Whether you are obtaining a mortgage for the first time or for the 100th time, our comprehensive list of F.AQ.s below should answer most of your mortgage questions. Be sure to send us a message to get an answer to any unanswered questions you may have! 

• What type of home loans does UNreduced Mortgage provide?

UNreduced Mortgage is proud to bring you mortgage solutions for ANY of your 1-4 unit property needs! We offer Purchase, Refinance, Conventional, FHA, VA, Mobile Home, Construction, Renovation and many other niche loans for your properties up to 4 units. Call or click today to see what we can do for you!

• How long does the loan process take?

Living UNreduced requires things to be done on your time so we try to be the fastest to serve you. Call us up and we will quote you the same day you inquire!

On purchases, we get you a full pre-approval before you’ve found a home. From the time you find a home to close is generally 2-4 weeks depending on appraisals and inspections needed. 

On refinances, once we receive all of your docs, we regularly see loans closed in 2 weeks. If you have a more complicated situation, it may take up to 6 weeks. This highlights the importance of disclosing EVERYTHING to your loan officer. Any hidden fact that comes up in underwriting could send you back to square 1. Your loan officer is the one who will make sure you are heard.

• What is the difference between prequalification and preapproval?

Pre-Qualification is an estimate of a prospective loan applicant’s borrowing power. It is a determination from the lender that the applicant would most likely qualify for credit and a determination of the credit amount.

Pre-Approval is a more formal and complete process, occurs after the applicant has submitted the loan application and supplied the lender with the required financial and employment information. The lender will have also run a credit report.

• How much down payment do I need?

As a rule, between 3% and 20% of the home’s purchase price is required as a down payment. The higher the percentage of the down payment, the lower the interest rate will be, along with better terms. You may be required to purchase private mortgage insurance (PMI) if you are unable to provide a sufficient down payment.

• What is PMI?

PMI is Private Mortgage Insurance. Generally, PMI is required if you borrow over 80% of your appraised value or purchase price (whichever is lower). This protects the lender against financial loss if the loan is defaulted.

• What is DTI and how does it affect me?

Your debt-to-income ratio (DTI) is the percent of your gross monthly income that goes toward required debt payments. This number allows potential lenders to see at a glance whether you are likely to be able to afford additional debt payments. As a general rule of thumb, lenders don’t want to see your housing payment + your other credit report debts to be over 45% of your income. 

• What is LTV?

Loan-to-value (LTV) is a risk factor that calculates if the lender can recoup losses (due to nonpayment) by selling the home. It is one of the determining factors lenders use when qualifying borrowers for a mortgage.

The LTV represents the amount of a first mortgage lien as a percentage of the total appraised value of the property. For instance, if someone borrows $180,000 to buy a house worth $200,000, the LTV ratio is $180,000/$200,000 or 90%.

• What is escrow?

Escrow is the portion of your monthly mortgage payment that is set aside to pay for your taxes and homeowner’s insurance. The amount of the escrow payment is calculated by estimating the insurance and property tax costs for the year and dividing the sum by 12. 

Say you expect to pay $750/year in homeowners insurance and $1,500/year in property taxes. The total yearly sum of these expenses is $2,250 which broken down monthly comes to ~$190/month.

• How is my monthly mortgage payment calculated?

A mortgage payment has four parts: principal, interest, taxes, and insurance. Principal is the repayment of your loan amount, which typically adds on interest, or the profit that goes to the lender, while taxes represent the portion that goes to the government, and the insurance is what protects lenders in the case that a loan goes into default.

• After completion of my new loan, when do monthly payments start?

Because it takes some time to set up your new loan, payments don’t necessarily start on the 1st of the next month after you sign your final documents. The best way to calculate when your first payment would be due is to add 30 days to your closing date and circle the 1st of the following month. Because of this, a well timed refinance loan could allow you to skip 2 monthly payments, but all clients will skip at least 1 month. 

• What credit score do I need to have to qualify?

Credit is only 1 of the factors lenders consider when you apply for a mortgage loan. At UNreduced Mortgage, we know that life isn’t perfect so we have unique strategies in place to get you approved with scores as low as 560! Even if you have something lower, we have a fantastic credit repair program to get you where you need to be! 

• What is included in closing costs?

Closing costs may include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed-recording fees and credit report charges. Prepaid costs are those that recur over time, such as property taxes and homeowners’ insurance.

• What are discount points?

Lenders allow you to pay money upfront on your loan to reduce your interest rate by buying discount points (essentially, buying down your rate to save in interest over the life of the loan). One discount point equals 1% of your loan amount.

For example, if you take out a mortgage for $100,000, one point will cost you $1,000. For a $200,000 loan, a point costs $2,000. Unlike other fees, discount points aren’t mandatory. The fees for any discount points will appear on your Loan Estimate under Origination Charges.

• Who pays realtor fees when I purchase a new home?

Realtor fees are usually considered in the home’s purchase price so this means the buyer ultimately ends up paying these fees. As a general rule, the listing agent and the buying agent split a predetermined amount, usually 3-6% of the purchase price, once the sale has been completed. Ask to see the sales contract and consult your real estate agent in order to save on these fees.