Homebuying FAQs

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.

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.

Your pre-approval remains valid for 90 days as long as the primary criteria we used to pre-qualify you remains the same.

For the vast majority of mortgage loans available, all lenders require the same documentation:

• Tax Returns
• Paystubs
• W2s
• 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.

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.

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.

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.

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 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.

There are a few differences between these types of loans:

1. 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. 
2. 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%.
3. 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.
4. Guidelines: FHA is also much more flexible with respect to credit and underwriting guidelines.
5. 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.  

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.

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.