Mortgage FAQ

You should start the mortgage process with a pre-qualification/approval which will help you narrow down your loan options. The next step is to search for home and make a purchase. Once your home has been selected and a contract for purchase has been signed, you need to complete and sign a full loan application and submit all required documentation. At this time, the mortgage company orders an appraisal on the home while the loan application is submitted to processing. Once all of the documentation is in place, the loan gets underwritten. The underwriter will notify the processing team of any outstanding items, which must be submitted and underwritten. After all loan stipulations have been met, the loan moves to the closing department where the closing package is delivered to the attorney for your closing date.

How long does the process take?

A typical mortgage transaction can be completed in approximately 18 business days which translates to about 30 days from start to close.

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What is the difference between pre-qualification and pre-approval?

Pre-qualification allows a loan officer to determine how much home you can afford based on information that you have given. This usually involves running a credit report. Pre-approval means that you have submitted all documentation to support the information given along with an initial application that has been reviewed by an underwriter.

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Can I use part-time job income?

This varies by loan program, but some programs typically will allow this provided the borrower can supply a documented 1 or 2 year history of this type of employment.

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What documents do I need to provide?

Documents required for a loan application vary by loan program (some require no documentation at all!). Please see our Loan Application Checklist for typical documentation required for a mortgage application.

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How much can I afford?

Pre-qualification is the step that helps you determine exactly how much home you can afford. This depends upon many things, but the key factors include: income, debts, credit history, and liquid assets.

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How important is my credit?

Your credit is probably the most important factor when securing a mortgage. Your credit score represents your risk to a lender in terms of repayment of the loan. A lender must justify your ability to repay a debt. Past payment history is a major factor in the analysis of the risk. However, many programs do allow for past credit problems and can help you get a mortgage today.

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How much money do I need to buy a house?

It is possible to get a house with no money down. However, the more money you are able to put down, the better the mortgage options that are available to you.

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How much do I need for a down payment?

Traditionally, houses were secured with a 20% down payment. Today, there are many programs allowing you to put 15%, 10%, 5%, or even 0% down on a house. All of these programs may or may not include private mortgage insurance (PMI).

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If I don’t have a down payment, can I still buy a house?

Absolutely – it is always worth talking to a Mortgage Consultant to determine your individual options.

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Do I have to have PMI?

Private Mortgage Insurance (PMI) is not necessarily required if you don’t have 20% to put down on a house. There are many products offering many options including lender-paid mortgage insurance and second mortgages to avoid PMI.

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What are your fees?

We tailor our products to meet your individual needs. In some cases, there may be no lender fees at all. However, with no fees, the rates may be higher. If you pay the lender fees upfront, you can typically secure a lower rate. A loan officer can help determine your individual needs to recommend the best scenario for you.

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How much are closing costs?

Closing costs can vary based on the price and value of the home as well as the loan program. Typical closing costs range from 1% to 5% of the loan amount.

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Can I roll closing costs into the loan?

There are programs that can help you avoid paying closing costs upfront. With no closing costs, the rates may be higher so talk to your loan officer and find out your best options.

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Would an ARM rate make my payments cheaper?

Depending on the market rates, an Adjustable Rate Mortgage (ARM) may make your initial payments lower. It is important to talk to your loan officer regarding the amount of time you plan to live in the house you are purchasing when deciding on the right loan program.

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Do you have programs for first time home buyers?

There are loan programs designed specifically for the first time buyer that allow for relaxed underwriting guidelines. In particular, down payment requirements are often less with first time homebuyer specific loans. Some of these loans have eligibility requirements in addition to being a first time buyer that must be met. An experienced mortgage lender can help find the programs that one of these buyers may be able to obtain.

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Is my rate higher because I am a first time homebuyer?

Absolutely not. Your rate is determined by your personal situation including credit score, income, loan program, etc.

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Is the rate you quoted me today automatically good until I close?

No. In order to secure an interest rate, you must enter into agreement with your loan officer and ask them to lock the loan and for a specific period of time (rate locks are typically offered for up to 30 days but can be offered up to 360 days based on your individual needs).

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When can I lock in an interest rate?

Once a property has been identified and an agreement has been made with the seller, a loan officer can select a loan program for you and lock in the interest rate.

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Should I pay points to get a lower rate?

This is the million dollar question and varies based on your personal goals and how long you plan to keep the mortgage. Typically, if you plan to keep your mortgage for more than 5 years, it may be wise to do this. Talk to an experienced loan officer to determine the best scenario for your situation.

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What is the difference between the interest rate and the annual percentage rate (APR)?

Annual Percentage Rate (APR) is the interest rate of the loan plus the cost of obtaining the financing (can include lender fees, attorney fees, etc.).

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What’s the difference between an appraisal, survey, and home inspection?

Appraisal gives the marketability of the home (i.e. if the property is on the market, how long would it typically take to sell and at what price?). Survey shows the boundaries of the property. A home inspector will give general feedback on the property and list areas they feel that are in question and that may need repairs.

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What does my mortgage payment include?

A typical mortgage payment includes principal, interest, taxes, insurance, and mortgage insurance (if applicable). Be sure that any quote you receive includes all of these elements.

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Will my loan be sold?

Many lenders do not service your loan and these loans are typically sold shortly after closing. This does not affect the terms of your loan in any way. You will be notified if your loan is sold at any time.

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What is the difference between a mortgage broker and mortgage lender?

A Mortgage Broker is the middle man for many different lenders and will charge a fee for finding the right loan program. A Mortgage Lender directly makes the mortgage loan on behalf of many different investors. This allows for a wide variety of programs and pricing and provides more control over underwriting and closing.

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How is Alera Financial different?

Alera Financial is a licensed mortgage lender that believes in making your mortgage transaction as easy and painless as possible. Find out how we’re different with the Alera Financial Difference.

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