|
|
|
|
Home
> FAQ
 |
 |
Frequently-Asked Questions
General
Questions
Pre-Qualification
Appraisal
Titles and Title Insurance
Closing
Payments
Refinancing
Locking Rates
Subordination Agreements
Credit
Points
Prepaid Interest and Rebates
Home Equity Loans (HELOCs)
PMI
The USA Patriot Act
General
Questions
Q. Why use a mortgage broker
instead of a bank or conventional lender?
A. When you seek a mortgage through a
bank or mortgage company, your contact is limited to the
company’s loans, lending programs and must adhere
strictly to the company’s lending guidelines. A
professional F&M Mortgage Group broker is not limited
and knows the full range of lending programs at multiple
lending institutions ranging from traditional mortgage
companies, trust companies, and chartered banks to insurance
companies, corporate and private pension funds.
Your F&M Mortgage Group consultant can explore a variety
of loan programs, lending guidelines and interest rates
to fit your financial circumstances and mortgage needs.
Because our independent mortgage brokers aren’t
affiliated with any one company, they represent you and
will work to get you the best loan and optimal possible
rate. In fact, many F&M Mortgage Group borrowers benefit
from our relationships with private lenders, who provide
creative mortgages only through independent brokers.
Q. How should I compare rates
offered by different companies?
A. As a borrower, you’ll want to
compare total costs for the same interest rate and lock
period. You’ll also want to know if prepayment penalties
apply and if the lender requires an Escrow account for
taxes and insurance. Since rates fluctuate daily—and
sometimes even several times in one day—you’ll
want to look at total costs among brokers and lenders
on the same day and at the same if the market is rapidly
fluctuating.
Q. Who is my F&M Mortgage
Group consultant?
A. If you have not met or worked with
an F&M Mortgage Group Mortgage Consultant, one will
be assigned to you based on your mortgage needs and will
work with you throughout the process. You’ll have
the peace-of-mind knowing that your consultant is not
only familiar with your needs, but is also an expert who
knows about lending program solutions for borrowers like
you.
Q. How frequently am I updated
regarding the status of my loan?
A. Once we’ve initiated your loan
process, your Mortgage Consultant will monitor the progress
every step of the way and will keep you updated. In addition,
you’ll also be continually apprised of the process
and progress via e-mail through our automated communications
update system.
Of course, if you have any questions about an update,
simply contact your Mortgage Consultant.
Q. Who manages and services my
loan?
A. After closing, our work is done. But
we expect you’ll be pleased with the final transaction
of your loan. Through our relationships with multiple
financial firms, your loan is transferred to a reputable
mortgage investor or lending mortgage institution. You
can expect this company to service your loan promptly
and professionally.
Pre-Approval
Q. Should I get a loan pre-approval
before searching for a home or property?
A. Certainly! The F&M Mortgage Group
pre-approval process lets you determine how much house
and mortgage you can afford and estimates any cash that
you may need for a down payment, fees or closing costs.
Having a pre-approval is a tremendous benefit—and
a timesaver. Not only will you know your price range when
shopping for a home, you’ll be ready to make a viable
offer immediately and the seller will know your offer
is serious since you’re pre-qualified.
Q. What documents do I need to
provide for my actual loan application?
A. Documentation requirements are different
for different loan programs. But as a rule, you’ll
need to document your income with a recent paycheck or
pay stub, earnings declaration or even a letter from your
employer that documents your earnings or income. You’ll
also need a copy of your W-2 Form to show your income
over the previous calendar year. If self-employed, prior
tax returns for the last 1 to 2 years are generally sufficient.
You can demonstrate cash on hand for closing with a copy
of your recent bank statement or documentation of other
cash assets. If you plan on buying one property after
selling another—with the proceeds planned as the
down payment—you can request an estimated closing
statement to show the proceeds as assets available for
closing.
Q. How quickly will my loan be
approved?
A. Once all your documents are in order,
most loan applications are approved within two business
days. However, the approval doesn’t finalize until
your appraisal and preliminary title report is reviewed
and approved.
Q. Is there an application fee
or any up-front costs?
A. No
Appraisal
Q. I already have an appraisal.
Can you accept it?
A. Unfortunately not. This is a quality-control
measure adopted by most lenders, conventional lending
sources and mortgage brokers to ensure that the appraisal
is performed by a licensed, preferred appraiser in your
location. Appraisers who work with F&M Mortgage Group
are on-call and give our orders prompt attention and priority.
As a borrower, you can count on a certified, sound and
reliable appraisal that’s done quickly and conveniently.
Q. What is your appraisal process?
Will it give the current value of my home?
A. The process and appraised value depend
on your home and your financing needs. First, your application
is screened using a technological underwriting system,
which directs the type of appraisal needed. The appraiser
starts with this report and then validates the information
or determines the need for support.
Sometimes, the appraiser may be able to confirm your stated
value using technological validation and market research
without the need for an intensive on-site review. Even
when an on-site inspection is required for the appraisal,
technology enables us to move appraisals quickly and efficiently.
And we make every attempt to schedule appraisals at your
convenience.
Titles
and Title Insurance
Q. Can I select my own title
company?
A. Of course. Choose whichever company
you like, but be sure and advise your F&M Group Mortgage
Consultant. Please note that we often use preferred-companies
for refinance transactions and these companies provide
us with a guaranteed—and often discounted—fee
schedule. So compare rates—you may save title and
escrow costs by working with our preferred providers.
Q. What is Title Insurance? Do
I need it?
A. First, think of function of the property
title. It’s a legal declaration of ownership and
will identify delinquent mortgage payments, debts, or
liens on the property. As a rule, sellers pay for the
title report since they must guarantee clear title. As
a buyer, you can get information about property by ordering
a preliminary title report, called a title search, which
will also indicate previous owners and sales. Title companies
compile this information from public records.
Title insurance is a way to guarantee the findings. Many
lenders require it, but often, the seller pays for it.
It protects the buyer and mortgage lender since the title
company is bound to pay legal fees that result from a
claim and any covered losses.
Closing
Q. How long will it take to close
my loan?
A. Whether your loan is refinancing a
loan or new mortgage, F&M Mortgage Group can usually
close the package in as little as 10 days. Once all signatures
are in order, your loan will officially close. This typically
takes 20 days, plus a three-day rescission period mandated
for new purchases and investment property refinancing.
Q. How are cash proceeds disbursed
at closing?
A. If you’re receiving cash at
closing, you can arrange for the settlement company to
mail you a check or make an electronic deposit directly
to your bank account.
Q. What is the three-day rescission
period?
A. By law, after signing all loan documents
at closing, you have three days to cancel a refinancing
loan transaction. This period is also called ‘the
three-day right to cancel.’ The loan funds after
this period expires—provided you don’t change
your mind. The period counts Saturdays, but not Sundays
or holidays.
Q. Can I redraw my loan documents
if needed?
A. You can ask for your documents to
be redrawn for a $300 fee. However, if you carefully review
the Estimated Closing Statement and make necessary changes
then, you’ll likely avoid extra costs and fees!
Payments
Q. Can I make bi-weekly mortgage
payments?
A. Many of our service providers do allow
customers to make bi-weekly payments, which enables borrowers
to pay their mortgage early by making 13 payments annually.
But sometimes there are fees. You can probably accomplish
the same goal by paying an additional amount each month—1/12
of your payment—and save any applicable fees attached
to a bi-weekly payment schedule. Just check with your
loan service provider.
Q. Do your loans have prepayment
penalties?
A. Usually, no. So you’ll be able
to prepay your loan and refinance easily if interest rates
decline, since most of our loans aren’t subject
to prepayment penalties. Sometimes, loan programs with
prepayment penalties are available, but any penalties
and the terms are always clearly disclosed.
Q. Do you require an Escrow account?
A. Unless the loan-to-value ratio exceeds
80%, our loan programs do not require Escrow accounts.
Q. What down payment do you require
to qualify?
A. Sometimes no down payment is required!
Many conforming loan programs require nothing down and
these are loans that fall under Fannie Mae and Freddie
Mac guidelines. Jumbo loan programs of more than $417,000
are available for as little as a 5% down payment. An F&M
Mortgage Group consultant can advise you best on whether
your circumstances and loan program require a down payment.
Refinancing
Q. My refinancing loan will close
around the time my current payment is due. Should I make
the payment?
A. Of course. Not only will you avoid
late fees and protect your credit rating, but you also
have an important obligation to your lender to maintain
your payment schedule.
Q. My home was for sale a few
months ago. Is it eligible for refinancing?
A. If your home isn’t currently
for sale—even if you had it on the market over the
past year—you’re eligible for a refinancing
loan. Usually our financing sources will require a statement
or letter of explanation, and you won’t be eligible
for any loan programs that offer rebates.
Locking
Rates
Q. What is a lock and why might
I want to use a lock policy?
A. Interest rates change—and change
often! And even the smallest change can mean thousands
over the life of your loan. That’s why F&M Mortgage
Group offers a lock policy, which enables us to lock in,
or guarantee an interest rate for borrowers once written
confirmation of the rate is provided. This protects your
promised rate—a rate you decide during the loan
process—regardless of fluctuating interest rates
and market changes. Your rate is secure from the day your
lock is confirmed until the day your lock period expires.
Q. When can I lock my interest
rate? How do I lock it?
A. If you are purchasing a home, you
must have a specific closing or settlement date in order
to lock in your interest rate. If we’re working
with you on refinancing your existing mortgage, you can
lock your interest rate within a reasonable time period,
but no later than 3 days prior to closing.
To lock a rate, just make the lock request to your F&M
Mortgage Group consultant. Usually, a lock is confirmed
on the day of your lock request. But be aware that volatile
market periods can have repeated rate changes during a
single day and this activity can impact your lock request.
You’ll know for certain that your rate is locked
when you receive written notice by e-mail or fax.
Q. When is the best time to lock
my rate on a new mortgage?
A. When the market is stable, most borrowers
lock their interest rate 15-30 days before closing. During
highly fluctuating market periods when rates are volatile,
prudent borrowers often request a longer lock-in period.
If your lock period surpasses 30 days, the loan may cost
you a bit more, but you can save thousands over the life
of the loan. Basically, the date you lock a rate is up
to you. So be sure and talk with your F&M Mortgage
Group consultant and review detailed information about
lock rates and the lock policy.
Q. When is the best time to lock
a refinancing interest rate?
A. To help you determine the savings
that refinancing can deliver, use our Refinance Savings
Calculator. You’ll be able to look at a payment
schedule and compare the current interest rate vs. the
rate you’re currently paying. You’ll want
to consider the costs of your current payment at a higher
rate against the savings you’ll get at a lower rate,
even if the lower rate might not be the lowest over a
rate cycle. How much will a delay cost? And do know that
any projections are only projections. And if a lower rate
comes to fruition, you always have the option to refinance
again for additional savings.
Q. What happens if my lock period
expires before my loan process is completed?
A. If we cause a delay that results in
the expiration of your lock period, we’ll extend
your lock without fee or penalty. But if the delay is
created by the borrower, we must then process or finalize
your loan at the original lock terms or current market
interest rate, the higher of the two.
Q. How do borrowers cause delays
in the loan process?
A. There are many ways you can delay
your loan application—so it’s important to
adhere to your processing schedule as much as possible.
To ensure that your loan and any related documents are
processed on-time and on-track, your application must
be returned to us within four days after you submit it
for application. Maintaining this timeframe will help
you protect your lock rate.
You’ll also want to make sure you provide and submit
all requested information documents, follow through on
your appraisal schedule and provide any supporting documents
we request. You’ll also want to make sure you’re
available to sign all documents required in your loan
package. Be aware too, that delays can occur when borrowers
request subordination of a current second mortgage.
Q. Can I relock my rate if I
reapply?
A. No, you can’t relock your rate
if you withdraw your application and make another application.
Q. I’ve selected a loan
program and locked my rate. What happens if I change to
a new rate and point combination or change loan programs?
A. You’ll want to be sure the first
loan program and rate and point combination you choose
is the right one for you. If you change your selected
options, you’ll receive the higher of these two:
either the rate and point combination the day you choose
your lock or the applicable rate on the day you change
programs.
Subordination
Agreements
Q. What is a subordination agreement?
A. This is a document prepared by a second
mortgage lender, and usually the borrower pays a fee for
processing a subordination agreement. What does it mean?
The lender agrees to remain in a secondary position when
a first mortgage is refinanced, or to be subordinate to
the first mortgage. In other words, if you default, the
primary lender is paid first when your property is sold
and the subordinate lender is paid second. Without this
agreement, the second mortgage holder advances to primary
lien position when the existing first mortgage is paid.
Q. Can I subordinate my existing
second mortgage?
A. If all lenders agree.
Q. What does debt-to-income ratio
mean, and what is the maximum ratio?
A. The ratio is determined by weighing
your total debt against total income. For example, if
your income is $100,000 annually and your debt totals
$30,000, then your debt-to-income ratio is 30%. There
is no maximum debt-to-income ratio on conforming loans
and 38% to 50% on jumbo loans—the range depends
on the loan program. In some cases, F&M Mortgage Group
has approved loans with that hover at 70%.
Credit
Q. What is a FICO score?
A. The FICO credit score provides a numerical
snapshot of someone’s credit at a point in time.
It reflects your credit risk level—the higher the
number, the lower the predicted risk. Low numbers indicate
greater risk. The FICO comes from the most commonly-used
scoring system, and is a credit bureau risk score generated
by information from your credit report only. Credit scores
aren’t stored, or part of a credit profile, and
may change from lender to lender since calculation factors
vary. The score does change every time credit information
changes in your credit report and a new or minimal credit
history means it may not be possible to calculate a score.
Q. What is the minimum FICO score?
A. We make mortgages easy, even for borrowers
with a FICO score of 560, which is the minimum qualifying
score in most cases. But we also offer alternative loan
programs to borrowers with lower scores. If you fall into
this category, you’ll want to be sure and contact
an F&M Mortgage Group consultant since it’s
likely other lenders have turned down your credit requests.
Details and pricing are readily available by calling 301-528-0022.
Q. My credit isn’t very
good. Is there help?
A. Yes, in fact we can often help you
get your credit and financial management back on track.
Learn more on our web site, by reviewing the F&M Mortgage
Group’s Challenged Credit Loan (41) program. You
might also find debt consolidation and credit counseling
services available in your area. Many nonprofits offer
these programs; just check your local Yellow Pages for
credit counseling or consumer credit counseling services.
But be wary of for-profit companies that offer a credit
fix for fees. Many of these companies are not legitimate,
so make sure the service or program you consult is certified
and legitimate.
Q. My credit report is incorrect.
Can I dispute a credit issue or credit flaw?
A. Of course, but you must contact the
credit bureau or credit agency which provided the information.
Contact the primary credit-data agencies at:
Equifax Consumer Relations
PO Box 105873
Atlanta, GA 30348
800-685-1111
www.equifax.com
Experian Consumer Relations
PO Box 2002
Allen, TX 75013
888-397-3742
www.experian.com
Transunion Consumer Relations
PO Box 1000
Chester, PA 19022
800-888-4213
www.transunion.com
Points
Q. What are loan points?
A. Points are calculated on the loan
amount, and each point is equivalent to 1% percent of
the loan. Generally, points are fees you agree to pay
in exchange for a lower interest rate. Basically, more
points, less interest and no points or fewer points equals
higher interest. You’ll pay more up front, but you
may save a bundle over the life of the loan. You’ll
want to weigh several factors when considering points—the
interest rate, the amount of points, the length of your
loan term, along with the benefits of tax-deductible interest.
There may be other factors you’ll also want to consider.
Q. Are loan points tax-deductible
like mortgage interest?
A. Most borrowers realize tax-deductible
benefits from points paid on a new mortgage, during the
year the points were paid. Points paid on a refinanced
mortgage are usually tax-deductible over the life of the
loan. Of course, tax circumstances differ from one borrower
to another, so it’s best to ask your tax advisor
or financial manager to help you determine your specific
tax benefits.
Prepaid
Interest and Rebates
Q. What is prepaid interest?
A. Prepaid interest is collected at closing,
to pay the interest for the remaining days of the month
that accrues on your new loan.
Q. The loan program I’m
considering has a rebate. How does the rebate work?
A. The lender is offering you a credit—or
rebate—if you agree to accept an interest rate higher
than the zero point interest rate. The rebate amount is
based on the amount of the loan and the lender harnesses
the rebate amount by collecting it in small increments
over the life of the loan.
Q. Is this like a no-cost loan?
A. Yes, a rebate is a key factor of a
no-cost loan. The lender offers rebates as credits toward
closing costs but the borrower agrees to pay higher interest.
So again, the rebate is recaptured in small increments
over the life of the loan.
Home
Equity Loans (HELOCs)
Q. I’m approved for a home
equity line of credit. How do I obtain proceeds?
A. You may opt for an initial advance
when the loan closes. After closing occurs, you should
receive credit line checks in two weeks or so, which you
can use at any time to draw on your credit line account.
You can also use your equity line proceeds for any purpose.
Q. How are payments calculated
on a home equity line of credit?
A. Your minimum payment each month is
calculated as an interest-only payment for the first 10
years of your loan. Thereafter, payments are calculated
by multiplying the interest rate by the amount you owe,
or the outstanding balance, and then dividing that total
by 12. You may not obtain proceeds or withdraw funds from
this account after 10 years.
Q. Is the interest tax-deductible
when it’s on a home equity loan or credit line?
A. Usually. Most taxpayers can deduct
the interest paid up to 100% of the home’s value
of your home. However, some restrictions may apply so
it’s best to consult with your tax advisor or financial
manager.
Q. Do lenders restrict how I
spend the funds from a second mortgage?
A. No, You can use these proceeds for
any purpose.
PMI
Q. What is PMI?
A. Private Mortgage Insurance is simply
insurance that protects the lender if you don’t
pay your loan. It’s required by the lender if your
total loan exceeds 80% of the purchase price of a new
home or property, or if you’re refinancing and the
total you plan to borrow will be more than 80% of the
property value. One way to avoid PMI costs is to make
a down payment of 20% or opt for a piggyback loan.
Q. So, what is a Piggyback Loan?
A. A piggyback loan is sometimes arranged
to eliminate private mortgage insurance and the necessity
for a large down payment. Two loans — first and
second mortgages — close simultaneously with the
loans totaling the full price, yet neither loan exceeds
the 80% cap.
On a loan of 80/10/10, the first mortgage captures 80%,
the second mortgage — or piggyback mortgage is loaned
on 10% of value and the borrower has a down payment of
10%. In most cases, the interest rate on the first mortgage
is calculated as if the borrower puts 20% down, and, PMI
is eliminated. On a loan package of 80/15/5, the borrower
will usually pay a somewhat higher interest rate on both
mortgages. However, the borrower may still get a savings
by eliminating PMI.
Q. When is PMI removed?
A. Mortgage insurance protects the lender
from losing their money if the homeowner defaults. Government
regulations require that PMI automatically be cancelled
when your loan balance reaches 78% of the original property
value at the time you got the loan.
PMI may be removed before you reach the 78% LTV ratio,
if:
Primary residence/second home (one unit)
 |
The Loan to Value ratio
is 80% or less based on the original property value
at the time the loan was secured OR |
|
The loan has been in effect for at
least 2 years and the LTV is 75% or less based on
the property value determined by a new appraisal
OR |
|
The loan has been in effect for at
least 5 years and the LTV is 80% or less based on
the property value determined by a new appraisal
OR |
|
The loan has been in place for less
than 5 years, but you've made substantial improvements
that have increased the home's value, AND the LTV
is 80% or less based on the property value determined
by a new appraisal. If this is the case, the appraiser
must note the specific nature, extent and cost of
the improvements made and the impact of the improvements
on the property's value. |
| |
| Investment property/2-4
Unit primary residence |
|
The Loan to Value ratio is 65% or
less based on the original property value at the
time the loan was secured; OR |
|
The loan has been in effect for at
least 2 years and the LTV is 65% or less based on
the property value determined by a new appraisal;
OR |
|
The loan has been in place for less
than 2 years but you've made substantial improvements
that have increased the home's value, AND the LTV
is 65% or less based on the property value determined
by a new appraisal. If this is the case, the appraiser
must note the specific nature, extent and cost of
the improvements made and the impact of the improvements
on the property value. |
| |
| Please note:
Paying on time is important when it comes to removing
PMI in either of the cases above. Your payment history
must show: |
|
NO 30-day late payments within the
past twelve months |
|
NO 60-day late payments within the
past 24 months |
The
USA Patriot Act
Q. Does the USA Patriot Act affect
borrowers and lenders?
A. Yes. We must verify the identity of
all loan applicants in order to comply with the Patriot
Act Generally, a current driver’s license is sufficient
for most criteria. Lenders must verify name, address,
date of birth and Social Security identification number.
For employed applicants, the Social Security number is
usually included on income documentation but for unemployed
applicants, we may need a copy of a social security card.
Sometimes, additional documents are necessary to verify
identity.
|
| |
|
|
