Frequently Asked Questions:

What is the difference between pre-qualification and pre-approval?
What are origination and discount points?
Why is the APR (annual percentage rate) often higher than the actual note rate?
Where will I be closing, how much money do I need to bring, can I bring a personal check?
What “up front” cost are required?
Why is it so important to document my down payment?
Why can’t I get a definite interest rate quote before applying for a loan?
Can my loan be sold? What happens if my lender goes out of business?
We’ve applied for a loan, what happens now?

 

What is the difference between pre-qualification and pre-approval?     return to top

Pre-qualification is a loan officer’s opinion that you should, based on the
verbal information you have provided, qualify for a mortgage. A pre-approval
is an underwriter’s decision that you are qualified for your requested loan amount subject to any requested documentation which leads to a firm approval. When it comes to writing an offer for a home, it is a good idea to obtain a pre-qualification letter from a lender not only to decrease any chances of closing on time but could ultimately be the determining factor when a seller accepts an offer.

What are origination and discount points?     return to top

The origination and discount points are both a percentage of your loan. If we are talking about 1 percent, it would be 1 percent of the loan amount. It is important to understand that the origination and discount points will affect your mortgage interest rate. In most cases, if you pay an origination fee and or discount points then your interest rate will be lower because you have effectively bought the rate down.

Why is the APR (annual percentage rate) often higher than the actual note rate?     return to top

This is disclosed on your truth-in-lending disclosure. Quite often the APR is higher than the actual note rate because the APR includes, in addition to interest, some of the additional cost in obtaining your financing. Simply stated, if there were no costs in obtaining your financing, your note rate and the APR would be the same.

Where will I be closing, how much money do I need to bring, and can I bring a personal check?     return to top

The closing will take place at a title company or attorney’s office. This information is disclosed on your signed contract. As far as how much money you will need for closing, your loan officer will give you an estimate within 3 days of loan application. The exact amount will be given to you by the title company or loan officer approximately 24 hours before closing. You must bring a cashier’s check for the exact amount. A personal check is typically not accepted.

What “up front” cost are required?     return to top

A mortgage company will be ordering a number of services from 3rd parties (appraisal, credit report, survey, pest inspection, ect.) and will be billed for these services before your closing. Therefore you will be required to pay either an application fee or appraisal fee/ credit report to cover these costs. If you back out for the contract usually a portion of your earnest money will be used to pay for any 3rd party expenses that did not get collected up front.

Why is it so important to document my down payment?     return to top

Simply put, a down payment is typically required to decrease the chance of a borrower “walking away” from their mortgage. The percentage of down payment will increase according to the risk of the loan. Bottom line, if you use your hard earned money vs. borrowed or gifted money then the chance that you walk away from the loan decreases. This is why a lender reviews your most recent bank statement not only to make sure your balance is enough to cover the down payment but to make sure you do not have any unexplained large deposits. In most cases any large deposits will need to be documented.

Why can’t I get a definite interest rate quote before applying for a loan?     return to top

A mortgage company can not accurately quote an interest rate because the investors set the rate according to the risk level of the loan. Your credit score, debt ratio, down payment, and job security are just a few things that are factored into the “risk” level. Bottom line, the higher the risk, the higher the rate and or closing costs (discount points/origination fee).

Can my loan be sold? What happens if my lender goes out of business?     return to top

Your loan can be sold at any time. There is a secondary mortgage market in which lenders frequently buy and sell pools of mortgages. This secondary mortgage market results in lower rates for consumers. A lender buying your loan assumes all terms and conditions of the original loan. As a result, the only thing that changes when a loan is sold is to whom you mail you payment. If your loan has been sold, your existing lender will notify you that your loan has been sold, who your new lender is, and where you should send your payments from now on.

We’ve applied for a loan, what happens now?     return to top

Keep in mind that we can not start processing your loan until we have received all of the requested documentation. We will then submit your file to our investor for a full loan approval. The loan processor in our office will help by keeping you informed and the status of your loan. The processor’s primary responsibility is gathering any additional paperwork, ordering any 3rd party documents, and scheduling your closing. Of course the loan officer will always be available to answer any additional questions you may have.

RIOPLEX MORTGAGE COMPANY IS COMMITTED TO PROVIDE THE BEST CUSTOMER SERVICE AND WILL WORK HARD TO FIND THE LOAN PROGRAM AND INTEREST RATE THAT WILL BEST FIT YOUR NEEDS.     return to top