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We can help you answer your questions! You will find the answers to several frequently asked mortgage questions. 
 
What is the difference between pre-approval and pre-qualification?  
When does it make sense to refinance?  
What is a rate lock?  
What is a full documented loan?  
What is a good faith estimate?  
What is a conforming loan?  
What is a jumbo mortgage?  
What are points?  
What is a pre-qualification?  
What is a good credit score and how can I improve mine? 
 
What is the difference between pre-approval and pre-qualification? 
The pre-approval process is much more complete than pre-qualification. For pre-qualification, the loan officer asks you a few questions and provides you with a pre-qualification letter. Pre-approval includes all the steps of a full approval, except for the appraisal and title search. Pre-approval can put you in a better negotiating position, much like a cash buyer. 
 
When does it make sense to refinance? 
People usually refinance to save money, by obtaining a lower interest rate or by reducing the term of the loan. Refinancing is also a way to convert an adjustable loan to a fixed loan or to consolidate debts. The decision to refinance can be difficult, since there are several reasons to refinance. However, if you are looking to save money, try this calculation: 

  • Calculate the total cost of the refinance
  • Calculate the monthly savings
  • Divide the total cost of the refinance (#1) by the monthly savings (#2). This is the "break even" time. If you own the house longer than this, you will save money by refinancing.
  •  
    Since refinancing is a complex topic, consult a mortgage professional. 
     
    What is a rate lock? 
    A rate lock is a contract agreement between the lender and buyer. There are four components to a rate lock: loan program, interest rate, points, and the length of the lock. 
     
    What is a full documented loan? 
    Both income and assets are disclosed and verified, and income is used in determining the applicant's ability to repay the mortgage. Formal verification requires the borrower's employer to verify employment and the borrower's bank to verify deposits. Alternative documentation, designed to save time, accepts copies of the borrower's original bank statements, W-2s and paycheck stubs.  
     
    What is a good faith estimate? 
    It is the list of charges that the lender is obliged to provide the borrower within three business days of receiving a completed loan application.  
     
    What is a conforming loan? 
    A loan eligible for purchase by the two major Federal agencies that buy mortgages, Fannie Mae and Freddie Mac. 
     
    What is a jumbo mortgage? 
    A mortgage larger than the maximum eligible for conforming purchase by the two Federal agencies, Fannie Mae and Freddie Mac. 
     
    What are points? 
    It is an upfront cash payment required by the lender as part of the charge for the loan, expressed as a percent of the loan amount; e.g., "2 points" means a charge equal to 2% of the loan balance.  
     
    What is a pre-qualification? 
    This is the process of determining whether a customer has enough cash and sufficient income to meet the qualification requirements set by the lender on a requested loan. A pre-qualification is subject to verification of the information provided by the applicant. A pre-qualification is short of approval because it does not take account of the credit history of the borrower.  
     
    What is a good credit score and how can I improve mine? 
    Any credit score over 680 and above.  You can improve the score by always pay all creditors on time, owe no more than 1/3 of credit limit and pull a annual credit report once a year.  For a free credit report visit www.annualcreditreport.com. 


     
     
     
     
     
    For all other mortgage questions, please contact us.  


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