Pro Mortgages University
Click the titles for more information:
Make no mistake, there’s a lot involved in getting a mortgage loan. You wouldn’t be here on our website if you could fill out a one-page application and get the best loan for you funded the same day. What we do is do most of the heavy lifting for you, so you can concentrate on what’s important — preparing to move into your new home, saving money, or making plans for your home equity check.
There are four main steps involved in getting a loan. You’ll see that we’ve made your part in them as easy as possible, and we do all the work! That’s what we’re here for.
Step one: Determine how much you can borrow
This is a function of a couple things. How much of a monthly payment can you afford? And given your unique credit and employment history, income and debt, and goals, how much will a lender loan you? The first part you can get a rough idea of by using the calculators on our website. We’ll also help you through different scenarios by asking a few simple questions. Based on standard lender guidelines, we’ll get you a good idea of what kind of terms and loan program you can expect to benefit most from.
Step two: Pre-qualify for your loan
This is where the rubber meets the road and you save the most money. You supply information about your employment, your assets, your residence history, and so on. We get your permission to run your credit score. When we review all this information we give you a Pre-Qualification Letter. Handle it with care — to a home seller, it’s like a suitcase full of cash! Your realty agent will use your Pre-Qual (as they may call it) to make the best offer on the home you choose, and the seller knows you’re pre-qualified. It gives you buying clout! And while you’re picking out the home that’s right for you, we’re busy finding the loan that’s right for you.
Step three: Apply now! We make it easy
Once you’ve made an offer and it’s been accepted, it’s time to complete the loan application. It couldn’t be easier, and you can do it online, right here at our website. When the time is right, we’ll order an appraisal of your new home.
Step four: Your loan is funded
Your realty agent and the seller’s will work together to designate an escrow/title company to handle the funding of your loan once it’s approved. We’ll coordinate with the escrow company to make sure all the papers your lender will need are in order, and you’ll sign everything at the escrow/title company’s office.
Good Faith Estimates (GFEs)
Soon after you apply for a loan, we’ll provide you with a “Good Faith Estimate” of your closing costs. We base this cost estimate on our many years of past experience. It’s important to note that while our GFEs are very accurate, we can’t always predict costs to the penny. We handle buyers’ questions about these costs every day at Pro Mortgages, LLC, so please feel free to ask if we can help answer your questions.
Standard Closing Costs
Loan-Related Costs
- Various Taxes
- Costs associated with “originating” your loan
- Points — lower your mortgage interest rate (optional)
- Appraisal Costs
- Pulling Your Credit Report
- Up-front Interest Payment
- Escrow Fees
Property Taxes
- Insurance
- Transfer Taxes and Recording Fees
Homeowners Insurance
- Flood or Quake Insurance
- Private Mortgage Insurance (PMI)
- Title Insurance
A rate lock or a rate commitment is a lender’s promise to hold a certain interest rate and a certain number of points for you for a specified period of time while your application is processed. This prevents you from going through your whole application process and at the end of it finding out the interest rate has gone up.
A rate lock period can vary in length, and longer ones usually cost more. A lender will agree to “hold” your interest rate and points for a longer period, say 60 days, but in exchange the rate and maybe points are higher than with a shorter rate lock period, for example.
There are many ways besides opting for a shorter rate lock period to get a lower rate, though. A larger down payment will result in a lower interest rate than a smaller one, because you’re starting out with more equity. You can pay points to lower your rate over the life of the loan, but that means you pay more up front. For many people, this makes sense and is a good deal.
Closing costs are fees paid by the lender, which the lender in turn charges you to close the loan. Many people pay closing costs when they sign on the dotted line, but many finance their closing costs. Paying closing costs when the loan closes will reduce your interest rate.
Finally, the interest rate a lender is willing to offer you depends on your credit score and your income-to-debt ratio. If you have good credit and your income far exceeds your debt obligations, you will qualify for a lower rate.
Reverse mortgages (also called home equity conversion loans) enable elderly homeowners to tap into their equity without selling their home. The lender pays you money based on the equity you’ve accrued in your home; you receive a lump sum, a monthly payment or a line of credit. Repayment is not necessary until the borrower dies, sells the home, moves out of the house, or defaults on other obligations such as insurance or taxes. When you sell your home or no longer use it as your primary residence, you or your estate must repay the cash you received from the reverse mortgage plus interest and other finance charges to the lender.
Reverse mortgage loans require that you be at least 62 years of age, have a low or zero balance owed against your home, maintain the property as your principal residence, and meet the minimal income and credit requirements established by HUD.
Reverse mortgages are ideal for homeowners who are retired or no longer working and need to supplement their income. Interest rates can be fixed or adjustable. You cannot lose your home under normal circumstances, but please understand foreclosure may occur if you do not pay your taxes and insurance and otherwise comply with the loan terms. “These materials are not from HUD or FHA and were not approved by HUD or a government agency.”
A construction loan is typically a short-term loan used to pay for the cost of building a home. It may be offered for a set term to allow you the time to build your home. At the end of the construction process, when the house is done, you will need to get a new loan to pay off the construction loan.
Essentially, this means you must refiance at the end of the term and enter into a brand new loan of your choosing