Pre-Submission FAQs

We have the answers to the most common loan pre-submission questions.

Have questions about the pre-submission loan process?

We have answers. Please feel free to reach out directly to our loan officers if you have further questions. We look forward to hearing from you!
Discount points are prepaid fees that borrowers can purchase that will lower the amount of interest they will have to pay on future payments. Each point costs about 1% of the total loan amount, and can lower the loan's interest rate by one-eighth to one-quarter percent. Here's a tool that will help you determine whether paying paying additional discount points for a specific interest rate in exchange for a lower interest rate is a good deal. The longer you expect to be in the home, the greater the advantage of paying points to lower your loan's interest rate. On the other hand, paying points may not be as helpful if you intend to sell the home, refinance, or pay off the loan in the near future.
This is account borrowers are generally required to create for setting aside a percentage of the yearly taxes at loan closing. The lender manages the account, and it also contains additional money collected monthly, which is used to pay tax bills regularly. Here's a blog that tells more about escrow accounts.
 
There are two instances when your monthly payment amounts may change:
1. If you have an adjustable rate mortgage, and the rate changes.
2. There are changes in your taxes, the tax assessment on your house is adjustsed, or your insurance premiums or association fees change.
Your interest rate will change only if you have a loan with an adjustable rate. A fixed-rate loan interest rate does not change.
A home appraisal is an opinion of a home's value done by an unbiased professional. These are almost always used for home purchases and sales, as well as refinances. They are done to ensure the lender that the homeowner is not over-borrowing for a property, preventing a possible foreclosure in the future.
This is to protect the buyer to guarantee that the seller owns the property legally without outstanding legal or financial claims against it.
You will have to pay this in most cases if you put down less than 20 percent of the home's purchase price. The first month of PMI might need to be paid at closing.
In some states, a survey company must verify the property lines and shared fences on the property.
No. An appraisal determines a home's fair market value. An inspection is an examination of your home's physical structure and systems.
A standard inspection report examines the condition of your home's interior plumbing, electrical systems, roof, attic and insulation, walls, ceiling, floors, windows, doors, foundation, basement, structural components, heating and cooling systems.
All of your down payment funds can be a gift if you put down 20% or more. If your credit score is between 580 and 619, at least 3/5% of your down payment needs to be your own money.
According to HUD 4155.1 chapter 5 , section B, in order for funds to be considered a gift, there can't be expectations of repayment to the donor by the borrower. A cash gift is acceptable from: a borrower relative, borrower's employer or labor union, a close friend, a charitable organization, a governmental agency or public entity that has a program providing home ownership assistance to low and moderate families or first-time homebuyers.

You will need a down payment gift letter that may include, but is not limited to: 

  • Donor's name, address and phone number
  • Donor's relationship to client
  • The date the funds were transferred A statement from the donor that no repayment is expected.
  • The donor's signature.
  • The address of the property being purchased.
The maximum loan amount you can borrow depends on your credit score, your debt-to-income ratio (DIT) and profile in the underwriting process. The lender basically wants to have an understanding of how much you will be able to repay, taking into consideration all risk factors. Here's a tool to help you calculate how much you can borrow.
The amount of a down payment needed for a mortgage loan depends on the type of loan and your current credit situation. You can put as little as 3.5% down on an FHA loan, conventional loans as low as 5%, and VA loans usually don't require a down payment. The lender will decide what your minimum down payment needs to be based on your credit situation. If you are able to make a sizable down payment, say 20%, you will pay less interest on your purchase, you'll get a lower interest rate, you won't have to pay private mortgage insurance, and you may stand out from a crowded field of interested buyers for the house you want. Here's a tool that can help you calculate how much you put down can affect your payments and rate.
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