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| Can I apply for a loan before I've found my property? |
 | Yes. You can obtain pre-approval for a maximum purchase price, loan amount and loan program. Once the loan has been approved, any of these variables can be changed to match the specifics of the actual transaction. However, an interest rate can not be locked until a property address has been specified. |
| How long will the loan process take? |
| It will take approximately 45 – 60 days to process your loan. Once we receive your loan application, the Client Coordinator assigned to your loan will be in continual communication with you regarding your loan status. |
| How much do I have to pay up-front to apply for a mortgage loan? |
| Sistar Mortgage Company requires up-front expenses for the credit report and the appraisal (this amount varies depending upon the region). |
| How important is my Credit Score and Debt Ratios? |
| There are two primary themes when applying for your first mortgage, and the first and most important is credit score, and the second is debt ratio. These are the basics in a quick format./
Credit Score Is the most important to receive a standard conventional loan, if you have a score that is over 660, and can document your income or over 700 and need to do stated, this is the easiest loan to do. Generally for conforming loans, a credit score of 620 is needed and for regular W-2, or tax returns for a self-employed person. In non-conforming loans, a score of 580 is needed for 100% with verified income, or 620 stated income, these loans are normally close as a 2/28 or 3/27, which means that it is a lower fixed rate for the first 2 or 3 years, then goes into 6 month adjustable, normally a quick rewrite of the loan is done after 2 or 3 years, to a regular conventional loan. This section does not apply to government loans or specialty mortgage programs as they have there own criteria for credit.
Debt Ratio Is the amount of house payment with property taxes & home owners insurance and is normally 28 to 33% of your gross monthly income, the other part of debt ratio is house payment (PITI=principal+interest+taxes+insurance), plus general credit that shows on your credit report, such as your monthly car, credit card, student loan payments, etc., and is generally for both capped to 41 to 45% of your gross monthly income (before taxes). For non-conforming loans the limit is 50% and the whole 50% can be your home if you have no other payments. Please see my mortgage calculator page to quickly determine your maxinum purchase price.
As stated above, your ability to purchase a home will depend, in part, on your credit history as profiled in a credit report. The information on the credit report is used to get the best possible rate. You do not have to have perfect credit to be approved for a mortgage, but it will definitely impact he rate you get. |
| What is the best way to compare rates from lender to lender? |
| When shopping for rates, we suggest that you get a Good Faith Estimate from all lenders you are shopping and compare rates and fees (i.e. apples to apples). This ensures that there are no hidden costs or fees and allows for a fair comparison between lenders. You may also want to compare the APR on the Truth in Lending Statement. This indicates the total cost of doing the loan. The lower the APR the less cost associated with the loan. |
| How often do interest rates change? |
| Interest rates change daily and sometimes several times daily based on US Treasury. Rates are also dependent on the type of mortgage loan and the loan balance. |
| Are rates going up or down? |
| This is the million-dollar question! The bond market changes twice daily. No one can predict fluctuations in the bond market and therefore cannot predict which way rates will go. |
| When can I lock an interest rate? |
| It all depends on the loan product and the lender. Sistar Mortgage Company offers a wide range of lock-in periods depending on your needs. |
| Should I lock now? |
| You have the option to lock in an interest rate or float at any time. Since no one person can accurately predict what rates will do, the decision to lock or float must be yours. |
| Will you sell my loan? |
| Sistar Mortgage is a licensed broker and lender. However, Sistar Mortgage Company practices only as a Broker entity. Sistar Mortgage does not retain the servicing on any of the loans. It only brokers for different banking and lending organizations. Transfer of servicing is a common business practice in the mortgage industry and is not based on personal or payment history reasons. |
| What is a point? |
| Points are prepaid interest which may be charged by the lender for the purpose of providing a lower interest rate. If points are paid, they are normally payable at the time of closing. Each point is equal to 1% of the principal loan amount. For example, $1,500 equals one point on a $150,000 mortgage. The more points you pay, the lower your interest rate will be, thus lowering your monthly payment. |
| What is an escrow payment? |
| An escrow payment is the portion of your monthly payment held by your lender to pay the taxes and insurance associated with home ownership. Your lender or servicer is responsible for collecting and disbursing these funds as they come due. Escrows are also called impounds or reserves in some states. |
| What is an appraisal? |
| An estimate of the value of the property you intend to buy or refinance. |
| What is amortization? |
| Amortization is the repayment of a mortgage debt with periodic payments of both principal and interest, calculated to retire the obligation at the end of a fixed period of time. |
| What does it mean to “buy down” the interest rate? |
| Buying down the rate refers to the payment of discount points in exchange for a lower interest rate. A discount point is one percent of the loan amount. As an example, paying two discount points on a $100,000 loan requires $2,000. |
| What are closing costs? |
| Closing costs cover all the charges associated with the transaction, including points, origination fee, appraisal fee, title insurance, survey, charges for credit reports, etc. Closing costs vary depending upon the loan product and the fees that are customary in your region. |
| Do I need to pay an Origination Fee? |
| The origination fee is a percent of the loan amount and covers the cost of processing and closing your mortgage loan. An origination fee can be waived as lender paid with a higher interest rate. |
| What is a jumbo loan? |
| Jumbo loans are mortgages that exceed the maximum loan amount established by the Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC). Currently, any loan over $359,650 for a single-family residence, is considered a jumbo. |
| What is 7 year Balloon? |
| The 7/23 mortgage is a 7-year level payment ARM that guarantees the payments for the first 7 years and then it becomes a fixed rate mortgage for the remaining 23 years. The interest rate upon renewal is determined by an index out of the lender's control and may not be increased by more than 6% payment at interest rates .25% - .50% below 30-year fixed rate mortgages. This is because the lender is only locking in the interest rates for 7 years, rather than 30 years under the traditional 30-year fixed rate mortgage. The one disadvantage is the borrower may have to pay substantially higher interest rates and payments after the first 7 years, if the interest rates go up over the first 7 years. |
| What is 5/1 ARM? |
| The 5/1 ARM mortgage is a 5-year level payment program that guarantees the payments for the first 5 years and then it becomes a 1-year ARM for the remaining 25 years. The interest rate upon renewal is determined by an index out of the lender's control and may not be increased by more than 5% in interest. The prime advantage to the borrower is that the lender can offer a fixed rate level mortgage payment at interest rates .25% - .50% below 30 year fixed rate mortgages. This is because the lender is only locking in the interest rate for 5 years, rather than 30 years under the traditional 30-year fixed rate mortgage. The one disadvantage is the borrower may have to pay substantially higher interest rates and payments after the first 5 years, if interest rates go up over the first 5 years. |
| What are “conforming” and “non-conforming” loans? |
| A “conforming” loan meets loan limits and underwriting guidelines established by Federal agencies such as Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC). These agencies purchase mortgages from lenders in the secondary market. “Non-conforming” loans, or “jumbo” mortgages, exceed these limits. Currently, the conforming loan limit for single family homes is set at $359,650. |
| What is an FHA Loan? |
| FHA (Federal Housing Administration) loans are insured by the U.S. Department of Housing and Urban Development (HUD) which enables homebuyers to obtain mortgages with low down payments. Both fixed and adjustable rate FHA loans are available. |
| What is a VA Loan? |
| Administered by the Department of Veterans Affairs, these special loans make housing affordable for U.S. veterans. To qualify you must be a veteran, reservist, on active duty, or a surviving spouse of a veteran that died with a service-related injury and had 100% entitlement. A VA loan is simply a fixed rate mortgage with a very competitive interest rate. Qualified buyers can also use a VA loan to purchase a home with no money down and no cash reserves. Your VA regional office can tell you if you are eligible for this VA benefit. |
| What is a convertible mortgage? |
| This is a mortgage that allows a borrower to convert from an Adjustable Rate Mortgage to a Fixed Rate Mortgage during specified time periods. A conversion fee usually applies. |
| What is the difference between a Fixed Rate Mortgage and an Adjustable Rate Mortgage? |
| Fixed-Rate Mortgages With this type of mortgage your monthly payments for interest and principal never change. Property taxes and homeowners insurance may increase, but generally your monthly payments will be very stable. Fixed-rate mortgages are available for 30 years, 20 years, 15 years and even 10 years. There are also "bi-weekly" mortgages, which shorten the loan by calling for half the monthly payment every two weeks. (Since there are 52 weeks in a year, you make 26 payments, or 13 "months" worth, every year.) Adjustable-Rate Mortgages (ARMS) These loans generally begin with an interest rate that is 2-3 percent below a comparable fixed rate mortgage, and could allow you to buy a more expensive home. However, the interest rate changes at specified intervals ( for example, every year) depending on changing market conditions; if interest rates go up, your monthly mortgage payment will go up, too. However, if rates go down, your mortgage payment will drop also. |
Can I apply for a loan before I've found my property? 