Through the years we have found that most of our clients have similar questions and concerns, even if they do not ask them. The purpose of this material is to clarify and address the most often asked questions regarding the mortgage loan process. "Knowledge is Power". By taking the time to understand more about the mortgage process it will allow our team to better serve you as you will have a clearer understanding of your needs and requirements. FAQ's: 1) What is the difference between Pre-Qualification and Pre-Approval? Pre-Qualification is our evaluation of your purchasing ability based on verbal or written information you provide, (Pre-Qual 1st form). A Pre-Approval is a formal underwriting evaluation of your complete financing package and a commitment to lend subject to few final items. A Pre-Approval puts you in a far stronger negotiating position when making offers to a seller. 2) Why do I have to provide so much documentation? In addition to specific lender guidelines, having all the documentation will allow our team to develop the best financing plans with all available options. It is critical that requested documentation be provided as early as possible, allowing us to serve your needs in an efficient manner, saving you time and money. 3) Can I use Internet statements for my banking documentation? Today, most lenders do not accept Internet statements, as it has not yet been proven that they are unalterable. Also, it is critical to provide all the pages of your bank statements, even if nothing is on some of the pages. An underwriter will always assume that your "secret skeleton" is hiding on the one page that was not provided. 4) What is the appraisal and when is it performed? The appraisal is our evaluation of the property you are financing; it is the collateral for the mortgage. The appraisal is ordered by us and is usually scheduled just after your physical inspection. The appraisal is completed by an independent third party firm and usually takes from 2-7 days to finish. You will receive a copy from us for your records just after closing. 5) Do you have any upfront costs? The only time you will incur a cost with us is when you enter escrow and we need to order your property appraisal. Since we use independent appraisers their fee is due when they perform their service. Costs will vary from property to property. 6) When and how is my loan rate locked in? There are many varying lock periods for different types of loans. Generally speaking, loans can be locked anywhere from 5 to 90 days. The longer the lock period the greater the cost. Naturally, when your loan is locked it needs to be locked to a date past your escrow closing. The decision on when to lock your loan is in your hands and will be decided between us. Some people like to play the market and wait till near the end of their escrow to lock their loan while others prefer the safety of knowing that the rate will not change during the process. We will identify a target rate that you would like to achieve and perhaps a stop-loss rate where you would lock if rates were heading higher. Thus we can track rates for you on a daily basis in order to protect your interests. 7) Do you sell your loans? All lenders today have the ability to sell the right to collect the payments on your loan to other loan servicers. There are multiple investors nationwide that purchase and service loans. Regardless to whom you make your payment, the Thompson Group is your Lender for Life. We will handle any questions you may have on your mortgage at any time in the future as part of our Mortgage Management Program. 8) What are points and how do they affect my financing? One origination point is equal to one percent of the loan amount you are borrowing. Generally speaking points will reduce the interest rate on the financing you select. Together we will analyze your specific situation to determine if points make sense or not. Points are usually tax deductible on a primary residence but we advise that you check with a CPA or tax preparer for your specific situation . 9) Once I sign your paperwork am I committed to you and your firm? No you are not; you are free to work with any lender you choose. Signing the paperwork only allows us to process, underwrite and approve your financing. We are confident that you will not find another lender to take care of you the way we do. At any time should you feel you want to move to another source, we will provide a complete copy of your loan package to anyone you request. 10) What is the APR and why is it higher than my interest rate? Often clients mistake the APR, which stands for Annual Percentage Rate, on the Truth in Lending disclosure as the interest rate on their loan. This is not the case. The APR takes into account prepaid costs and mortgage insurance as a method for consumers to compare amongst various lenders. The APR is higher than your actual rate because it includes all the cost of financing a home expressed in a mathematical calculation. 11) How do I get updates on my loan process? We will advise you up-front what to expect in terms of timing for your specific transaction. You will receive weekly status letters from us. My Transaction Coordinator is responsible for knowing where your file is at all times and can answer your status questions anytime. 12) What is Mortgage Insurance? Mortgage Insurance is generally required by lenders if the down payment is less than 20%. There are pros and cons to having mortgage insurance and several strategies to avoid mortgage insurance. This is explained in more detail in other material that you can request. 13) How do you get paid? Our income is based on a percentage of the loan you acquire, whether your loan is funded by our firm or by a brokered source. We do not earn anything until your loan is closed. A common misconception is that lenders make their money from origination points, this is not accurate. We earn the same whether you pay points or not. (see #8). The percentage we earn varies from transaction to transaction but on average is 1% of your loan amount, which is then split with the firm. Of course, our families feel that we need to earn more than this! 14) What is vesting? Vesting is the determination of how you will hold title to the home you are financing. The escrow company will ask for this information at the beginning of escrow, usually in written form. It is critical that you return this information to them quickly as it may delay your closing. 15) Where do I go to sign my loan documents and what will I need to bring? You will sign all the final paperwork at the escrow company. We will be in touch with you before your closing to make sure that you have a clear understanding of your final financing and costs prior to signing. We will make every effort to have a final dollar figure for you before you sign your documents. Most escrow companies will not accept personal checks and thus you will need to arrange for a cashier's check or wire transfer to escrow. Congratulations! You've just earned $100! As a thank you for taking the time to review these FAQ's the next time you speak to our team mention that you reviewed this information, and we will credit you $100 towards your closing costs! Pass on this information to a friend or associate and when they use our services they will also receive a $100 credit! Why we offer our clients Discounts and Coupons Our success is in large part due to great relationships with our clients. We know that the small things can make the difference between an OK experience and a great experience. We also know that the more efficient we can be the better the entire process will be for both you and us. If you read over the information we send it saves us time explaining the same information on every transaction. By the same token if you get us documentation quickly we don't have to call and bother you for it later on. In other words you are helping us save time and money. So of course since you are helping us save money we are going to pass it along to you. Pretty novel concept - ever wonder why other lenders don't do this? There is a difference when you are a Thompson Group Client for Life. Here are a few ways you can earn some money from us: FAQ's - read them $100.00 Return paperwork in 48 hrs $50.00 Concierge Form - fill it out $1.00 and a surprise Disclosures - read the explanation $25.00 Do a new loan with us $350-$500 Refer a friend - they get $350 Do you have any other ideas to help us become more efficient or better at what we do? If we implement your idea we will credit you $500 on your or a friend's next transaction.