Frequently Asked Questions
We love questions. We have provided some answers to the most frequently asked questions, but do not hesitate to contact us if you have any questions on any part of the real estate process.
What is the difference between a mortgage broker and bank’s mortgage officer?
A mortgage broker counsels you on the loans products available from a number of different banks and lending institutions, usually allowing for a much broader list of program choices. A loan officer at a particular institution will only be available to offer the mortgage products and services offered by that particular bank.
Will I save money going directly to a bank?
Not usually. Because mortgage brokers deal with multiple lenders they can shop for the best interest rate and terms available on any given day. Additionally, they can find lenders who specialize in various market niches such as loans for self-employed borrowers or investors with multiple properties. Mortgage brokers do not add any costs to the loan process as they personally perform the duties that would also need to be performed by random bank employees.
What is the difference between pre-approval and pre-qualification?
The pre-approval process is a much more comprehensive overview of your financial ability to qualify for a loan. For pre-qualification, the loan officer merely asks you a few questions and provides you with a general idea of your loan qualifying potential. Pre-approval verifies three of the five pieces of key documentation needed for a full approval: a three-bureau credit report, income documentation and asset verification. You will still need to have an appraisal and title search completed on the property under contract. Pre-approval provides you, the seller and your Realtors confidence that your loan will be approved.
What do you need to review to preapprove me for a loan?
MAK Financial takes prequalification very seriously. You will see that our process is much more thorough than any of the internet services you see popping up on your web pages. We want to be sure your loan will be approved and funded when you write a contract on your house. We receive lots of emergency phone calls from people who were “prequalified” on the internet, but have been abandoned by the web lender a week before closing. We require the following before writing a preapproval letter:
- Full Credit Report. We require a tri-merge report giving your three FICO scores from all three reporting bureaus: Experian, Transunion and Equifax. Credit score is essential for both loan qualifying and pricing. For qualifying purposes, banks throw out your high and low scores and use your middle score.
- Recent Paystubs and Last 2 years W2s to verify your income and employment status
- Cash to Close. We also require that you provide bank statements showing assets sufficient to cover your down payment, closing costs, prepaid real estate tax and homeowners insurance escrows and any reserve monies the bank might require.
When does it make sense to refinance?
Refinancing your existing mortgage can reduce your interest rate and in turn reduce your monthly mortgage payments and your long term finance charges. You can refinance from a longer term fixed program to a shorter one, greatly reducing your interest charges over time. You can convert from an adjustable rate product to a fixed product. You can use your home's equity to consolidate debts. You will want to make sure that the reduction in your rate or term provides you with enough savings to cover the costs of refinancing in a reasonable amount of time. How much equity you have and how much longer you intend to own the property are important factors to consider. We will be happy to discuss your situation and determine whether refinancing makes sense.
What is a rate lock?
A rate lock is a contractual agreement between the lender and buyer. There are four components to a rate lock: loan program, interest rate, points, and the length of the lock. Most banks quote rates for a 30-day lock, meaning your loan must fund within 30-days of your lock initiation for that particular interest rate to be offered. Loans that do not close within the lock period will have to either pay for a lock extension (if allowed) or to relock the loan. Most banks require that you relock at the current market rate or the original locked in rate – whichever is worse.
What is the difference between a conforming and jumbo loan?
A conforming loan is eligible for purchase by the two major Federal agencies that buy mortgages, Fannie Mae and Freddie Mac. The current conforming loan limit is $417,000. A mortgage larger than the conforming limit is considered jumbo.
What if I have had some credit issues in past?
Knowledge is power in the case of your credit report. The sooner we know your credit scores and any possible issues, the sooner we can help you take steps to fixing problems. We have several professional resources that can assist with credit issues including erroneous reporting, bankruptcy and judgment discharges, late payments etc. Our credit reporting company can improve your score in a few days instead of a few months (with the proper documentation.) Sometimes time and discipline are the only solutions but we can help keep you on track there too.
How long does the loan process take?
It depends on the complication level of the transaction – and we often tackle very sophisticated real estate deals. However, for the usual purchase or refinance we ask for 30-days to close.
How much money can I expect to get from the sale of my current home?
Your Realtor will discuss your current market. If you have yet to choose a Realtor, we cannot stress enough how a professional real estate agent will add value and confidence to your home buying experience. We will be happy to provide personal recommendations. Your net proceeds will be your final sales price minus your real estate commission of 6%, minus any seller concessions, minus any and all liens on the property.
