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Q. What is Truth-in-Lending Disclosure Statement and why do I receive it?
A. Your Disclosure Statement contains information which Federal and State law requires us to provide to you. The purpose of this statement is to disclose information about your loan and to assist you in shopping for credit.
Q. What is the Annual Percentage Rate?
A. The Annual Percentage Rate, or APR, is the cost of your credit expressed in terms of an annual rate. Because you may be paying points and other closing costs, the APR can be used to provide a method for comparing the cost of credit for different loan programs.
Q. What is the Amount Financed?
A. The Amount Financed is your mortgage amount MINUS the prepaid finance charges. Prepaid finance charges include items such as loan origination fee, commitment fees (points), interest adjustments, and initial mortgage insurance premiums (if applicable). The amount financed represents a net figure used to allow you to accurately assess the amount of credit actually given.
Q. Does this mean I will get a lower mortgage that I applied for?
A. No. If your loan is approved in the amount for which you applied, then this amount will be provided toward your home purchase or refinance at closing.
Q. Why must I sign the Disclosure Statements?
A. Lenders are required by law to provide the information on this statement to you in a timely manner. Your signature is an acknowledgment that you have received this information and does not obligate either you or Drew Mortgage Associates, Inc., in any way.
Q. When Drew says 100% Financing or No Money Down, does this mean I will have to pay absolutely no money out of pocket?
A. Drew offers great No Money Down programs, meaning you won’t have to pay a down payment on the purchase price of the home you are buying. However, we can’t waive certain closing costs such as appraisal, credit report, home inspection, and prepaid items (taxes and insurance). If you negotiate properly, however, some of these fees can be paid by the seller. We can help you come up with the best possible deal under these programs.
Q. How does my credit score affect my financing?
A. Your credit score is based on your personal credit history, and can vary depending on how long your accounts have been active, balance in relation to credit limits on credit cards, your history of on-time payments, and any open collection or judgment accounts. Drew Mortgage can provide a free copy of your credit report and a detailed evaluation of your credit score.
Q. How long will the loan application process take from start to finish?
A. If you are refinancing your home, the average time frame is about 30 days. A home purchase time frame is tied to the closing date set by the seller and the buyer in your Purchase and Sales agreement. We will do our part to make sure your closing take place on time. Drew Mortgage will be happy to expedite a fast closing for you if you are under a strict timeline.
Q. What is the difference between a prequalification and a full preapproval?
A. If you are looking to buy a home, we can give you a prequalification letter based on your credit report and a review of your preliminary loan application. This prequalification letter is subject to review once we receive supporting documents such as income, assets and employment, and is not a guaranteed loan approval. A full preapproval, on the other hand, is a firm commitment letter issued by our underwriting department. This preapproval letter makes you a more viable buyer because it indicates that our underwriting department has approved your financing based upon a review of your income and assets documents (subject to an appraisal and a signed purchase & sale contract). Because a preapproval letter assures that have have received financing approval, it will often induce a seller to accept your offer.
Q. Can I get money back at closing when I purchase a property?
A. Typically the answer is no, with the possible exception of a deposit that you made to secure the purchase of your home, but don’t intend to apply toward the purchase. Such a deposit refund would most likely occur with a no money down or low down payment loan.
Q. I had a home inspection. Why do I have to pay for an appraisal?
A. Home inspections are highly recommended but not required by mortgage lenders. The home inspector works directly for you as the buyer, providing a detailed report to inform you if there are any problems with the property. An appraisal is required by lenders to determine the accurate current market value of the property and to ensure that it meets all secondary market requirements.
Q. I just had an appraisal done 9 months ago. Why can’t I use that for my re-finance?
A. Because market conditions constantly change, lenders will typically accept an appraisal if it is 120 days old or less prior to your closing date. After 120 days, a lender will require a new appraisal to reflect current market value and property condition.
Q. If I can’t qualify for conventional financing from a different lender, can I still get a loan from Drew Mortgage?
A. Absolutely. Drew offers portfolio loans where credit decisions are made in-house using criteria that would not meet normal secondary market requirements. If you have a unique scenario or a difficult situation, we will look at financial issues such as compensating factors, and we will use common-sense underwriting to will find a way to approve your loan.
Q. If my credit score is lower than someone else, will I have to pay a higher interest rate?
A. No. Drew Mortgage feels that you are more than just your credit score. We will do everything to qualify you for your financing, and if you do happen to have a low credit score, we will look at underlying issues such as legitimate reasons why you may have had trouble paying your bills in the past as possible mitigating factors that can help earn you an approval for your loan. Depending on the type of loan program you’re applying for, Drew will offer the best and most competitive rates to all borrowers.
Q. Do I have to pay a tax escrow charge even if I don’t want to?
A. Yes. All lenders generally require that taxes be paid into escrow at closing. When Drew is providing financing for your home and your loan is under 80% loan to value, you do have the option to request a waiver of your escrows for taxes and insurance.
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