Understanding your Mortgage

Presented by:Fidelity National Financial

Content:1. Key Terms2. Important Questions3. The Loan Process

1. Key Terms: Equity Lock-in LTV Mortgage Mortgage Broker PITI

EquityValue of a property minus the

debtBack to terms page

Lock-inA lock-in, also called a rate-lock or rate commitment, is a lender's promise to

hold a certain interest rate and a certain number of points for you, usually for a

specified period of time, while your loan application is processed.

Back to terms page

LTVLoan to Value

The amount you will borrow compared to the total

purchase price.Back to terms page

MortgageTransfer of property rights as

security for a loan. The mortgage assigns property rights to the bank who lets you

borrow money against it.Back to terms page

Mortgage BrokerOne who, for a fee, places loans

with investors, such as banks and savings and loan, but does not

fund or service those loans.

Back to terms page

PITIThe total sum of a mortgage

payment, including:Principal, Interest, Taxes &

InsuranceBack to terms page

2. Important Questions To Ask Your Lender

1. What are your credentials? Why should I chose you??

2. How many points will your company charge me?

3. How long will the financing process take?

4. What interest rate do I qualify for?5. When will I be able to ‘lock-in’ the intere

st rate on my loan? 6. Can you GUARANTEE the lowest closing

costs?

1. Why should I chose you to be my mortgage

broker?The truth is that ALL mortgage companies

should offer you decent service at low costs.

Your goal: to discover “What can this mortgage company offer me that nobody

else can?” Expect nothing less than “Exceptional”

service.

2. How many points will your company charge

me?The right lender must answer honestly and without hesitation. Simplified, points are mortgage fees that are paid upfront to

reduce the initial interest rate. Ask your lender to be very clear on how many points he is charging you on the loan he is offering

you.

3. How long will the financing process

take?Once you have applied for the loan and it’s approved, the truth is that the loan process has just begun. Between this step and the

estimated time of closing, it’s identified as the “loan in process”. It is here that your loan

documents will be prepared, verified, underwritten and finally closed. The average “in process” period is approximately 30 days.

4. What interest rate do I qualify

for?Keep a watchful eye on

advertisements that offer interest rates that are extremely low! Though everything is possible, it will come at a cost paid by you, the borrower. The suitable lender will be able to answer

that “as a professional, he/she will insightfully analyze your complete history”. Furthermore, the interest

rate will totally depend on each individual’s financial facts.

5. When will I be able to ‘lock-in’ the

interest rate on my loan? A really important point: the market will

continue to fluctuate until you agree to an interest rate lock-in. The more diligently you submit your application and fulfill all your lender requirements, the faster you will be ‘locked-in’. Traditionally, a lock-in within 30 days of your estimated closing

date is made at no additional cost. Return to questions page

6. Can you GUARANTEE the

lowest closing costs?As an educated and confident

homebuyer, don’t forget to request a “good faith estimate”- it’s the law!

In this fashion, you are able to compare all lenders under

consideration.Return to questions page

3. Loan Process Summary

Interview a few lenders Select lender based on your criteria

satisfaction Complete an application (referred to

as a 1003) Based on the information provided

on this application, lender can provide a pre-approval status, as well as offer a variety of loan programs

Select the loan most convenient compared to your re-payment goals

Loan Process Continued…

You will be asked to gather a series of documents for

verification (process known as documentation)

These are most common: Last 2 years of tax returns Last 2 years of W2’s Business tax returns Last 30 days of pay stubs Last 3 months of personal business bank

statements Pension award letter Etc.

Loan Process Continued The lender now verifies all

documentation submitted and loan goes through underwriting process (the average process is 30 days)

Mortgage APPROVAL takes place Lock-in of your rate may be suggested.

However, it is your responsibility to request an interest rate lock-in to take place.

Lender finalizes “lender’s package”

Loan Process Continued

Lender sends package to title company

Title company prepares final documentation, as directed by lender instructions

Closing date and time is set Closing takes place

Congratulations!Your loan transaction has

closed