Mortgage
FAQ
What
is the difference between pre-qualification and pre-approval?
Pre-qualification
is a lender's opinion of your ability to purchase
a home and is based on your verbal statement of income,
employment history and available down payment.
Pre-approval is a lender's underwriting decision
that you are conditionally qualified and is subject
to the lender's review of your completed application,
credit check, appraisal and home inspection.
When it comes to writing an offer for a home, a pre-approval
letter contains stronger language to the seller and
the listing agent than a pre-qualification. You, the
buyer, have the increased negotiating leverage
of cash buyer status because the mortgage is already
in place.
A pre-approval can often be a determining factor in
winning the contract in a competitive bid situation.
What is the difference
between APR and Interest Rate?
The
APR, or Annual Percentage Rate, is often higher than
the quoted interest rate, or note rate. This is because
the APR includes, in addition to interest, some of the
additional costs of obtaining your financing. Simply
stated, if there were no costs in obtaining financing,
your note rate and your APR would be the same.
Your APR will be noted on your Truth-in-Lending disclosure
that you receive after application
What are discount points?
A
point equals one percent of the loan and is usually
paid at closing.
For example, if your loan amount is $100,000…then one
point would equal $1,000 OR one percent.
Discount Points are fees paid by the buyer to the lender
to reduce the loan's interest rate. If you plan to keep
your residence for five or more years, it may be worthwhile
to pay discount points to reduce your monthly payment
and achieve greater savings over the life of the mortgage.
The number of discount points required to buy down your
interest rate will vary based on the loan type.
Generally
speaking, points are tax deductible when you are buying
a primary residence. Consult your tax advisor for more
information on tax deductibility
What are appraisals
and surveys?
An
appraisal is the estimate of the value of the home you
are purchasing and is provided by a professional appraiser,
trained in estimating the value of real or personal
property.
A copy of the appraisal is provided to you at closing.
Surveys determine whether there has been an encroachment
on the property lines, building lines or easements.
If your home is new construction, the builder may order
the survey just after completion or just before closing.
Although we recommend that all buyers purchase a survey,
they are not required on most mortgage products
in Georgia. In Florida & North Carolina, they are
required on all mortgage products
What is the closing?
Closing
will typically take place at an attorney or title agent's
office. The attorney or title agent represents the lender
- not the seller, real estate agent or you - the buyer.
Your Realtor will give you instructions on where the
closing will be conducted, along with a phone number
and a fax number for the closing attorney or agent in
case you have any questions for him.
All borrowers associated with the loan transaction will
be required to bring a government issued photo ID such
as a driver's license or passport to closing.
Here's what you can expect to happen at the closing
table:
- The
closing agent reviews the HUD-1 Settlement Statement
with both you and the seller. Next,
- Evidence
of required insurance and inspections are presented.
Then,
- Signatures
are collected for loan documents including the HUD-1,
mortgage or deed note and the Truth-in-Lending statement.
Next,
- You
submit a certified or cashier's check to cover your
down payment and closing costs. Or, in some proceedings,
money is drawn from an escrow account established
for your home purchase. Then,
- The
Lender provides a check to the closing agent to cover
the home loan amount. If your monthly payments are
to include property taxes and insurance, a new escrow
account (or reserve) is established.
- Finally,
you receive the keys to your new home
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