Frequently Asked Questions About Mortgages

1. How do I obtain the best rates possible?
2. Are no points loans better?
3. Why can’t I get the advertised rate ?
4. Why are the rates different for second homes and investment properties?
5. What is a pre-payment penalty or early payment penalty? Does my loan have on?
6. How do I avoid surprises at the closing table?
7. Why do I need more funds to close than are on the Good Faith Estimate?
8. My credit score is low. What can I do?
9. The Federal Truth In Lending document contains a different rate than is on the Good Faith Estimate. Why is the rate higher on the TIL than on the GFE?
10. What is a No-Doc loan?
11. What loans are available if I cannot prove income?
12. Why can’t I get a co-signor like I did for my automobile loan?
13. Why does where the down payment comes from make a difference?
14. I have perfect credit, why does the underwriter need to see this document or that document? Don’t they know we will pay the loan?
15. What is a bridge loan?
16. The program says 100% financing, why do I have to bring money to the closing?
17. What is title insurance? Why does this cost so much?
18. Why is there so little 100% investor financing? The guy on TV makes it sound so easy?
19. What are the rates for mortgage insurance?
20. What happened to all of the 1% loans?

Answers: Note: to get back to the top click on "top"

How do I obtain the best rates possible?

Simple, shop around and find people who will work with your situation in a professional manner with lower rates and fees. Also concentrate on the lowest rate deal that will actually close. Our goal is to have lower rates that actually make it to closing table without huge hassles. Although some of our internet competition will promise the world it has been our experience that many of these deals don’t actually close and ultimately the consumer will pay more. One of our most important objectives is to give you the same deal originally quoted. See our line 800 fee guarantee. Call us at 757-481-0100 for details. [top of page]

Are no points loans better?

Sometimes yes, but sometimes no!. This actually depends on how long a person keeps the loan. Ultimately if we have a good idea how long you will probably keep the loan then we can tailor this to a much lower True A.P.R. The true A.P.R which can only be calculated after the loan is paid off can vary substantially from the Federal Truth In Lending form which is a required disclosure that calculates an A.P.R assuming a 30 year re-payment schedule. According to Fannie Mae only _____% of loans are actually repaid with a full 30 year term. It is easy to see why these figures are usually inaccurate. Let one of our experts work with you to calculate different options and assumptions which will suit your needs better. Call us at 757-481-0100 for details. [top of page]

Why can’t I get the advertised rate ?

Many times lenders put rates on the web (bait and switch), to just draw in a phone call or they put in credit scores that are simply unattainable. Sometimes this problem is created by credit challenges or lack of enough qualifying income. Everyone’s circumstances are different and our goal as stated earlier is to help our borrowers save money by attaining loans with rates that will actually close at lower rates than our competition and with less hassles. [top of page]

Why are the rates different for second homes and investment properties?

When determining risks Fannie Mae, Freddie Mac, and private investment money is very concerned with the likelihood of default. Statistically the likelihood of a loan going to foreclosure increases with non-owner occupancy or on a home which is not the owners’ principal residence, thus the rates for these properties are higher. You can substantially lower these rates by putting down more money on a purchase or financing less at the time of refinancing. With 25% down on a purchase and with loan to value of 70% or less on a refinance you will generally discover much more generous terms on investor loans or second homes. [top of page]

What is a pre-payment penalty or early payment penalty? Does my loan have on?

Prepayment or early payment or termination penalties do exist on many of the lending products available today. At Community it is our goal to avoid this feature if at all possible. Typically this penalty is 2-6% of the outstanding loan balance and is in effect for 1-5 years. Lenders like these, especially the sub-prime lenders as they make the loan more valuable in the secondary market as the likelihood of the loan being re-paid or refinanced is much less likely and if repayment occurs the lender benefits from the fees. What most of the public does not know is that these can usually be negotiated for a slight premium and that there are different laws that vary by State and Federal as to limits of these fees. To find our more call us at 757-481-0100, we can help. [top of page]

How do I avoid surprises at the closing table?

This is a very hot topic in the mortgage finance business. With so many components involved in making a loan it is difficult to know what the costs will be. At Community we have taken the time negotiate with many of the service purveyors and obtain their costs in order to ensure more accurate disclosure of fees. Take a look at our 800 line fee guarantee and you will see our commitment to keep estimates accurate within ranges which are far better than industry standards. One way you as a customer can help is to provide very accurate payoff data and insurance data up front to facilitate accurate escrow accounts. You also need to get in writing what the attorney and real estate brokerage fees are. If after shopping these around you are not satisfied call us. We have worked with dozens of firms in the area if not hundreds and can recommend several choices to help ensure your satisfaction of a fair and equitable loan with reasonable charges for ancillary services. Call us at 757-481-0100 for a more in depth explanation of this. [top of page]

Why do I need more funds to close than are on the Good Faith Estimate?

As loan industry professionals we do our best to estimate what other service purveyors will charge. We have found that in the last few years a number of new fees have come to light. Many of these are generated by realty firms to increase profits including charging the borrower an administration fee. As a consumer you should demand your realtor and closing attorney show you an estimate of all fees before the transaction. If you are being charged a transaction fee by the realty firm always remember that this is probably negotiable. If a closing attorney refuses to provide fees, then find another attorney. Remember to hold all parties in a transaction accountable for the compensation they obtain for their service. If after obtaining service purveyor estimates you are not happy please always remember that it is YOUR choice of who to use for ancillary services. This decision is not up to the attorneys or the realtor, and although many provide valuable and helpful advice ultimately you the borrower have a responsibility to make sure the deal is fair and in your best interest. With the recent amount of joint ventures between mortgage, title, real estate companies, and attorneys it is more important than ever to scrutinize how much you are being charged for the services of lending, title insurance, closing, and realty brokerage. Shop around, differences can be substantial. To see how we help with our 800 line fee guarantee call 757-481-0100 [top of page]

My credit score is low. What can I do?

If your credit score is low there is a lot that you can do. First off call us and we will review your credit report with you for any inaccurate information. We also can obtain a rapid rescore (usually 2-3 days) for information which is on the credit report that is incorrect. If you have issues which are unresolved we can work with you on which debts to pay. A word of caution! We cannot make problems go away that have actually occurred. There are many services which claim that this can be done. Watch out as anyone stating they can do something and overcome information which is true might have other motives such as charging your unreasonable fees and guaranteeing results they probably cannot deliver. The best way to fix credit is to pay off debt and collections, and establish new credit with positive history. [top of page]

The Federal Truth In Lending document contains a different rate than is on the Good Faith Estimate. Why is the rate higher on the TIL than on the GFE?

This is a commonly asked question for homebuyers when they read just how much interest on loan that they will pay. The reason that the rates are different is that the up front costs are amortized into the loan to calculate the A.P.R. (annual percentage rate). Long ago when this guideline was written the objective was to help borrowers determine which is more important the rate or the fee. In other words would a loan containing charges of 3.0 points at 5% be better than a loan containing 0 points at a 6% rate. This figure tells you which loan is better if held until the end of the 30 year term. When looking at this we can help you determine the most likely way to reduce costs by looking at how long you will have the loan and working up different scenarios based on your specific needs.
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What is a No-Doc loan?

Simple, this is a loan based solely on an individual’s credit report and the home’s equity. In this loan the borrower is not required to produce any documentation for income or assets. This loan is very difficult to obtain if the borrower has major credit issues. If the borrower has fairly good credit this is an excellent loan when going through a job change etc. Call us at 757-481-0100, we can likely have an e-mailed good faith estimate to you in less than 30 minutes. [top of page]

What loans are available if I cannot prove income?

• No-Doc
• No-Ratio
• 12 months bank statements
  Call us at 757-481-0100 for a complete explanation of how these programs might benefit you. [top of page]

Why can’t I get a co-signor like I did for my automobile loan?

Actually in theory you could. The problem is that a non-occupying co-signor must be able to qualify with your debts and theirs on their income alone. Usually the income required to cover the debt load of two parties is not sufficient when a large housing payment expense is added. In some situations this will work, but it has been our experience that those are few and far between. Part of our goal is to find solutions to these problems when others can’t. Call us at 757-481-0100 as we may be able to suggest strategies to accomplish financing where other firms cannot. [top of page]

Why does where the down payment comes from make a difference?

The lending institutions which assess risk have determined that if a borrower must bring their own hard earned funds to the closing table that the likelihood of foreclosure is far less. We call this the capital commitment philosophy in that if the borrower has no capital invested of their own then they are likely to have little commitment to re-paying the loan through good times as well as bad. We have many products that allow gifted funds or borrowed funds for the down payment. Regardless of the program we are committed to making loans that are not only approvable, but that make sense and that the borrower has the capacity to repay. Call us at 757-481-0100 and let us go to work for you. [top of page]

I have perfect credit, why does the underwriter need to see this document or that document? Don’t they know we will pay the loan?

In the same way that an insurance company needs to see a copy of a driver’s license for documentation underwriters have certain documentation that is required for loan approval. In most cases the lender is fully aware of the ability to make payment, but the issue is that over many loans it has been determined that properly documented files have much less chance of foreclosure. The way to obtain the lower rates is to (pool) loans and this pooling requires the right documentation in order to be able to give the lower rates that many of our lending partners enable us to offer. In the end you will discover that the wholesale rates accomplished by this pooling are much more generous and worth the time required to properly document the loan. Call us at 757-481-0100 and let us show you how low the quote can be. [top of page]

What is a bridge loan?

A bridge loan is used when down payments are unavailable to “bridge” the purchase of one home before the sale of another. If you need to close on one home before your other one closes call us. We have very innovative solutions to meet your financing needs. We also will not hesitate to use credit unions, local banks, and any other legitimate souce whether we are compensated or not to help you accomplish a reasonable plan which assures your well being and makes your purchase possible. Call us at 757-481-0100 and let us work to help you find an excellent solution for this.
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The program says 100% financing, why do I have to bring money to the closing?

100% financing refers to the amount loaned on a particular loan. If you want to finance closing costs you will usually use a 103 or 107. Generally speaking these loans are deemed much riskier than the straight 100% programs offered. More risk = higher rates and tougher qualifying guidelines. It has been our experience that financing over 100% seldom makes sense. Call us at 757-481-0100 and let us show you programs with generous seller concessions which have lower rates and make sense.
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What is title insurance? Why does this cost so much?

Title Insurance helps with defects in the chain of title which may arise after closing. Many individuals and law firms have made enormous sums of money by researching deeds in courthouses nationwide. In today’s highly litigious society title insurance is necessary to prevent people from claiming a property that you are paying for is their property. Although you cannot stop them from putting in a claim, the title insurance company will insure against this. Title insurance also helps stop other judgments, mechanics liens, and other problems which may arise from the previous owner and could also encumber your property. Link below to several companies which can give very in depth info on this subject. [top of page]

www.equtitytitle.com
www.lawyerstitle.com
www.firstam.com

Why is there so little 100% investor financing? The guy on TV makes it sound so easy?

Regardless of what you may see on TV, borrowing 100% on an investor property through normal bank financing and walking from the closing table is highly unlikely. This did go on for many years until the losses from the banks compiled and guidelines were installed to prevent this. Most major lending institution have guidelines that state that the value of a property for purposes of a purchase transaction is the LOWER of the purchase price or the appraised value. This is regardless of where the appraisal comes in. Most major lenders also have seasoning guidelines that clearly establish how long you must own the property before a cash-out refinance can be used to extract money from a property. If you need more answers to investor related questions please call us. We have people in our organization who are very intimate with various trade organizations throughout the Hampton Roads area including TRIG (tidewater real estate investor group), and Peninsula REIA. If you are serious about investing in real estate call us. We can point you in the direction to get answers from informative groups of people who have done hundreds if not thousands of transactions. Before you spend any of your hard earned money on coursework we advise you attend these meetings which are usually free for the first visit. Knowledge is power and the lack of it can be costly. Call us at a757-481-0100 and let us guide you to one of these groups and save your money to purchase the real estate itself, not coursework on how to obtain it. [top of page]

What are the rates for mortgage insurance?

Rates for mortgage insurance are usually determined by the following

• level of income or asset documentation or both
• credit score ranges
• amount of down payment
• occupancy status
• ability to fit into a Fannie/Freddie based program

If you need a quote on Mortgage Insurance or need to know about programs that do not require MI please call us at 757-481-0100.
For more MI info please visit. [top of page]

www.pmigroup.com

www.mgic.com

www.radian.com

What happened to all of the 1% loans?

What happened is that they never really were 1%. Payments are based at 1% however the actual loan balance in these loans moves up over the first few years of a loan not down. As in life with credit cards, real estate taxes, and the IRS you will pay less now but much more in the future. The 1% phenomenon is no different. These loans have very few places where they are actually appropriate. [top of page]