Home Loan & Mortgage FAQ’s
What types of mortgage options does First Choice Loan Services offer?
First Choice Loan Services offers these competitive loan programs and options:
• Fixed Rate and Adjustable Rate
• FHA, VA, and USDA Loans
• Jumbo and Conforming Loans
• Conventional Financing
• Renovation Loans
• Float Down Option
What is a prequalification letter, and why should I have one?
A prequalification letter comes from the lender. The letter states that the lender agrees to provide a mortgage to you, the homebuyer, under certain conditions. Prequalification letters help you set realistic goals while you’re house hunting. Additionally, they can provide you with the same negotiating ability as a cash buyer and enable you to move quickly once you find the perfect home.
Should I go through the prequalification process before I begin searching for a home
Absolutely. If your credit score and finances are already in order prior to your house hunt, the process goes much smoother. The prequalification process is simple:
1. Gather your personal financial information such as bank statements, W-2 forms and paycheck stubs, and meet with your First Choice Loan Services Sr Mortgage loan originator.
2. Your First Choice Loan Services Sr Mortgage loan originator will pull your credit report and evaluate your financial documents. With this information, you and the Sr Mortgage loan originator are able to discuss the best home financing options that will help you achieve your financial and homeownership goals.
3. Once you are prequalified, First Choice Loan Services will give you a prequalification letter to inform your REALTOR® and the seller of the property that you’re a preferred and serious potential buyer. This will give more weight to any offer you extend on a property as well as allow you to relax and enjoy the process of looking for your new home.
Do I have to pay for the prequalification process?
No. We invite you to use our website for information, to compare interest rates and terms for various loans, for prequalification at no charge; and if you need additional assistance, please call us.
When I apply for a mortgage, what documents will I need?
The typical documents that you’ll need are those that verify your income, employment and assets. Click here to review our document checklist that will help you get organized when you start the application process.
Is it still possible to qualify for a loan even if I have past credit problems?
Yes, and you are not alone. Everyone finds themselves in tough financial situations at one point or another. Don’t allow previous problems to discourage you from trying for a fresh start.
Why did I receive a Truth-In-Lending document?
Truth-In-Lending documents are sent to all borrowers after they apply for a loan. The Truth-In-Lending Act is a federal law requiring lenders to reveal the annual percentage rate (APR).
How does the annual percentage rate (APR) differ from the interest rate?
According to the Consumer Financial Protection Bureau (CFPB): “The interest rate is the cost of borrowing money expressed as a percentage rate. It does not reflect fees or any other charges you may have to pay for the loan. An Annual Percentage Rate (APR) is a broader measure of cost to you of borrowing money. The APR reflects not only the interest rate but also the points, broker fees, and certain other charges that you have to pay to get the loan, including certain of your closing costs. For that reason, your APR is usually higher than your interest rate.
Will I get a copy of my credit report and appraisal?
You may obtain a copy of your credit report through the credit bureaus. You will receive a copy of your appraisal a minimum of three days prior to your closing.
How will I know which loan program is best for me?
Your lifestyle and financial situation are the best guides for deciding on the best loan program for you. Consider these questions:
• How long will you live in this home? Several years, or just a few?
• Do you anticipate your income or finances to significantly change over the next few years?
• Are you either comfortable or uncomfortable with an adjusting monthly mortgage payment?
• Do you plan to be out of mortgage debt by, for example, when your children start college or when you retire?
Based on your answers, your First Choice Sr mortgage loan originator can discuss different home loan programs that will suit you financially and help you reach life’s milestones.
What is the difference between a VA and an FHA loan?
A VA loan is guaranteed by Department of Veterans Affairs. Individuals who have served in the armed forces for a specified time may be eligible for this type of loan.
An FHA loan, on the other hand, is guaranteed by the Federal Housing Administration. FHA is a government agency that works with approved lenders such as First Choice Loan Services.
How do I know what my interest rate will be?
Your First Choice Loan Services Sr Mortgage Originator will advise you of the rates available for your loan product. When you are ready, you can lock in your interest rate. You can lock in your rate for up to 180 days (additional restrictions and fees may apply for lock terms in excess of 90 days). The lock secures the interest rate for the specified lock period
Should I get a loan with a fixed or adjustable interest rate?
When deciding on the type of rate you want, it’s all a matter of time. You’ll want to think about a fixed-rate mortgage if you plan to live in your home for more than a few years. Fixed rates provide you with stable payments and protection against increasing mortgage interest rates. An adjustable-rate mortgage would be more suitable for you if you foresee living in your home for only a few years. With an adjustable-rate mortgage, you open yourself up to the possibility of having your monthly payments increase or decrease each time your interest rate changes.
What are “origination points”, “discount points”, and “origination fees” in regard to my mortgage?
Paying origination or discount points allows you to lock in a lower interest rate.
Typically, origination points are applied and disclosed at the time of locking in an interest rate. On the other hand, discount points can be added at the time of lock or later in the process if you choose to pay to reduce your interest rate.
Origination fees are the fees required to originate the loan. They can include processing fees, underwriting fees, administrative fees, and several others. Your Sr Mortgage loan originator can give you a complete breakdown of these fees as they vary from state to state.
How much will I need for a down payment?
Depending on your situation and eligibility, we have several down payment options. Your First Choice Loan Services Sr Mortgage loan originator will be able to help you find a loan program that best fits your financial goals and needs.
What is a loan-to-value ratio?
To find your LTV, simply divide your current loan amount by the total value of your home. For example, if your home is worth $220,000 and you owe $160,000, your LTV is 73%.
When mortgage lenders say “PITI,” what are they referring to?
PITI is principal, interest, taxes and insurance – the basic components of a monthly mortgage payment if escrows are being included.
When my Sr Mortgage loan originator asks me if I want to waive escrows, what exactly does this mean?
When you waive escrows, you take the responsibility of paying your taxes and insurance rather than having them included in your monthly payment. Waiving escrows may add a fee to your closing costs. You can only waive escrows if your loan program allows for this.
What is a pre payment penalty?
A lender may charge a pre-payment penalty if the borrower decides to pay off the home loan early. Some loans with lower rates will contain a pre-payment penalty, which discourages refinancing if interest rates fall. This ultimately benefits the lender with a higher rate of return on the loan. Although home loans are structured in various ways, a pre-payment penalty is typically a percentage of the unpaid balance or the amount of interest on a specified number of months. Statistically speaking, most homebuyers will either move or refinance before paying off the loan, so they rarely see the benefit of a slightly lower interest rate in exchange for a for a possible pre-payment penalty. None of First Choice Loan Services’ loans carry prepayment penalties.
What inspections or appraisals does the lender require?
The lender requires a home appraisal on most transactions. If the appraiser recommends repairs or if repairs are mentioned in the contract, the lender may require that those repairs be completed before closing. The appraiser then will perform a final inspection to ensure that the repairs were completed.
My first mortgage payment is due but I don’t have my payment slips yet. Where should I send the payment?
Refer to your “First Payment Letter” in your closing documents to determine where to send your first mortgage payment.
Will I have two separate payments if I have a second lien?
The second lien is often from a different lender than the first lien (or loan). Borrowers with a second lien, therefore, will make two separate payments each month – one on the first lien and one on the second lien.
What is the difference between a mortgage broker and a direct lender?
A mortgage broker serves his or her client by shopping around for various lenders who will approve the homebuyer’s loan. While this sounds convenient, many times the buyers end up paying higher costs for their mortgage because of the broker’s fees. A direct lender, on the other hand is just that – a direct connection between the homebuyer and one company, from start to finish. As a direct lender, First Choice Loan Services delivers a fast and efficient process to our buyers from the initial application, to approval of a competitive loan and to the final closing.
Who can answer questions not addressed here?
In addition to getting in touch directly with your Sr Mortgage loan originator, you are always welcome to contact us through our contact page.