Frequently Asked Questions About the Mortgage Financing Process
At Service First Mortgage, we want to make the process of obtaining your home financing as efficient and simple as possible, and will work closely with you to obtain the best program to address your needs.
Our goal at Service First is provide the highest quality products and services in the industry, and to take care of the details so you can relax and enjoy your new home.
All our associates understand how involved a home purchase can be and genuinely care about meeting your needs.
We measure our success by your willingness to recommend Service First to your friends and family. "World Class Service" is what it will take to gain this type of loyalty, and it is our goal to provide just that.
Service First has compiled the following information to help answer some commonly asked questions about home financing, and throughout the process we will be available to answer any questions you may have.
This information is covered in detail in the written disclosure booklet Service First provides each customer - so please refer to that booklet for additional detail.
We sincerely appreciate your business and look forward to providing you with your mortgage financing.
1. What is the difference between pre-qualification and pre-approval?
2. What is the difference between APR and the interest rate?
3. What are points?
4. What is meant by the term "locking my interest rate"? And then, when and how do I lock my interest rate?
5. Is it okay to use Internet statements, instead of actual hard copy bank statements, to verify my bank and investment accounts?
6. Who orders the appraisal and survey, and when is it ordered?
7. How will I be kept updated on the status of my loan?
8. Once I sign my application, am I committed to borrow the money?
9. What key items help ensure a smooth closing?
10. Where will I be closing? How much do I have to bring to closing, and can I bring a personal check?
11. Does Service First sell their loans? Who do I send my payment to?
12. What is the Customer Service Satisfaction Guarantee?
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 Service First mortgage, and it is made unconditional when you return the financial documentation we request after your application.
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.
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 Service First 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.
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 30, 45,60, and 90 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: Service First 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.
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 Service First has to come back to clients and ask for additional documentation.
6. Who orders the appraisal and survey, and when is it ordered?
Service First orders the appraisal, and the title agent orders your survey. You will receive a copy of the appraisal at closing. You must pay for the appraisal prior to Service First ordering the appraisal for your.
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? Service First orders your appraisal within 48 hours of the expiration or your option period of your contract or if you are building a home, 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 Service First. On VA loans, appraisals can sometimes take up to three weeks.
7. How will I be kept updated on the status of my loan?
A Service First Loan Officer/Team Member will make an introductory call to you within 48 hours of your application and will be available to answer questions throughout the process. The Customer Service Specialist works in conjunction with your mortgage consultant and you will be dealing with one service specialist throughout your transaction. If any of the qualifying information you submitted to Service First changes, please let your service specialist know immediately.
You are always welcome to contact your Service First loan officer 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.
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 Service First 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.
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 must be sent to your
Service First Customer Service Specialist 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 Service First mortgage
consultant for details.
Before closing, original documents which were requested must be received by
Service First.
10. Where will I be closing? How much do I have to bring to closing, and can
I bring a personal check?
When applying for your mortgage, your Service First mortgage consultant will
provide you with a Good Faith Estimate of the closing costs as part of the
application package you receive.
Your Service First customer service specialist will call you within 24 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 title agent will issue you a check.
Closing will typically take place at a title company's office.
You will be given instructions on where the closing will be conducted, along
with a phone number and a fax number for the closing agent 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.
11. Does Service First sell their loans? Who do I send my first payment to?
Many clients ask if Service First will sell their loan.
Another way of asking that question is, who services my loan?
The answer is, Service First originates loans - we process, we underwrite, we
close and we fund your loan from our offices.
That gives us total control of the transaction and a greater ability to help
you through the process. Thereare no excuses for anything going wrong with
your loan.
We have multiple investors who will purchase your loan from us after closing.
This flexibility allows us to offer competitive interest rates and a wide
variety of loan programs to best address your needs.
Service First MortgageCorp. will provide temporary servicing for your
mortgage loan until your loanis sold, and a transfer of servicing has been
established with your new investor.
Service First MortgageCorp. will receive and process your loan payments until
you are notified, in writing, that your loan has been sold.
If for some reason you do not receive a first payment statement, your payment
should be mailed to the following address. Please be sure to include your
loan number on the check if you are mailing a payment without a coupon.
The payment address is:
Service First MortgageCorp.
3200 Broadway
Suite 420
Attention: First Payment
Garland, TX 75043
Within several weeks afteryou close your loan, Service First Mortgage Corp.
will send you a Notice Of Assignment, Sale, Or Transfer Of Servicing Rights
letter indicating that your loan has been sold.
The letter will include loan payment instructions, payment due dates and
customer service contact information in the event you need to speak with your
new loan servicer directly.
The letter will also include information related to your rights as a loan
customer under the Real Estate Settlement Procedures Act (RESPA). Please read
this transfer notice carefully and contact us if you have any questions.
Service First MortgageCorp. stands for service, so if you ever have a concern
or a problem with your mortgage loan, before or after your loan is sold, call
yourloan officer - we will respond and address your issue quickly. Our
contact information is provided on the internet at www.servicefirstmtg.com.
ServiceFirst wants to be your mortgage solution provider for life.
12. What is the CustomerService Satisfaction Guarantee?
Service First Mortgage Corp. is absolutely committed to excellent Customer
Service and is one of thef ew mortgage lenders who provide a 100% Customer
Service SatisfactionGuarantee.
If, at any time during the loan process, our service does not meet your
needs, immediately contact any Service First mortgage representative. We are
determined to make it right!
If your experience with Service First did not meet your expectations after
closing your loan with us, we will gladly refund your application fee.
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