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Frequently Asked Questions
1. What is the difference between pre-qualification and pre-approval?
Pre-qualification is a lender's opinion of your ability to purchase a home, and is
based on your income, employment history and available down payment.
Pre-approval is a lender's underwriting decision that you are qualified, subject to
the conditions noted in your pre-approval, and is based upon the lender's review of
your completed application, credit check, appraisal and home inspection.
When it comes to writing an offer for a home, a pre-approval letter contains stronger
language to the seller and the listing agent than a pre-qualification. You, the buyer,
have the increased negotiating leverage of cash buyer status, because the mortgage
is already in place.
A pre-approval can often be a determining factor in winning the contract in a competitive
bid situation.
You will receive a conditional pre-approval shortly after applying for your CMA Mortgage,
and it is made unconditional when you return the financial documentation we request
after your application.
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2. What is the difference between APR and the interest rate?
APR - the Annual Percentage Rate will be outlined on your Truth In Lending disclosure
- also known as the TIL - that you receive after your application.
The APR is often higher than the quoted interest rate, or note rate.
The APR is different than your note rate, or the rate that you were quoted, because
the APR includes, in addition to interest, some of the additional costs of obtaining
your financing. This is a common practice in mortgage lending.
Simply stated, if there were no costs in obtaining financing, your note rate and the
APR would be the same.
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3. What are points?
A point equals one percent of the loan. Points are usually paid at closing. If your
loan amount is $100,000…then one point would equal $1,000…one percent.
Discount Points are fees paid by the buyer to the lender to reduce the loan's interest
rate. If you plan to keep the residence for five or more years, it may be worthwhile
to pay discount points to reduce your monthly payment and achieve greater savings
over the life of the mortgage.
The number of discount points required to buy down your interest rate will vary based
on loan type. Consult your CMA Mortgage consultant for details on your specific transaction.
Generally speaking, points are tax deductible when you are buying a primary residence,
however we recommend you consult your tax advisor for information on limitations to
tax deductibility.
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4. What is meant by the term "locking my interest rate"? And
then, when and how do I lock my interest rate?
When a lender "locks" your interest rate, this means you are guaranteed a specific
interest rate for a specific period of time. That period of time is called the lock
period.
The lock guarantees your rate as long as your loan closes and funds prior to the expiration
date of your lock. If your closing is delayed beyond your lock expiration date, you
could be exposed to higher market rates. It is good advice to lock for a period longer
than you need, or a period beyond your actual closing date. This will protect you
in case unforeseen circumstances arise.
Typical lock periods are 15, 30, 45 and 60 days. In a stable rate environment, shorter
lock periods provide you the potential for a better interest rate. However, the market
can be volatile and rates move with market activity, up and down. Let's look quickly
at the four possibilities for rates:
1) Rates can go up slightly
2) Rates can go down;
3) Rates can stay the same, or
4) Rates can go way up.
If you believe rates may go up slightly, you might benefit by waiting to lock because
of the shorter lock commitment period. If you believe rates will go down, you would
definitely benefit by waiting to lock. If you believe rates will stay the same, you
may also do better to wait. Of the four scenarios, you benefit from a longer lock
only when rates go up significantly after you lock. For that reason, and generally
speaking, we advocate shorter lock periods.
If you have a feeling that rates are going to go up significantly, by all means, call
us and let's lock your rate.
The bottom line is this: CMA Mortgage works for you and will do exactly what you wish
concerning your rate lock. Advice is always readily available, but the final decision
is yours.
If you have not locked in when you receive your application, you may notice that the
rate on the application is somewhat higher than the market interest rate. You are
not committed to that interest rate. Your mortgage consultant has intentionally used
a higher rate with which to qualify you in the event that rates do go up prior to
locking in.
You are still approved, and we do not have to re-approve you, so you are not exposed
to any more paperwork.
Once you have a property under contract, you can then lock your rate by simply requesting
a lock term. We will fax or e-mail a confirmation to you and request you sign and
return the document within 24 hours.
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5. Is it okay to use Internet statements, instead of actual
hard copy bank statements, to verify my bank and investment accounts?
Currently Internet statements are not allowed because they have not yet been proven
as a reliable source of unalterable financial documentation by the agencies that govern
lending. Also, an important side note: Bank and investment statements always designate
the number of total pages. For instance, your statement may say one of three, or one
of five pages.
Please include all pages for each statement, even if there is nothing on the last
page, and even if the first page is an advertisement. We do need back portions of
any statements when printed on. Standard mortgage guidelines require all pages of
a statement to verify accounts. If you have applied for an FHA or VA loan, we will
need original bank statements. Copies are not acceptable. Missing pages always present
a problem - even if you think the information is not relevant! Please include ALL
pages! This will avoid unnecessary delays and frustration.
Getting partial statements is probably the greatest reason CMA Mortgage has to come
back to clients and ask for additional documentation.
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6. Who orders the appraisal and survey, and when is it
ordered?
CMA Mortgage orders the appraisal, and the attorney or title agent orders your survey.
You will receive a copy of the appraisal at closing. Surveys determine whether there
has been an encroachment to the property lines, building lines, or easements. If your
home is new construction, the builder may order the survey just after completion,
or just before closing.
To answer the question: When is the appraisal and survey ordered?
CMA Mortgage orders your appraisal within 48 hours of your loan application unless
you request otherwise. On conventional and FHA mortgages, the appraiser has 10 business
days to return the appraisal to CMA Mortgage.
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7. How will I be kept updated on the status of my loan?
An CMA Mortgage consultant will make an introductory call to you within 48 hours of
your application and will be available to answer questions throughout the process.
You will be dealing with one service specialist throughout your transaction. If any
of the qualifying information you submitted to CMA Mortgage changes, please let your
service specialist know immediately.
You are always welcome to contact your CMA Mortgage consultant who took your application
directly especially if your question is related to interest rates, but your customer
service specialist's responsibility is to keep you updated on the status of your appraisal,
your survey, your loan approval, homeowners insurance and title insurance. So feel
free to call your customer service specialist at any time.
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8. Once I sign my application, am I committed to borrow the
money?
Some people feel like once they have signed the application, they are obligated to
borrow. That is absolutely not the case. In fact, none of the documents you have received
are contractual until you are actually at closing and sign your note.
All CMA Mortgage is doing with your application is approving you and putting you in
a position to make an offer, purchase a home and close a mortgage loan. You are not
obligated for the loan transaction until you sign your closing documents.
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9. What key items help ensure a smooth closing?
There are several key items you need to have addressed to ensure a smooth closing.
Homeowners Insurance, or Hazard Insurance, is coverage that compensates for physical
damage to the property by fire, wind or other natural causes. It is very important
for you to obtain your Homeowners Insurance at the earliest possible date so that
there are no delays in your closing or in obtaining the necessary closing funds.
The Declaration Page of your Homeowners Insurance policy with proof of payment must
be sent to your CMA Mortgage consultant at least 5 days prior to your closing date.
The responsibility to order and produce a clear Termite Certification depends on the
terms in your contract. Check with your CMA Mortgage consultant for details. Before
closing, original documents which were requested must be received by CMA Mortgage.
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10. Where will I be closing? How much do I have to bring
to closing, and can I bring a personal check?
Closing costs are the other charges the buyer must pay to obtain a loan. These usually
included taxes, which are charged in most states, and title insurance. When applying
for your mortgage, your CMA Mortgage consultant will provide you with a Good Faith
Estimate of the closing costs as part of the application package you receive. Your
CMA Mortgage consultant will call you within 72 hours of your closing date, and will
provide you with a preliminary Settlement Statement or a HUD-1 indicating the required
cash to close. This ensures that you have ample time to arrange for the necessary
funds.
At closing, you will be required to have certified funds in the form of a cashier's
check. Although we don't anticipate any variation from the HUD-1, you should bring
your personal checkbook to closing in case there are last minute adjustments. If you
are due a refund at closing, the attorney or title agent will issue you a check.
Closing will typically take place at an attorney or title agent's office. The attorney
or title agent represents the lender - not the seller, real estate agent or you -
the buyer. You will be given instructions on where the closing will be conducted,
along with a phone number and a fax number for the closing attorney in case you have
any questions you wish to direct to them. All borrowers associated with the mortgage
loan transaction will be required to bring Picture Identification to closing…driver's
license, passport, etc. are suitable.
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11. What is the Customer Service Satisfaction Guarantee?
CMA Mortgage is absolutely committed to excellent Customer Service and is one of the
few mortgage lenders who provide a 100% Customer Service Satisfaction Guarantee. If,
at any time during the loan process, our service does not meet your needs, immediately
contact any CMA Mortgage consultant. We are determined to make it right! If your experience
with CMA Mortgage did not meet your expectations after closing your loan with us,
we will gladly refund your application fee.
Get started today and apply online! It's fast and
easy, with no obligation.
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