This is a comprehensive mortgage FAQ provided by Austin mortgage lender, Joel Richardson. Please feel free to use and review when preparing to purchase a home. In this comprehensive mortgage FAQ (frequently asked questions) you will find information for the general home buying process and the new disclosure rule.
Q: What is the difference between a mortgage banker and mortgage broker?
A: Both mortgage brokers and mortgage bankers will originate your loan and will shop various lenders for a program and rate. The difference (and devil) is in the details: A broker must deliver the loan package to the lender to underwrite and fund; therefore losing control of your loan. A mortgage banker will shop all the lenders, but the file will be underwritten, closed and funded in the mortgage banker’s name and eventually shipped to the end investor. You can also go to a retail bank for a loan, but they are locked into their rates only.
Q: What is the difference between the interest rate and the annual percentage rate (APR)?
A: Interest rate is the contractual rate that you agree to pay for your mortgage loan. This rate is used to calculate the interest portion of your monthly mortgage payment. Annual percentage rate (APR) includes your interest rate and factors in the prepaid finance charges to give you an average yearly rate. APR can be a good tool to use when you’re comparison shopping for rates.
Q: Do I need to be pre-qualified for a mortgage before I begin my search for a home?
A: If you know that you will be approved for a mortgage prior to your house, the process goes much smoother. The process is simple. To arrange to be pre-qualified for your mortgage, take the following steps:
1. Gather your personal financial information, such as bank statements, W-2 forms and paycheck stubs.
2. Meet with me to pull your credit report and evaluate your financial documents. At this time, you can discuss with me the best home mortgage financing options that will help you achieve your financial goals.
3. Based on the evaluation of your financial documents and credit, a pre-qualification letter can be written for you to inform your Realtor and the seller of the property that you are a a preferred and serious potential buyer.
Q: When I apply for a mortgage, what documents will I need?
Usually, you will need to provide document that verify your employment, income and assets. Though there are some mortgage loan programs that have limited requirements in terms of documentation for certain home buyers, a typical mortgage loan program requires the following documents:
A copy of your Social Security card (applies to anyone applying for the loan with you)
- Pay stubs for the last two months
- W-2 forms for the past two years
- Bank statements for the past two or three months
- One to two years’ federal tax returns
- A signed contract of sale (if you have already chosen your new home)
- Information on current debt, including car loans, student loans, and credit cards
It is best to consult with your PrimeLending Loan Officer as you gather your documents.
More mortgage FAQ (frequently asked questions) on PrimeLending.com:
- What types of mortgage options does PrimeLending offer?
- What is a prequalification letter, and why should I have one?
- Should I go through the prequalification process before I begin searching for a home?
- Do I have to pay for the prequalification process?
- When I apply for a mortgage, what documents will I need?
- Is it still possible to qualify for a loan even if I have past credit problems?
- Why did I receive a Truth-In-Lending document?
- How does the annual percentage rate (APR) differ from the interest rate?
- Will I get a copy of my credit report and appraisal?
- How will I know which loan program is best for me?
- What is the difference between a VA and an FHA loan?
- How do I know what my interest rate will be?
- How can I use PrimeLending’s calculators to learn about my loan options?
- Should I get a loan with a fixed or adjustable interest rate?
- What are “origination points”, “discount points”, and “origination fees” in regard to my mortgage?
- How much will I need for a down payment?
- What is a loan-to-value ratio?
- When mortgage lenders say “PITI,” what are they referring to?
- When my loan officer asks me if I want to waive escrows, what exactly does this mean?
- What is a “pre-payment penalty?”
- What inspections or appraisals does the lender require?
- My first mortgage payment is due but I don’t have my payment slips yet. Where should I send the payment?
- Will I have two separate payments if I have a second lien?
- What is the difference between a mortgage broker and a direct lender?
- Who can answer questions not addressed here?
Contact Austin Mortgage Professional Joel Richardson
If you’re looking for mortgage rates and an experienced mortgage lender in Central Texas, look no further! Joel Richardson, an Austin Mortgage Branch Manager for PrimeLending, has more than two decades of financial experience and wants to help you finance your new home or investment property. Call today at (512) 637-0932 or fill out the online form to learn more.