a down payment?
How does mortgage insurance work?
When my loan officer asks me if I want to waive escrows, what exactly does this mean?
What inspections are required by the lender?
When will I find out what my final figure is for the total costs to close?
Why did I receive a Truth-In-Lending?
Where do I go for closing?
Where do I send my first mortgage payment?

My real estate agent recommended that I get a pre-approval letter. What is a pre-approval letter, and why should I get one?

The lender gives you a commitment letter stating the lender agrees to provide a mortgage to you (a homebuyer) based on certain criteria. Commitment letters help you set realistic goals while you're house-hunting, provide the same negotiating ability as a cash buyer and enable you to move quickly once the perfect home is found.

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What is the difference between the interest rate and the annual percentage rate (APR)?

Interest rate is the contractual rate that you agree to pay for your mortgage loan. This rate is used to calculate the interest portion of your monthly mortgage payment. Annual percentage rate (APR) includes your interest rate and factors in the prepaid finance charges to give you an average yearly rate. APR can be a good tool to use when you're comparison shopping for rates.

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When I apply for a mortgage, what documents will I need?

Usually, you'll need to provide documents that verify your employment, income and assets. There are some loan programs that have limited requirements in terms of documentation for certain homebuyers.
Typical loan programs require the following documents:

A copy of your Social Security card
Pay stubs for the last two months
W-2 forms for the past two years
Bank statements for the past two or three months
One to two years of federal tax returns
Information on current debt, including car loans, student loans and credit cards

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If I am a non-citizen, can I qualify?

Different guidelines are established for non-citizens. Each loan type varies.

As a requirement, the home being purchased in this country must be the primary residence for FHA loans. Non-citizens also must have a Social Security card and all other documentation regularly required for FHA buyers.

Freddie Mac underwrites loans for permanent and nonpermanent residents alike, with no special requirements for the latter.

Through Fannie Mae, non-citizens are required to hold a green card (have permanent resident alien status). Non permanent resident aliens are required to supply an additional down payment and proof of permission to work in the United States for extended periods through a work visa. Additionally, they must occupy the purchased property.

Be sure to check with Leesa Sandoval before choosing a home. This will help you be aware of your specific financing opportunities.

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Is it still possible to qualify for a loan even if I have past credit problems?

In challenging economic times such as these, a good number of people have found themselves with financial difficulties. These times create opportunities to incorporate valuable lessons in to a person's financial planning. When the desire to move forward into home ownership sets in, it is often questioned what chances exist for those that have encountered financial problems.

The first distinction that is important to make is the difference between a person with a bad credit experience in the past and a person who is a bad credit risk. There is an important difference.

Lenders' main questions will be along the lines of the following:

What was the situation of the financial difficulty? What circumstances caused the specific trouble?
What steps did you take to resolve the issue?
What measures were taken to prevent the situation from occurring again? Have you reestablished yourself financially? Were the changes that were made the right ones?

If you have encountered more challenging credit problems like bankruptcy and foreclosure, your explanation needs to be more thorough and have much more importance; additionally, the greater the credit problem, the more recovery time is necessary.

Everyone finds themselves in tough financial situations at one point or another, but everyone deserves another chance. Do not allow previous problems intimidate you and prevent you from trying to get a fresh start!

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When mortgage lenders refer to "PITI" what are they referring to?

PITI is principal, interest, taxes, and insurance: the components of a monthly mortgage.

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What amount is required for a down payment?

There is not an established amount of a down payment for every loan. Depending on your situation and eligibility, you may find very low down payment requirements available. Your PrimeLending Loan Officer will be able to help you find a loan program that best fits your financial goals and needs. Remember that private mortgage insurance may be required for down payments less than 20%.

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How does mortgage insurance work?

Mortgage insurance operates very similar to the insurance you have for your vehicle. It protects against loss, requires payment of a premium, and is used in the case of an emergency. The lender is able to foreclose on the home if the borrower is not able to repay the amount of an insured mortgage loan; the lender can file a claim with the mortgage insurer for a portion or the full amount of losses.

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When my loan officer asks me if I want to waive escrows, what exactly does this mean?

When you waive escrows, you take the responsibility of paying your taxes and insurance rather than having them included in your monthly payment. Waiving escrows may add a small fee to your closing costs. You can only waive escrows if your loan program allows for this such as conventional loans that have a loan value of 80% or less on your first lien.

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What inspections are required by the lender?

The lender requires an appraisal on most transactions. A clear termite report is required on government transactions. If the appraiser recommends repairs or if repairs are mentioned in the contract, the lender will require that those repairs be done before closing. The appraiser then will perform a final inspection to assure that the repairs were completed. If the termite report recommends treatment, treatment is required. We will need a receipt showing the name and amount of chemicals used and a clear termite inspection.

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When will I find out what my final figure is for the total costs to close?

The Settlement Statement (HUD-1) is prepared by the title company according to closing instructions prepared by the lender. This is available 24 hours prior to closing by contacting the title company.

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Why did I receive a Truth-In-Lending?

Truth-In-Lendings are sent to all borrowers after a loan application has been made. The Truth-In-Lending Act is a federal law requiring lenders to reveal all of the terms of a mortgage. The APR that appears on your Truth-In-Lending will be higher than the interest rate on your Real Estate Lien Note, as it is calculated based on term and finance charges.

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Where do I go for closing?

Your closing will take place at the title company or closing attorney's office. The title company name and address appears in your sales contract. Call the title company to schedule a time for your closing. In some cases a mobile closing may be arranged.

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Where do I send my first mortgage payment?

Refer to your "First Payment Letter" in your closing documents to determine where to send your first mortgage payment. If you receive a statement from your new lender prior to the due date of your first payment, send your payment to the new lender.
Otherwise, send your payment to PrimeLending, A PlainsCapital Company as detailed in your "First Payment Letter." Remember to include your loan number on your check.

For more specific questions regarding your payment please contact our servicing department at 888-82-2711, option 1. You will need to have your loan number handy when calling.

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