Questions?

Frequently Asked Question’s

Why do I need to use a loan officer?

Because your best interest is my only interest! Whatever your situation is, over the years I have demonstrated a unique ability to come through for my clients. I am your one point of contact through out the entire transaction, and I make myself as available as you need me to be.

What makes you different from a bank?

There are a number of different reasons why working with a broker is better than working with a bank.

1) Big banks have limited options. They have their product lines, and if anything falls out from those lines, then they can not do the deal. I have the option to look at multiple lenders, to find the best deal for your particular situation. If there is anything funky with the deal (such as relocating) the bank may not take it, and then you will have to start again.

2) Because they are a big bank, their customers are numbers in a machine. Most the time you will be working with a few different people at the bank, rather than just one person. I am your one point of contact through out the entire transaction. This limits any misunderstanding that may happen; and makes for a smoother process.

3) Like any big institution, banks can move slowly with certain things. I have a good team of third party people that offer speed, service, and quality.

4) I am a full disclosure loan officer. I will tell you every fee, and every cost that you will have. I have never had to surprise my borrowers at the closing table with higher rates, or fees. I am trying to build relationships with my clients. Just an FYI: banks are not required to disclose all of their fees, and hide things in the interest rate without giving you the option to manage how your money will be used. I have never seen a bank good faith estimate that correctly lays out the costs of taxes and insurance. I honestly do not think they know how too.

Can you lay out the process in a simple way?

1) Estimate what would be a comfortable total house payment

2) Organize your Income, Job History and Checking/Savings Information

4) Call Jake and/or Apply Online to get pre-approved

2) Discuss Jake’s recommended Loans & Rates of Different Programs & choose the best fit

5) Send Jake any additional documentation needed

6) Lock your rate when you have an accepted purchase offer (Jake helps you time it best)

6) Jake orders Appraisal, Title, and guides the loan through Underwriting

7) Jake gets final approval from the lender after they’ve reviewed the loan info

8) Close Your Loan

 

What is the difference between a pre-qualification letter, and a pre-approval letter?

The preapproval letter is a tool typically drafted by a loan originator to be used by a buyer’s real estate agent when presenting an offer on a property.   The preapproval letter is intended to assure the seller and the listing agent that the buyer has been approved by the lender and therefore accepting an offer from this buyer, there should ideally not be any financing issues with the buyer.

When I prepare a preapproval letter, it usually contains the following (depending on the program):

  • Effective date.
  • The borrower’s names (who is approved for financing).
  • The sales price and loan amounts they are approved for.
  • The type of financing is confirmed (ex. Conventional, FHA, etc.)
  • Credit has been reviewed.
  • Employment and income has been confirmed.
  • Down payment and closing cost have been verified.
  • Any item the preapproval is subject to (such as satisfactory appraisal, title, complete purchase and sale agreement, etc.).

If these items have not been actually verified with proper documentation, then a buyer has been prequalified—not preapproved.  BIG DIFFERENCE.  Being prequalified essentially means that a verbal interview has been conducted without providing all of the necessary supporting documents (pay stubs, W2s, bank statements—again, depending on the type documentation required for the specific loan “full doc” to “no doc”).  In addition, a Good Faith Estimate does not constitute a preapproval, it does detail the proposed loan scenario.

What is Libor?  What is an Index?

People talk about indices’s and margins all the time in the mortgage world.  To tell you the truth, a lot of mortgage professionals do not even know what it is, and how it will affect them.  So, here is a brief run down of it.

An Index is something that is determined by an outside source that allows us all measure things.  Kind of like a compass on a map; it gives us a starting point.  The most widely used index is the LIBOR, or London InterBank Offered Rate.  This LIBOR is the rate at which one bank will charge another bank to lend them money.  It is for banks in London, hence the name, and we use it as our compass.  There are other indices’s that people use, code named COFI, MTA, or the 1 year Treasury index (used primarily in the America).

Mortgage lenders use this index to create ARM loans, or Adjustable Rate Mortgages.   The lender uses that rate, and then adds a ‘margin’ to it, and that creates the Note Rate.  That Note Rate is the rate at which you will be paying back the lender for your loan.  When the index goes down, the rate at which you pay your ARM loan goes down (assuming you have passed the ‘fixed’ portion of your mortgage.

So, INDEX+MARGIN=NOTE RATE.

The Margin never changes, only the Index.  When the fed cuts the 1 year Treasury rate, which is what a lot of American ARM loans are tied too, their rate goes down.  It is just like a home equity line of credit that adjusts with the Prime rate.  Why is this all important?  There are stories out of London that banks have been manipulating this index, which they should NOT be doing.  It appears that regulatory powers in London have noticed this, and have started to put a stop to it, leading to the threat that this rate may go up.  If that happens, people that have loans tied to the LIBOR may see their rate go up.

All of this is important because it shows how connected the banking institutions through out the world are ALL connected!

When is the best time to refinance?

Every situation is different; however here are some of the questions to consider if the timing is right for you…Are you paying mortgage insurance? Do you have debt that can be consolidated? How long are you planning to remain in the home? Are you considering home improvements that can be accomplished through equity in your existing home?

What is Mortgage Insurance?

Mortgage insurance is there to protect the lender when they issue mortgages with less than 20% down payment. Depending on the transaction there are many ways to avoid mortgage insurance, however, there are times when it is beneficial and cost efficient to have this as part of the transaction.

What is the advantage of doing a two loan option versus one loan?

The main advantage is usually the elimination of mortgage insurance and the ability to pay taxes separately from payment.

What are tax impounds?

This is an account created at the time of closing that holds (depending on the time of year) anywhere from 2 months to 10 months of taxes. The taxes are also included within your monthly payment.

What is Locking?

Locking is when you have secured a property (in the case of a purchase) or when you have agreed on a refinance scenario, and would like to secure the rate for a set amount of time. Generally locks are based on 30-60 day time frames.