Frequently Asked Questions

Mortgage brokers are independent, licensed professionals who represent you, not a bank. The alternative is to call dozens of lenders and compare their terms on your own. A broker takes one application, shops it across lenders you may never have heard of, and brings back the options side by side.

Often, yes. Your credit does not have to be perfect. Difficult stretches are often caused by illness, divorce or temporary unemployment. If the problem is in the past and you have re-established a good payment record for long enough, you may be in a good position to qualify. FHA loans in particular accept a wider range of credit profiles.

A good broker gathers enough information about you before recommending a program, the same way a doctor examines you before suggesting treatment. Ask for a plain explanation of the pros and cons of fixed-rate and adjustable-rate loans. With a fixed rate the payment never changes. With an adjustable rate, the rate is fixed for an initial period, often five, seven or ten years, and then adjusts with the market within caps set in your note. Interest-only and balloon features exist on some programs; ask how and when the balance comes due.

Refinancing makes sense when the monthly savings pay back the closing costs within the time you expect to keep the loan. Divide the total cost of the refinance by the monthly savings to find the break-even point in months. A rate reduction of 1% or less can still be worthwhile on a larger balance, and a refinance can also shorten your term, remove mortgage insurance or convert an adjustable rate to a fixed one. Our refinance calculator does the math.

The interest rate is what you pay to borrow the money. The annual percentage rate (APR) also includes most lender fees and certain closing costs, spread over the life of the loan, so it is a better tool for comparing two offers. Federal law (Regulation Z) requires every lender to disclose the APR on your Loan Estimate, including on adjustable-rate loans, where it is calculated from the current index and margin. For an ARM, also ask about the adjustment frequency, the first and periodic adjustment caps, the lifetime cap, the index and the margin.

Twenty percent is the traditional figure, but it is not required. Conventional loans allow as little as 3% down, FHA loans 3.5%, and VA and USDA loans can be 0% for eligible borrowers. A smaller down payment usually means mortgage insurance and a slightly higher rate, so ask about all of your options.

Loan costs include the lender's fees and third-party charges such as the appraisal, credit report, title insurance, escrow, recording fees and prepaid taxes and insurance. Within three business days of your application, you will receive a Loan Estimate that lists every one of them. At least three business days before closing you will receive a Closing Disclosure with the final figures. Ask for an estimate of costs before you apply.

Lenders require a lender's title policy for the loan amount, which protects them against title defects for as long as the loan exists. An owner's policy, which protects you, is optional but strongly recommended. Both premiums are paid once, at closing.

Rates can move between the day you apply and the day you close. A rate lock guarantees your rate for a set period, commonly 30 to 60 days, sometimes for a fee. Ask what happens if the lock expires before closing.

Most loans we arrange have none, and federal rules sharply limit them on qualified mortgages. Some non-QM and investment-property loans do carry one. Your Loan Estimate states clearly whether your loan has a prepayment penalty, how much, and for how long.

Most purchase loans close in 21 to 45 days. Your purchase contract needs a closing date, so coordinate it with us before you write the offer. We will tell you about any step that could slow things down, and how long after final approval the loan will fund.

A credit score is a number that predicts how likely you are to repay a debt, based on your payment history, how much you owe, the age and mix of your accounts and recent applications for credit. The most widely used mortgage scores are FICO scores, which range from 300 to 850. Because your report is the raw material for your score, check it for errors before you apply. You can get free reports from all three nationwide bureaus, Equifax, Experian and TransUnion, every week at AnnualCreditReport.com.

On a conventional loan with less than 20% down, the lender requires private mortgage insurance to protect itself if you default. It is usually added to your monthly payment. You can request cancellation once your balance reaches 80% of the original value, and it ends automatically at 78%. Putting 20% down, or choosing a program that prices the risk differently, avoids it.

No one can guarantee a closing date, because it depends on the lender, the appraisal, the title company and the seller as well as on us. What we do is tell you where the file stands at every milestone, flag anything that could cause delay, and explain what happens to your rate lock and costs if a date moves.

LTV is the loan-to-value ratio: the total of all loans on the property divided by its value. On a purchase, value is the lower of the purchase price and the appraised value. A higher LTV is riskier for the lender, so it affects your rate, your mortgage insurance and which programs you qualify for.

The Loan Estimate is the three-page federal form that lists your loan terms, projected payments and closing costs. The lender must deliver it within three business days of receiving your application. It replaced the Good Faith Estimate in 2015. Compare Loan Estimates from different lenders using the APR and the "Total Interest Percentage" on page 3.

Typically: Social Security numbers for all borrowers, pay stubs covering the last 30 days, two years of W-2s or tax returns, two months of bank and asset statements, and a list of your debts. Self-employed borrowers add business returns or bank statements. See the full documents checklist.

An appraisal is a licensed appraiser's opinion of a property's market value, based on its condition, location and recent sales of comparable homes. Lenders require one on most loans to confirm that the loan amount is supported by the value of the property.

If your loan has an escrow (impound) account, part of each monthly payment is set aside and your servicer uses it to pay your property taxes and homeowner's insurance when they come due.

A point is 1% of the loan amount, so one point on a $500,000 loan is $5,000. Discount points are prepaid interest that buy a lower rate. Whether they are worth paying depends on how long you keep the loan; we will show you the break-even.

In California and Washington, closing is handled by an escrow company. You sign the loan documents, usually with a notary, the lender funds the loan, and the deed and deed of trust are recorded with the county. Before signing, do a final walk-through of the home. After recording, you get the keys.