Clearing Up Common Queries
Embark on your journey with confidence as you choose a loan process that seamlessly aligns with your unique needs. Our commitment to efficiency ensures a seamless experience, while our tailored approach guarantees that your individual requirements are met with precision. Experience the assurance of a process designed for you, ensuring your path to homeownership is both smooth and secure.
Our FAQs section is here to provide you with straightforward answers to the questions you have about mortgages, eligibility criteria, and everything in between. Whether you’re a first-time buyer or a seasoned homeowner, we aim to demystify the complexities of the mortgage landscape, allowing you to make informed decisions with confidence.
What kind of experience can I anticipate when collaborating with a team compared to working solely with an individual Loan Officer?
Our founders, who once excelled as top-tier loan officers, recognized a recurring challenge: the bottleneck effect caused by funneling allApply Online communication through a single individual. This often resulted in delays, especially when juggling numerous clients or concurrent projects. To tackle this issue head-on, Homepad developed the innovative “Super Team” system, a hallmark of our approach. Through an advanced, state-of-the-art information management system, every member of our team remains seamlessly informed about every facet of each client’s journey. This dynamic transparency ensures that updates and inquiries receive swift attention, even during periods of high demand.
With Homepad’s unique solution, you’re not just working with a team – you’re engaging with a synchronized network dedicated to delivering unparalleled efficiency and responsiveness, redefining industry standards.
What's the timeline for finalizing my mortgage once my offer gets accepted?
Our streamlined process allows for swift closures, often within just 14 calendar days, from the moment your contract is signed to the day you receive your keys. While many transactions fall within this timeline, certain loan types or intricacies may necessitate longer closing periods, especially if reliant on third-party involvement.
For instance, Veterans Administration (VA) loans may require extended timeframes due to the involvement of the Veterans Administration and VA-certified appraisers, who may not operate as swiftly as those in our standard appraisal network. As a result, the closing period for VA loans typically spans 21 calendar days. It’s always wise to consult with our dedicated team members to confirm the specific closing timeline that applies to your unique circumstances.
Could you also clarify the distinction between pre-approval and pre-qualification?
Prequalification involves a mortgage lender gathering fundamental financial details from you to estimate the potential amount you can afford for a home. Receiving a prequalification confirmation from a lender offers a preliminary understanding of your potential loan approval amount, aiding in the establishment of a practical home buying budget and facilitating targeted house hunting.
Prequalification often relies on self-reported information, bypassing the verification process of pulling credit reports or comprehensive financial document reviews. As a result, being prequalified provides a rough estimate rather than a definitive figure. It’s worth noting that preapproval, on the other hand, is more robust and dependable. Typically, it involves your lender assessing your credit score, scrutinizing bank statements, and reviewing pertinent documents to furnish you with a more reliable home loan amount.
How long does a pre-qualification remain valid?
Your pre-approval remains valid for 90 days as long as the primary criteria we used to pre-qualify you remains the same.
What documentation do I need to provide in order to get pre-approved?
For the vast majority of mortgage loans available, all lenders require the same documentation:
- Tax Returns
- Investment Account/Bank Statements
- Credit Report
Some types of mortgage loans allow much less documentation if you are a particularly strong borrower with a large down payment, low debt ratios, and/or excellent credit. Similarly, there are “Non-QM” loans available if you do not qualify in a traditional manner. These loans may only require bank statements or other alternative documentation sets, but they also come with higher rates and down payment requirements. When we work on your pre-approval, we will always qualify you for the best loan available with minimal documentation requirements.
Why is my credit score online so much higher than the one you are reporting?
Online credit reporting tools often yield higher credit scores than those that mortgage lenders pull with their reports. This is because the scoring criteria that mortgage lenders use is more stringent than the scoring criteria that is used by the online tools.
As discussed above, we are required to use our own internally generated report that adheres to the specialized scoring criteria for mortgage lenders.
Does it matter if my spouse/partner has a low credit score?
Yes. It matters because credit scores can significantly affect your interest rate. When lenders check credit, they access the three major credit bureaus and rely on the credit scores those three bureaus generate. Lenders then correlate to “the middle” of the three scores when they qualify you.
If there is more than one borrower on a loan application, lenders correlate to the lowest middle score of all the borrowers on the application.
Interest Rates & Loan Process
Discover how interest rates impact your mortgage, explore the various options available, and gain clarity on the steps involved in securing your loan. Our experienced team is here to demystify the complexities, ensuring you’re well-informed every step of the way.
What will my interest rate be?
Your interest rate is impacted by several different factors including property type, down payment, loan amount and credit score. Homepad Lending is happy to provide current market rate quotes for your particular scenario at any time, but rates cannot be guaranteed until locked.
NOTE: Rates cannot be locked unless a property has been identified and we have an address to associate with the rate-lock.
Here are factors that will influence your interest rate:
- Property Type: Condos, high-rise condos and multi-unit dwellings (2 – 4 units) usually have higher interest rates associated with them, as compared to single-family dwellings.
- Property Use: Investment properties have higher rates than owner-occupied properties.
- Credit Scores: Credit scores significantly affect rates. Having a 750 mid-score might have a rate as much as 1% lower than if you were to have a 670 mid-score.
- Down Payment: The bigger the down payment, the lower the rate, in most cases.
- Loan Amount: Very small loans (under $150,000 for example) can have higher rates, as can very large jumbo loans (over $3 million for example). In addition, “low balance” conforming loans under $647,200 will have lower rates than “high balance” conforming loans (from $647,200-$970,800).
- Loan Type: FHA and VA rates are usually lower than conforming (Fannie/Freddie) rates, and our jumbo rates are currently the lowest of all for very strong borrowers.
- Rate Lock Period: Interest rates can be “locked in” or guaranteed prior to close of escrow for 15, 30, 45, or 60 days in most cases. The longer the lock period, the higher the rate.
- Fixed Period/Loan Maturity: The longer a rate stays fixed, the higher the rate. For example, a 7/1 ARM (fixed for seven years) will usually have a lower rate than a 15-year fixed-rate loan, and a 15-year fixed-rate loan will have a lower rate than a 30-year fixed-rate loan.
- 1st/2nd Combo Loans: Loans with a concurrent 2nd mortgage can have higher rates too, depending on the loan-to-value ratio.
If several of the above factors work in tandem, your rate could be significantly affected.
For example, if you have a 690 credit score and are buying a high-rise condo with 5% down with a high-balance loan, your interest rate might be 1% to 2% higher than if you were buying a single-family home with 25% down, have a 750 credit score, and a low-balance loan.
When can I lock in my rate?
For a purchase, we can lock in your rate as soon as we receive a ratified purchase contract that identifies a property address and closing period.
For a refinance, we can lock in your rate as soon as you provide the authorization, after you and one of our Mortgage Analysts have discussed the terms and benefits.
What is the difference between my APR and the interest rate quoted to me for my mortgage?
The interest rate we quote you is the actual rate that will be on your mortgage promissory note. The APR (Annual Percentage Rate) is a recalculation of your effective mortgage interest rate to include your closing costs as well as the interest you will pay on the loan. These closing costs can include origination fees, points, escrow fees and mortgage insurance.
The APR may be somewhat misleading on loans that require large mortgage insurance premiums, like FHA loans. APR quotes are required, however, to prevent lenders from quoting artificially low interest rates to attract business and then charging substantial fees to cover the cost of the low rates.
If rates drop immediately after I close my loan, when is the soonest I can refinance into a lower-rate mortgage?
If rates fall, we can lock you into a new, lower rate as soon as four months after you close – but, we cannot close your new loan for at least 180 days after your initial loan closes. This is because most lenders sell every loan they fund on the secondary mortgage market for a premium (more than the principal loan amount), as that is how all mortgage lenders make enough money to cover overhead.
What is the difference between an FHA and conventional loan?
There are a few differences between these types of loans:
- Mortgage Insurance: The main difference between an FHA and a conventional loan is that FHA loans are insured by or backed by the U.S. Federal Government. FHA stands for Federal Housing Administration, and that Federal agency backs every FHA loan with its massive insurance pool. That pool is funded by up front “Mortgage Insurance Funding Fees” of 1.75% of the loan amount at the close of escrow and by monthly mortgage insurance premiums equal to 0.85% (in most cases) of the loan amount divided by 12. These mortgage insurance premiums are mandatory and permanent in most cases, even when down payments are substantial (20% or more of the total purchase price). In contrast, conventional loans are not backed by the Federal Government. Conventional borrowers putting down 20% or more do not need any mortgage insurance but buyers putting down less than 20% will need “Private Mortgage Insurance,” or PMI. The insurance is deemed “private” because is provided by private sector insurance companies and not by the government (like with FHA). We should emphasize here that the mortgage insurance referenced above only protects lenders in the event of a default; it does not protect you as the borrower.
- Down payments: FHA only requires 3.5% of the purchase price for a down payment. Conventional loans have 3% down options for some qualifying buyers but the majority of conventional buyers need to put down at least 5%.
- Rates: FHA interest rates are lower than conventional interest rates, despite what many lenders convey. These lower rates, however, are offset by FHA’s much higher mortgage insurance premiums in most cases.
- Guidelines: FHA is also much more flexible with respect to credit and underwriting guidelines.
- Which option is best? For strong buyers with substantial down payments, lower debt ratios, and good credit, conventional financing is always the better option because buyers can avoid the Up Front Mortgage Insurance Premium altogether, and avoid the monthly mortgage insurance premium if they put down 20% or more. If strong buyers put down less than 20%, conventional financing is still the better option because the Up Front Mortgage Insurance Premium is avoided once again and private monthly mortgage insurance is much cheaper than FHA’s. For buyers with lower credit scores (under 700), limited funds, and higher debt ratios, FHA is often a much better option.
I am receiving gift funds from a family member to help with my down payment. How does that affect my loan?
In most cases it won’t affect your loan at all, as most lenders are very flexible when it comes to gift funds. Our only advice when it comes to gift funds is to have your donor wait and deposit your gift funds directly into an escrow account AFTER you are in contract to buy a home. This avoids a lot of unnecessary paperwork for both you and your donor. Please reach out to one of our team members if you would like additional details.
Why does having local appraisers matter?
It matters significantly because appraisals can easily make or break your transaction. We maintain our own network of highly qualified and experienced appraisers who are always local to the areas in which they appraise. This is key because every neighborhood has substantial nuances that can significantly affect value. Prior to cultivating our own appraiser network, we frequently had issues with appraisers who were appraising areas with which they were not familiar. Because of this, they often provided poor-quality appraisals that did not support contract prices and broke up transactions.