RHMC Frequently Asked Questions (FAQ)
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Question: What is a discount point?
A discount point is a fee charged by the lender used to lower your interest rate. The cost of each discount point is equal to 1% of the loan amount. Example, for a $200,000 loan, one point equals $2,000.
Question: How long does it take to obtain a mortgage?
Under normal circumstances, a purchase transaction should close between 30 and 60 days from the signing of the contract and a refinance should close between 24-45 days of the application. The obtaining of a mortgage commitment normally takes between 14-21 days – depending on the conditions of the loan. The length of the process lies with the cooperation of the applicant, realtor, attorney and the loan professional. Providing all documents have been submitted in a timely fashion, your loan professional should be able to meet all stated time frames.
Question: What documents will I need?
Following is the list of the documents most commonly needed when you apply for a mortgage loan. You may need additional documents depending upon the type of loan you’re applying for, be sure to ask your loan professional.
- Completed Application
- Sales contract signed by Buyers and Sellers (if purchase).
- W2 for previous two (2) years
Question: What is the difference between ARM and fixed mortgage?
A fixed rate mortgage is one in which the interest rate is fixed and set for the duration of the loan. In other words, the interest rate remains the same during the entire term of the mortgage. It’s simple, easy to understand and offers security to buyers who plan to stay in the home for an extended time and for those who want to know what their budget will be each month.
An ARM is an Adjustable Rate Mortgage. The rate will adjust after a set period of time. The primary benefit of an ARM is a lower initial rate prior to the adjustment. This provides the borrower the ability to afford more of a mortgage in the early years of the loan. Please consult with your loan professional to see if an ARM is the right choice for you.
Question: What are the steps in the loan process?
You’ve been looking at houses for months and months, and you have finally found it–the house that’s just right. Now, you’re anxious to buy your new home, move in, and get settled. But you still have an important task ahead of you–getting a mortgage loan.
STEP 1 — Preparing your documents
Gather all your documents prior to applying for the loan. A good rule of thumb is the “rule of 2”. You will need 2 of each of the following: income documents, asset documents and form of ID. For a more complete list, please refer to FAQ #1.
STEP 2 — Application
Completing the Application. This could either be online, phone or in person. This process usually takes about 10 minutes.
STEP 3 – Processing
The lender gathers all your information and does a preliminary review to make sure all paperwork has been submitted correctly. It is the processors job to make sure the file is complete before submitting to the Underwriting team. You may get a call from the Processor. This does not mean there are issues; they are just making sure the file represents your financial situation accurately.
STEP 4 – Underwriting
Underwriting is where the underwriter looks at the application along with all supporting documents to see if the financial picture makes sense. They are ultimately the one who approves your loan.
STEP 5 – Conditions
In many instances there are “conditions” an applicant must meet in order to solidify their loan. “Conditions” are requests for additional information in order to complete your loan file. Your lender will let you know what these are and give you advice on how to resolve them.
“Conditions” can be as simple as a Verification of Employment, the verification that you are still currently employed prior to loan closing.
This is the step where most delays occur. It is the applicant’s responsibility to submit all necessary documents in order to get the conditions cleared. Be patient with your mortgage professional, they can only clears these with your help. Once all conditions are cleared, a “clear to close” is issued from the underwriting department.
STEP 6 – The Closing
Congratulations, you’ve purchased a home. You will sit with your attorney or title company and sign all applicable paperwork. Please read everything carefully. Your loan professional should be available to answer any final questions you may have. Don’t be afraid to ask – this is their specialty and their job.
Question: Should I get a pre-approval letter?
Real estate experts tell home buyers that it’s critical to apply for a loan before shopping for a home. This is an essential first step since most people rely on mortgages to buy a home. The benefit:
- You’ll know how much home you can afford.
- Increase Bargaining & Negotiating Power.
- Enjoy a Faster Closing Period.
Question: How do I get a pre-approval letter?
To get your pre-approval letter, contact your loan professional. You will be asked to complete a short application and provide some preliminary documentation. Typically you will be issued a pre-approval letter within 48 hours. If you need it sooner in order to make an offer on a home, let your loan professional know. In most cases they will be happy to accommodate.