Q. How do I apply for a mortgage?
A. Access our free consultation online form HERE, or call our toll-free application line at 888-841-4238. An application interview by phone typically takes about 30 minutes.
Q. What does it cost to apply?
A. There is no cost to apply and no obligation to proceed. After the initial consultation, any costs going forward will be disclosed to you as part of the application process and collected following your receipt of the early Truth-in-Lending disclosure and your approval to continue with the application
Q. How long does it take to obtain loan approval?
A. The average number of days from application to approval will vary, however 7-10 business days is typical. Depending on your credit history, down payment or equity in your home, and the loan program selected, Sistar may be able to approve your mortgage in less time.
Q. What might delay approval of my loan?
A. If you provide complete, accurate information, the loan process should run smoothly. If the underwriter discovers credit problems, however, there could be delays. Make sure you notify us if you change jobs, increase or decrease your salary, incur additional debt or change marital status between the time you submit an application and the time the loan is funded.
Q. How long will it take to close after I am pre-approved?
A. Once you’ve been approved, 30-45 days from application to closing is typical. However, this timeframe can be as little as 15 days, so ask your Sistar Mortgage Loan Officer about your specific loan conditions.
Q. What documents will I need to apply for a mortgage?
A. Traditional loans usually require documents that verify your employment, income and assets, and may include:
Your Social Security number
Pay stubs for the last two months
W-2 forms for the past two years
Bank statements for the past two or three months
One to two years of federal tax returns
A signed contract of sale (if you've already chosen your new home)
Information on current debt, including car loans, student loans and credit cards
Q. What is the difference between pre-qualification and pre-approval?
A. Pre-qualification is the method of determining the maximum amount a prospective homebuyer will be eligible to borrow before the loan application process occurs. Pre-approval allows you to get approved for a specific loan amount prior to finding the home you want to purchase. The loan is underwritten and the lender commits to a specific loan amount. Pre-approval can provide a great advantage when negotiating the purchase price of a home, as most sellers will give preference to a buyer who has been pre-approved for a loan.
Q. How much do I need for a down payment?
A. There is no set amount. In fact, you might be surprised to learn that many first-time homebuyer programs require as little as 3.5% down. Today, there are many loan programs that can be tailored to fit your needs and financial resources. Keep in mind that for down payments of less that 20%, private mortgage insurance (PMI) may be required.
Q. What is the minimum down payment for conventional, FHA, and VA loans?
A. While conventional loans (those not backed by a government agency) usually require a minimum down payment of 5%, Sistar Mortgage has low-down payment programs available. For example:
FHA mortgages, insured by the Federal Housing Administration, are available for as little as 3.5% down.
VA mortgages, guaranteed by the Department of Veterans Affairs, have a no-down payment option for eligible veterans buying a home.
Please contact a Sistar Mortgage Loan Officer for specific down-payment requirements and programs.
Q. How much money will be required at closing?
A. The amount of money needed for cash to close is comprised of your down payment, closing costs, as well as the prepaid items for your initial taxes and insurance escrow accounts. Sistar will provide you with a Good Faith Estimate (GFE) of settlement costs at the time of application. Also, typically within 24 hours prior to your closing, you will be provided with the final sum of money required for the closing.
Can I close on a home without having to be at the closing table? Sistar Mortgage can accommodate what is termed a "mail away" closing. You may also appoint someone to act for you by using a Power of Attorney (POA). In this scenario, you would actually assign someone to sign on your behalf. Each state has its own specific requirements, so please check with your Sistar Mortgage Loan Officer or Processor for state specific requirements. If you select a "mail away," the lender will coordinate overnight delivery of the documents to ensure a timely closing. Please note, this process may require some additional coordination time.
7 Questions to ask your Mortgage Advisor
At Sistar Mortgage, we feel a well-informed client is likely to be more satisfied with the loan process. So we’ve provided a list of questions below that should be asked of any lender when applying for a home loan.
What is the interest rate on this mortgage? To determine exactly what you'll pay over the term of the loan, you need to know the rate. Rates change quickly, and there are several factors, such as your credit score and the value of the property you are purchasing vs. the amount of the loan (LTV), which will affect the rate you qualify for.
How many discount and origination points will I have to pay? You have the option to pay prepaid mortgage interest points to lower your interest rate. Ask your Sistar Mortgage Loan Officer to clarify these costs and how they will impact your interest and payment amounts.
What are my closing costs? Mortgages come with fees for various services provided by lenders and other parties involved in the transaction. You want to know what those fees will be as early as possible. Sistar will provide you with a written Good Faith Estimate (GFE) of closing costs within three days of receiving a loan application. Beware of any lender who is unwilling to do so!
When can I lock in the interest rate and what will it cost me to do so? Your interest rate may fluctuate between the time you apply and closing. To prevent it from going up, you may want to lock in the rate, and even points, for a specified period. Ask your Loan Officer if lock-in fees apply.
Is there a pre-payment penalty on this loan? There may be a pre-payment penalty on your loan. Some penalties are one percent of the loan amount, others are equal to six months' interest, some apply only when you refinance or reduce the principal balance by more than 20 percent, and some kick in if you sell your home. Find out the duration of any penalty period and how the penalty is calculated.
What is the minimum down payment required for this loan? The rate and terms of your loan will be based on a down payment figure, typically 5 to 20 percent of the purchase price. If you can put more money down, you may be able to lower your rate and improve your terms; if you come up short, you may be required to purchase private mortgage insurance (PMI).
What are the qualifying guidelines for this loan? These requirements relate to your income, employment, assets, liabilities and credit history. First-time home buyer programs, VA loans and other government-sponsored mortgage programs typically offer easier qualifying guidelines than conventional loans.
SELECTING THE BEST LOAN
What is a conventional loan? A conventional loan is a fixed rate loan over a specific time frame. It’s secured by a mortgage or deed of trust with an acceptable loan-to-value (LTV) ratio range and is not guaranteed by VA or insured by FHA, FMHA or State Bond agencies.
What is a jumbo loan? A jumbo loan is a conventional loan that exceeds the maximum agency (Fannie Mae, Freddie Mac) mortgage amount guidelines for a conventional loan.
How do I know what loan is best for me? Review your current situation and future goals, and then answer these questions by yourself or with your Mortgage Advisor to help determine the best options for you:
How long do you expect to stay in the house?
Which is more important: low monthly payments or low closing costs?
Will my income increase or decrease in the next three years?
How comfortable are you with your monthly payment potentially increasing?
Everyone's situation is different. Most people will benefit from either consulting by phone or in person with a mortgage professional who is committed to discovering your needs, and helping you match those needs with a mortgage product that's right for you.
What is the difference between a fixed rate and adjustable rate mortgage (ARM)? With a fixed rate mortgage, the interest rate and payment remains constant over the life of the loan. With an adjustable rate mortgage, the interest rate can either increase or decrease, based upon the terms of the loan. This could cause the monthly payments to increase in order to have the loan paid in full by maturity.
MONEY, RATES AND FEES
What is a buy-down? A buy-down is a fee paid to lower the interest rate on a mortgage. The buyer, seller or any other interested party may pay it. A permanent buy-down would lower the rate for the entire term of the mortgage, while a temporary buy-down lowers the rate for a specified shorter term, generally three years or less.
What are closing costs? Closing costs are fees and expenses that both the buyer and seller must pay at closing. They generally include:
other costs described in the HUD I at settlement
How much money will be required at closing? The amount of money needed for cash to close is comprised of your down payment, closing costs, as well as the prepaid items for your initial taxes and insurance escrow accounts. Sistar will provide you with a Good Faith Estimate (GFE) of settlement costs at the time of application. Also, typically within 24 hours prior to your closing, you will be provided with the final sum of money required for the closing.
Will Sistar include my closing costs in the loan amount? On a purchase transaction, you typically cannot finance your closing costs into the loan amount. However, there are special programs that may allow you to finance some, or all, of the costs by agreeing to a slightly higher interest rate. Also, if you are refinancing, you may be able to refinance some, or all, of your closing costs. See your Sistar Loan Officer for details.
What is an escrow account? An escrow account is maintained by the lender to collect funds from the borrower in order to pay the taxes and property insurance due on the loan.
Which is better: a fixed or adjustable interest rate? If you plan to be in your home for more than seven years, you may want to consider a fixed rate mortgage, which offers predictable payments and long-term protection against rising mortgage interest rates. If you plan to be in your home for seven years or less, an adjustable rate mortgage could be attractive. Keep in mind that with an adjustable rate mortgage, your monthly payments have the potential to go up each time your interest rate adjusts.
When should you pay discount points? When you pay a discount point, you are essentially paying part of your interest to the lender up front. This will lower your interest rate — as well as your monthly payment — over the life of the loan. One discount point is typically equal to 1% of the loan amount. For example, one point on a $100,000 loan would require payment of $1,000 at closing. Generally speaking, the longer you plan to remain in a property or hold your mortgage, the more advantageous it is to pay points. There is no requirement to pay discount points; whether or not you decide to pay points is completely up to you.
How can I determine what mortgage amount I might be eligible for? Based on your income, your current debts and estimated down-payment, your lender can usually help you determine the maximum mortgage amount for which you could qualify. Many lenders have a toll-free 800 number where you may speak with a mortgage professional or you may also reference the lender's mortgage calculator located on its mortgage Internet site. This process is frequently referred to as a "prequalification analysis".
What is title insurance? Title insurance provides the lender and the buyer (if you purchase owner's coverage) with coverage for losses resulting from specific title defects listed in the policy. In cases where land and property have changed hands over time, there is always the possibility an error has occurred. If an error has occurred, it may be that someone else may be in title to or have an interest in the property, improvements encroach on property lines or that other similar problems may exist. In these scenarios, if you do not have title insurance you could lose your investment in your home. Lenders require "lender's coverage" to protect their investment and it only protects the lender. Owner's coverage is optional and provides separate coverage for the borrower.
Does Sistar Mortgage require title insurance for purchase transactions? Yes, a Mortgagee's Title Insurance Policy will be required on purchase transactions.
What is PMI and why is it required? Private mortgage insurance (PMI) is insurance written by a private company that protects the lender from losses in the event the borrower defaults on the mortgage. Borrowers are required to pay the premium for private mortgage insurance. Private mortgage insurance limits a lender's exposure to financial loss resulting from loan default. If you make a down payment of less than 20%, even if you have a good credit profile, lenders generally require private mortgage insurance.
How much does mortgage insurance cost? The cost of PMI is divided into two parts. The first part is a payment made at the time of closing. The second is an ongoing payment made each month with your principal and interest payment.
How long will I be required to have PMI on my loan? The Homeowner's Protection Act of 1998 allows borrowers whose loans originated after July 29, 1999, to request cancellation of PMI at 80% loan-to-value (LTV) based on amortization, or actual payments, if the borrower has a good payment history, if the borrower provides evidence the property value has not decreased, and certifies there are no subordinate liens on the property.
Lenders are required to terminate borrower paid PMI at 78% LTV based on the amortization schedule if the loan is current. If none of the above is done, PMI will terminate automatically at the midpoint of the loan term. For loans originated prior to July 29, 1999, PMI guidelines will vary from lender to lender and can change at any time. Some investors will not allow the cancellation of PMI. Typically, PMI is required on your loan for a minimum of 24 consecutive payments absent any law to the contrary. After that time, if you have 20% or more equity in your property and meet certain other conditions, you may request to have it removed. Typically, there is no guarantee that your PMI will be removed, and most loan investors will require a new appraisal at your expense prior to removing PMI.
What is the minimum down payment required by a lender in order to eliminate PMI? Typically, on a primary residence, the minimum that you need to put down to eliminate PMI is 20%. If you are putting less than this down, but wish to avoid PMI, your lender may have alternative products and pricing options they may provide in lieu of PMI.
What is a rate lock? This lock gives you protection from financial market fluctuations in interest rates by setting the range of pricing available to you. Your final rate, which may not be determined until closing, will reflect the pricing that was available at the time you locked for loans with your specific transaction characteristics and your credit profile. While locking does not guarantee that a specific rate will apply, it does ensure that your loan pricing will not be affected for a set period of time by changes in financial market conditions.
When can I lock in my rate? You can lock or float your interest rate at any time during the process of your loan. Your Loan Officer will discuss these options with you upon taking your loan application.
How long is my rate lock valid? Depending on the type of transaction and the time you need, lock periods can be valid anywhere from 10 to 180 days.
How much do I need for a down payment? There is no set amount. In fact, you might be surprised to learn that many first-time homebuyer programs require as little as 3.5% down. Today, there are many loan programs that can be tailored to fit your needs and financial resources. Keep in mind that for down payments of less that 20%, private mortgage insurance (PMI) may be required.
What is an origination fee? The origination fee is charged by the lender, typically 1% of the loan amount you borrow. It’s used to cover expenses during the process of the loan.
What is a discount point? A discount point is paid to the lender to permanently buy down or lower an interest rate. It is usually a percentage of the loan amount.
May I pay additional discount points to reduce my interest rate? Yes, most lenders will allow you to pay additional discount points to lower your interest rate.
How are rates determined? Rates are determined by the financial markets. These rates can change daily or even more than once within the same day. The changes are based on many different economic indicators in the financial markets. To obtain current interest rates, contact your Sistar Mortgage Loan Officer.
How can I compare different loan offers when shopping for a mortgage? When shopping, compare loan terms, settlement charges and the Annual Percentage Rate (APR). The APR, which is usually higher than the interest rate, expresses the total cost of the mortgage as an ongoing annual rate and includes certain fees, discount points, closing costs and other expenses that are charged on your loan. Although one lender may have a slightly lower rate, they may charge more fees, and hence have the same APR as a lender with the slightly higher rate. Refer to the comparison charge on the Good Faith Estimate (GFE).
What is the difference between APR and interest rate? The APR (annual percentage rate) reflects the cost of your mortgage loan as a yearly rate. It takes into account interest, discount points paid on the loan, any fees paid to the lender for making the loan, and any mortgage insurance premiums you may have to pay. The interest rate is the actual note rate, which is used to determine the monthly principal and interest payment.
Why is the Annual Percentage Rate (APR) on the Truth-in-Lending disclosure higher than the rate shown on my mortgage note? The APR reflects the cost of your mortgage loan as a yearly rate. This rate is generally higher than the rate stated on your mortgage note because, in addition to the interest rate, APR includes prepaid interest, discount points paid on the loan, any fees paid to the lender for making the loan, and any mortgage insurance premiums you may have to pay. The APR allows you to compare, in addition to the interest rate, the total cost of financing your loan, among various lenders.
What is prepaid interest? This is the interim interest that accrues on the mortgage loan from the date of the loan closing to the beginning of the period covered by the first monthly payment. For example, if your closing date is scheduled for June 15, the first mortgage payment is due August 1. The lender will calculate a per-day interest amount that is collected at the time of closing. This amount covers the interest accrued from June 15 to July 1.
What is the difference between 'locking' and 'floating'? A lock gives you a specified period of time of protection from financial market fluctuations in interest rates by setting the range of pricing available to you. Your final rate, which may not be determined until closing, will reflect the pricing that was available at the time you locked for loans with your specific transaction characteristics and your credit profile. While locking does not guarantee that a specific rate will apply, it does ensure that your loan pricing will be unaffected during the lock-in period by changes in financial market conditions. If you choose to "float" or defer "locking," your rate will fluctuate with the market and will be subject to both upward and downward movements in the market. The benefit to floating is if interest rates were to decrease, you would have the option of locking in at a lower level of rates.
Which mortgage and homeowners costs are tax-deductible? Three types of mortgage and homeowners costs may be tax-deductible: discount points, interest paid on a home loan or home equity loan and property taxes. After the year of sale, your mortgage interest and annual property taxes are the only deductible costs. For a refinanced loan, points must be deducted over time. Consult your tax advisor for advice about your situation.
REFINANCING YOUR LOAN
What are the benefits of refinancing? You may want to consider refinancing if you are interested in paying off high-interest-rate debt, shortening the length of your repayment term for your mortgage or lowering your monthly mortgage payment. Generally speaking, one or more of the following conditions needs to be present before you should consider refinancing your mortgage:
Mortgage interest rates are falling.
Your home has significantly appreciated in market value.
You've been making payments on your original 30-year mortgage for less than ten years.
Can I refinance to take cash out of my house? Yes, Sistar Mortgage offers a variety of options that allow you to tap into your home's equity and take cash out. Consult a Sistar Mortgage Loan Officer for the best cash-out refinancing option for you.
How can I consolidate debt when refinancing my mortgage? Cash-out refinancing can help homeowners who want to consolidate high-interest, nondeductible debt. Because your mortgage interest rate is likely to be lower than rates on credit cards or other types of bank loans, consolidating debt may reduce your overall monthly debt payments. In addition, your mortgage interest may be tax-deductible, while your credit card interest is not.
The amount you save on loan consolidation may vary by loan. Since a home loan may have a longer term than some of the bills you may be consolidating, you may not realize savings over the entire term of your new loan. In addition, your loan may require you to incur premiums for hazard and, if applicable, flood insurance and mortgage insurance which would affect your monthly payment reduction.
Do I need to have my house appraised in order to refinance? Yes, in most cases. However, depending on the circumstances, an appraisal may not be required.
If I refinance my loan with my existing lender, will I have to pay all the closing costs again? Typically, yes, as there is a cost to process any new loan application. This cost may include fees paid to third parties, such as the appraisal provider and the title and closing providers.
What’s the difference between Cash-Out Refinance and Home Equity Financing? Accessing your home's equity may be a sensible way to manage your finances and pay for important purchases, such as college tuition or home improvements. Your equity is the difference between your mortgage balance and your home's estimated market value.
While both cash-out refinance and home equity accounts are potentially tax-deductible, you should be aware of their differences. Comparing the features of each option can help you make the decision that's right for you.
|Cash-Out Refinance||Home Equity Financing|
|One loan with a monthly loan payment||You can choose between a lump sum loan or a revolving line of credit|
|Your existing mortgage is refinanced for a higher overall amount using some of the accumulated equity in your home||You can borrow a portion of your home's equity|
|Get available funds and spread the payments out over a longer term||A home equity loan can provide the flexibility of a shorter term to help to build equity faster because you can pay the loan off sooner OR reduced monthly payments by spreading the cost over a longer term|
|May have a lower interest rate than home equity financing||On a line of credit, interest is only paid on the funds you draw, and you can access available funds without having to reapply|
How is my credit report used in the loan application process? Your credit report is used to evaluate your mortgage request by showing how you have handled your credit obligations in the past. The following companies can provide you with a copy of your credit report, often free of charge.
Equifax Website: www.equifax.com Phone: 1-800-685-1111
Experian Website: www.experian.com Phone: 1-888-397-3742
TransUnion Website: www.transunion.com Phone: 1-800-888-4213
Can I buy a home if I have less-than-perfect credit? Yes. Keep in mind that we don't just look at your past history, but also at your ability and willingness to pay in the future. Sistar may be able to help you buy a home, even if your credit isn't perfect.
Can my credit history prevent me from getting a mortgage? It can, but check with a Sistar Mortgage Loan Officer first to evaluate your credit situation and how it may impact your loan options. A Sistar Mortgage Loan Officer can also work with you to improve your credit score.
Why isn’t my score higher? When we receive your FICO score, up to four "score reason codes" are also delivered. These score reasons are more useful than the score itself in helping you determine whether your credit report might contain errors, and how you might improve your score over time.
These are the top 10 most frequently given score reasons. Note that the specific wording may vary.
Serious delinquency, and public record or collection filed.
Derogatory public record or collection filed.
Time since delinquency is too recent or unknown.
Level of delinquency on accounts.
Number of accounts with delinquency.
Amount owed on accounts.
Proportion of balances to credit limits on revolving accounts is too high.
Length of time accounts have been established.
Too many accounts with balances.
Does my income affect my credit score? Income might affect your ability to get a loan, but it does not affect your credit score. Only your credit history — such as timely payments and how much you owe — affects your score. Regardless of income, if you manage your debt responsibly, you can have a high score.
Will my score drop if I order my credit report? Self-inquiries do not affect your score, as long as you order your credit report directly from the credit reporting agencies, or through an organization authorized to provide credit reports to consumers. It's a good idea to check your credit report once a year.
Will a low score haunt me forever? No. In fact, it changes as new information is added to your credit history and you change the way you handle credit. For example, past credit problems impact your score less as time passes.