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Frequently Asked Questions

 

When should I refinance?

It's generally a good time to refinance when your closing costs can be  recovered within two (2) years of closing. Call us today and your loan officer will help you determine if a refinance will provide a benefit to you.

We also offer a specialty program called Finance One®.  With it's NO CLOSING COST feature,  your loan officer can show you how our Finance One® loan will start to save you money from day one.  NO CLOSING COSTS typically means NO recoupment period,  thus providing savings beginning on day one.

 

What are points?

A point is an optional upfront payment in which the borrower can decide to buy down an interest rate in exchange for the increase in closing costs of the upfront fee. A point is a percentage of the loan amount. For example 1-Point = 1% of the loan, so 1-Point on a $100,000 loan is $1,000. Points are paid at closing in exchange for a lower rate. Careful consideration should be exercised by the consumer to determine if points will benefit them. Call us today to discuss the advantages, and disadvantages, of choosing to pay any amount of points. You may also refer to FAQ “Should I pay points to lower my interest rate” below for more details.

 

Should I pay points to lower my interest rate?

Paying points can offer a potential long term benefit to you if you beleive that interest rates are at their low for the foreseeable future, and you are confident that you will own the property for a minimum of at least four (4) years going forward. Paying discount points to lower the loan's interest rate will lower your required monthly loan payment.  However, if you plan to own the property for only a year or two, your monthly savings will likely not be enough to recover the cost of the discount points that you paid up-front. Call us today to discuss if you should paying points would provide a proper return for you longer term.

 

What does it mean to "lock" the interest rate?

Mortgage rates are constantly changing according to the market.  Mortgage Interest Rates are most closely related to movement in the 10 year US treasury bond. If the interest rates rise during the application process the amount that you pay for the principal and interest on your loan will also increase. Thus, your required monthly principal and interest payment increases.  We allow the borrower to “lock-in” their interest rate, which guarantees that rate for a specific period time, when they have obtained a signed contract to purchase a property and/or have adequately shopped for their mortgage loan product and come to the conclusion that Financial One is their lender of choice. Financial typically processes a mortgage loan within 14-30 days. Thus, we typically lock a loan in for 30-45 days. However, we have longer lock options for those who need to preserve their rate for a closing more further into the future. Many lenders charge an application fee and/or to lock in an interest rate, however, Financial One does NOT charge any upfront  fees. We are confident that we have offered our best program option from the start and that our custmers have found Financial One to be their lender of choice after thoughtful considersation. Your verbal commitment and our Loan Estimate and the Rate Lock Commitment that we will provide to you is enough for us. Call us today to discuss your options for locking into a low rate today.

 

What documents do I need to prepare for my loan application?

Below is a list of documents that often can help you prepare for the loan process. Call us today and your loan officer can provide a more specific to you list:

     Property related (purchase only)

  • Copy of signed purchase contract- including all addendums and/or counter offers
  • Copy of the EMD (Earnest Money Deposit) check
  • Copy of the Seller completed property disclosure (if required by state law)
  • Contact info for your Realtor (email and phone)
  • If applicable, copy of the sales contract on any property you are selling OR a listing agreement on any property you are moving from.

     Property related (refinance only)

  • Copy of your current mortgage billing statement
  • Copy of your current insurance declarations page to show annual premium and renewal date
  • Copy of any current HELOC or 2nd mortgage agreements (if applicable).

     Income (hourly or salary)

  • Copy of a current paystub(s) covering  the most recent 30 day period- with Year to Date Earnings
  • Copy of your W-2 forms for the past 2 years

     Income (If self-employed or receive commission or bonus, tips, or rental income)

  • Provide full federal tax returns with ALL schedules for the last 2 years (If you have filed an extension, please supply a copy of the extension for the current filing year along with then the most recent full tax returns for 2 years preceeding it.)
  • K-1's for all partnerships and S-Corporations for the last 2 years (please double-check your return. Most K-1's are not attached to the 1040.)
  • Completed and signed Federal Partnership (1065) and/or Corporate Income Tax Returns (1120, including all schedules, for the last two years. (Required only if your ownership position is 25% or greater.)
  • If applicable, Year to Date Profit and Loss Statement. Please ask your loan officer if this will be needed.

     Income (If you will use Alimony or Child Support to qualify)

  • Provide divorce decree/court order stating amount, as well as, proof of receipt of funds for last year

     Income (If you receive Social Security income, Disability or VA benefits)

  • Provide most recent award letter from agency or organization or other evidence of current receipt of this income

     Assets (source of down payment OR reserves OR funds needed at closing)

  • If applicable:  Sale of your existing home - provide a copy of the signed sales contract on your current residence OR the listing agreement if unsold (at closing, you must also provide a Closing Statement from this sale)
  • Most recent two (2) months current bank statements for checking, savings, brokerage, IRA, etc. (must be an official statement and include ALL pages to the statement- even if any are intentionally blank).
  • Gift Funds - If applicable, and part of your cash to close, your loan officer will provide specific requirements for documentation. Ex: a gift letter will be prepared to be signed and dated by the parties giving and receiving these funds and proper documentation of receipt with be discussed.
  • Based on information appearing on your application and/or your credit report, you may be required to submit additional documentation.

     Debt or Obligations

  • If you are paying alimony or child support, court document stating the terms of the obligation (Example: Divorce Decree, separation agreement, court order)

What is an appraisal?

An Appraisal is an estimate of a property's fair market value that is used by the lender to determine if the property being offered as collateral against the loan is sufficient to meet certain requirements of the lender. An appraisal is different from a home inspection and should not be used by a consumer to determine the condition, structural soundness, integrity, and/or etc, of the property. It is highly recommended on a purchase for a consumer to obtain their own independent home inspection(s). Call us today so we can determine if your pending loan will require an appraisal.

 

What is PMI (Private Mortgage Insurance)?

On a conventional mortgage, when the down payment is less than 20% of the purchase price mortgage lenders typically require the borrower purchase Private Mortgage Insurance (PMI) to protect them in case the borrower defaults on their mortgage. PMI costs will vary based on credit score, down payment, and loan program. Call us today and your loan officer will discuss your options for PMI.

 

What are some important things to know leading up to my closing?

  • Many states have “Good Funds Laws”. Good Funds Laws require that ALL monies involved in a real estate transaction be presented in a certain manner at the closing. Talk to your loan officer about the laws in your state to make sure that you have your funds liquid and available for closing so that they can be presented in accordance with the law. (example: Ohio requires, in most cases, the funds required for closing be sent via bank WIRE). It is very important to consult with your loan officer as to the timing and method of funds needed at closing.
  • DO NOT become a Victim of Fraud: Unfortunately these days criminals use sophisticated emails to send fake wire instructions that may appear as if they are their Lenders, Title Companies, and Realtors.  Do not accept any wire instructions until you have verified them with your trust source. ALWAYS take the time to verbally contact your loan officer, title agent, OR realtor at a known number BEFORE sending any payment or wire to any institution.
  • DO NOT Commit Fraud: Failure to notify your lender of ANY changes in employment can result in Mortgage Fraud.
  • DO NOT cause unnecessary delays in your closing. As required by Loan Quality Initiatives, Lenders are required to do a soft pull credit report just prior to closing. DO NOT apply for new debt or significantly change your current debt prior to closing. If unavoidable, you MUST inform your loan officer immediately and provide the documentation required for the new debt.  IF the soft pull shows any application for new debt OR significant changes to existing debt then Lenders are required to stop the transaction and determine the qualifying impact of the changes. Applying for new debt includes, but is not limited to, application for auto loans, other installment debts, credit cards, student loans, same as cash offers, NO payment options, and etc. Normal use of an existing credit card is typical and expected.

What is an APR?

The annual percentage rate (APR) is an interest rate reflecting the cost of a mortgage as a yearly rate. It takes into consideration certain factors like loan program, certain closing costs, and if applicable, private mortgage insurance (PMI). The APR is critical in helping a consumer see the “true costs of loan”.  However, it is very important for the consumer to understand that the lowest APR does NOT always reflect the best option they may have.  For an example: an adjustable rate mortgage (ARM) can often offer a much lower APR when compared to the APR of a 30 year fixed mortgage. However, the ARM can carry risk features that may not be the best fit for a consumers risk tolerance or may not fit the expected duration of the use for the mortgage loan product.)  Call us today to discuss the many different loan products available in order that we may find the very best loan program that fits your personal financing needs as well as your level of long term interest rate risk.

Important: The APR does NOT affect your monthly payments. Your principal and interest payment is directly related to the INTEREST RATE  and the length and terms of the loan.

 

 

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