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.

Why do I have to pay title insurance?
Title insurance protects the lender and the homeowner against loss resulting from any defects in the title or claims against a property that were not uncovered in the title search and that are not specifically listed as exemptions to the coverage on the title insurance policy.

What is APR?
APR is abbreviated for Annual Percentage Rate. The APR is the annual cost of the mortgage expressed in the form of a yearly rate. The APR is generally higher than the note rate because the APR includes the interest rate plus related costs such as points, fees for processing the loan and other pre-paid charges. The APR can be used to compare the actual cost of different types of mortgages.

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.

When can I lock an interest rate?
It all depends on the loan product and the lender. Waterfield offers a wide range of lock-in periods depending on your needs.

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.

Does my credit have to be perfect?
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 determine how responsible you are in meeting your obligations. You do not have to have perfect credit to be approved for a mortgage, but if you have a number of late payments, you may need to provide a letter explaining why those payments were late.

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 is an appraisal?
An estimate of the value of the property you intend to buy or refinance.

How much do I have to pay up-front to apply for a mortgage loan?
Waterfield requires up-front expenses for the credit report and the appraisal (this amount varies depending upon the region).

How often do interest rates change?
Interest rates change daily and sometimes several times daily based on the bond market. Rates are also dependent on the type of mortgage loan and the loan balance.

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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 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.

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.

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.

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?
Waterfield retains the servicing on the majority of our loans. However a transfer of your servicing rights is possible. Transfer of servicing is a common business practice in the mortgage industry and is not based on personal or payment history reasons.

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 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.

Questions about Loan Types

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.

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 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 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 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 $252,700.

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 $252,700 for a single-family residence, is considered a jumbo.

Mortgage Insurance Questions

What is Private Mortgage Insurance?
Private Mortgage Insurance, or PMI is insurance which protects the lender in case the buyer defaults on the loan. It is typically paid for by the borrower and exists on conventional mortgages when the buyer’s down payment is less than 20%.

Will I always have to pay Private Mortgage Insurance?
You may request that your lender cancel Private Mortgage Insurance when your mortgage balance reaches 80% of your home’s original value (i.e. the lesser of the sales price or the appraised price at origination). Your mortgage payments must be current, you must have no other loans on the house, and your lender must be satisfied that your property value has not declined.

When your mortgage balance reaches 78% of your home’s original value, your Mortgage Insurance will be canceled automatically by your lender. Again, you must be current on your payments. Some exceptions apply to certain “high risk” loans.

Payment Questions

What does P.I.T.I. mean?
Principal-Interest-Taxes-Insurance. These elements together are called P.I.T.I. For most borrowers, monthly mortgage payments include three components: a payment toward the principal of the loan (that is the amount borrowed); a payment representing interest; and a payment into a special account (called an escrow account) that your lender maintains to pay your hazard insurance and property taxes. If you will be paying private mortgage insurance or condo association fees, these may also be included in the payment amount.

What happens if I’m late with a payment or miss a payment?
Continued delinquency (late payment) or defaulting on your mortgage (failing to make one or more payments) can lead to foreclosure, or judgement against you.

How often do I have to make mortgage payments?
This depends on the lender you choose. With Waterfield, you may select monthly, or enroll in the Equity Accelerator, a biweekly program.