How to Save your Loan Application

We have put together a short step-by-step guide to show you how to save your loan application. Simply click here to view the document. (The document will open in another window)

Why do you monitor my credit while I am in process for a loan?

While your loan is in process (from application through funding of the loan) your credit report is monitored for any activity that could affect your qualifying for the loan. If you incur debt during the loan process you may not be able to get approved, or the rate/terms could be higher. Please do not open or accept any new credit accounts without contacting us first. This includes department store cards, bank inquiries, car loans and co-signing for someone. It is also very important that you maintain your credit rating and score so always continue to pay your bills on time. If something comes up and there is a potential problem please call your loan officer immediately for assistance.

When will my loan be approved?

We start with a “pre-approval” based on the initial application, information, and documentation you provide us. When the appraisal comes in and all income/asset documentation is complete we will issue a “loan commitment/approval letter”. This letter will confirm that you are approved for the loan and will list any outstanding items that are needed so we may proceed to closing.

When will I know if the appraisal is acceptable?

We will provide you a copy of your appraisal once we receive it; if there are any issues with value or repairs we will contact you to discuss the options.

When do I need to give you the final loan conditions?

We must receive all outstanding loan conditions from you 5 business days prior to closing. This will allow adequate time for the final loan approval to be issued (also called “Clear to Close”) and for your closing documents to be prepared so you’ll have time to review, ask questions, and send the funds for closing. Once the commitment letter is issued the loan conditions are usually minor, such as an updated paystub or bank statement. If you have questions on the loan approval conditions please contact your loan officer or loan processor to discuss exactly what will be needed so your loan will close on time.

When do I get homeowner’s insurance?

As soon as you have identified a home to purchase and started the loan application we recommend that you contact your insurance agent to get a quote. If you need assistance we can provide you several insurance agents for you to speak with and determine the best deal for you. Please provide us your homeowner’s insurance agent contact information at least 10 business days prior to closing so we may assist you with making sure the property is properly insured.

How much are the closing costs?

Closing costs will vary depending on the type of transaction (purchase, refinance, or new construction). If you are purchasing a home the closing costs you are responsible for will be written into the contract. When you apply for the loan we will provide you a good faith estimate so you’ll have an accurate snapshot of the total cost of the transaction (down payment, taxes, closing costs, etc.). Prior to your closing you’ll receive a HUD-1 closing statement which will have the final closing costs, payment, terms, rate, and total amount due at closing.

How is my interest rate determined? When can I “lock in” the rate and terms?

Interest rates for home mortgages are determined by a number of individual factors. There are several things to remember when inquiring about the rate you will receive when getting a mortgage:

  • Credit score-the higher your credit score, the lower your interest rate. In most cases the rates are lowest when you have a credit score of 740 or higher. Interest rates are priced in 20 point increments (i.e. 680-699, 700-719, 720-739, and 740 or higher). Most loan programs have minimum credit score requirements (620-640 in most cases).
  • Loan to value-the more money you put into the transaction the lower the rate. For example, if you put 5% down the rate is likely to be higher than if you put 20% down. This can vary by program and your loan officer will review all the options with you.
  • Type of property-the specific type of property can also factor in to the interest rates that are available. A single family home will have a lower rate than a condominium in most cases.
  • Occupancy-owner occupied homes (primary residence) are the least expensive in terms of rates; investment property is more expensive due to the risk associated with a borrower not living in the home (investment properties have a higher rate of default versus a primary residence).
  • Type of loan-each loan program has different rates. We offer FHA, VA, Conventional, and Jumbo mortgages. Our loan officers will show you multiple program options so you can determine what’s best for you.
  • Loan term-the amount of time that you are taking the loan out for can also affect the rate. Loan terms range from 10-30 years; typically the longer the term, the higher the rate. We will give you rate and payment options so you can see the difference before finalizing your decision.
  • Discount points-if you wish to get a lower rate you may do so by paying the lender an upfront fee. This is called “buying down” the rate because at closing you will pay “points” in return for the lender giving you a lower rate over the term of the loan. Discount points will vary by program and we will give you a rate quote with several different options (with discount points and without). If you pay “1 discount point” that would equate to paying 1% of the loan amount at closing ($200,000 with 1 discount point = $2,000). Your loan officer will assist you with calculating the difference in monthly payment to see if it is worthwhile for you to pay discount points at closing.
  • Loan purpose-rates will vary depending on if you are purchasing a home, refinancing with no cash out to get a lower rate, or refinancing in order to take equity out of the home (also called “cash out refinance”). In most cases a “cash out” refinance is more expensive than a purchase or rate reduction refinance.
  • Closing date/length of time for rate lock period-the quicker the loan is closed after locking in the lower the rate. Most loans are locked in for 15-45 days, depending on when your closing is scheduled. Some closings (normally new construction) can be longer than 45 days from loan application, and we offer extended rate lock in periods for a fee.
  • The daily stock and bond market-interest rates are generally based on the US Treasury bond market (most notably the 10 year Treasury bond). The lower the bond yield, the lower the interest rates. The bond market is always changing just like the stock market, so although our interest rates usually change once a day it is possible that rates can change during the day if there are large movements in the market. For example, if you get a quote to buy Home Depot stock at 10 am it’s possible that the price to buy the stock is different at 3 pm. The bond market affecting mortgage interest rates are the same way, they are always subject to change. If you wish to lock in your rate please call us and we will give you an up-to-the minute quote, and if you choose to lock in we will send you a written confirmation of the rates, terms, and costs for the program you choose.

Please contact us if you have questions or concerns about interest rates, terms, or locking in. Although there is no way to accurately track the daily interest rates that apply to your individual loan financing you can get a general idea of the daily market and the direction of rates. Websites such as CNBC and Bloomberg have the 10 year Treasury Bond posted all day.

Can I deduct the closing costs on my tax return? What about other deductions for mortgage interest, taxes, and mortgage insurance?

Please contact your CPA, Financial Planner, or Attorney to determine what costs are eligible for itemization on your tax return. At the end of each year you’ll receive a “Mortgage Interest Paid” form to show how much you interest you paid for the year; you’ll need this form when preparing your tax return.

Can I bring a check to closing?

In most cases the title company or attorney closing the transaction will ask you to wire transfer the funds due at closing. Please contact us if you are unsure of how to bring the funds to closing.