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 What is Pre-qualification?Pre-qualification is the method of determining how much money a prospective homebuyer will be eligible to borrow before the loan application process occurs.
- What is a Pre-approval?
Pre-approval allows you to get approved for a specific loan amount prior to finding the home you want to purchase. The loan is underwritten and the lender commits to a specific loan amount. Pre-approval can provide a great advantage with a homeowner or realtor if someone else is interested in the same home simultaneously. Also, if you're thinking about refinancing and want to payoff creditors or take cash out -- but not sure you’d qualify – you can apply for a pre-approval and potentially save on the cost of getting an appraisal on your home until you know if you qualify.
- What information do I need to provide when I apply?
When you're ready to apply, you need the most current information on your:
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monthly income
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monthly debt payments
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total debt
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a total of your assets
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your Social Security Number
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employment information and verification (e.g., W-2, pay stub, etc.)
For a complete list, visit our Application Checklist.
- Is there a cost to apply? If so, how much?
This varies from lender to lender. Some lenders charge an application fee to cover actual out-of-pocket expenses and money for their efforts. Other lenders charge a reasonable credit report and appraisal fee, which cover out-of-pocket expenses. This could range anywhere from $50.00 (credit report only) to $500.00.
- Where do I close and sign for my loan?
Typically, your closing will take place at a title closing agent’s or attorney’s office. When all parties agree upon a closing date, U.S. Bank will provide you with the exact location and time of your loan closing.
- What documents will I receive at closing?
At closing, you’ll sign and receive copies of all legal documents that are recorded and placed on record for the property you’re purchasing or refinancing. You’ll also receive all pertinent information regarding your mortgage payment and servicing information for your new loan.
- How long will the loan process take?
The loan approval and funding time frames vary depending on the type of transaction and the complexity of your personal finances. On average, the process can take from 14 to 60 days.
- What is a lock-in rate?
The lock-in rate represents the interest rate you choose and will be the interest rate used to factor your monthly payment. The lock-in secures the interest rate during the process of your loan approval as long as your loan is processed and closed prior to the rate expiration date. This date is given to you when you lock-in the rate.
- When can I lock in my rate?
You can lock or float your interest rate at any time during the process of your loan. Your loan officer will discuss these options with you upon taking your loan application.
- How long is my rate lock valid?
Depending on the type of transaction and the time you need, lock periods can be valid anywhere from 10 to 180 days.
- Can I pay my loan off early or pay extra each month?
Yes, you can make principal payments at anytime during your loan term or pay the loan in full. You can also pay a set amount each month above the normal payment due or make lump sum payments periodically.
- What is an escrow account?
An escrow account is maintained by the lender to collect funds from the borrower in order to pay the taxes and property insurance due on the loan.
- What is PITI?
PITI represents the accounts your money is applied to when you make your monthly mortgage payment and include:
P – Principal
I – Interest
T – Taxes
I – Insurance
- How do I know what loan is best for me?
Review your current situation and future goals, and then answer these questions by yourself or with your loan officer to help determine the route you may want to take:
- How long do you expect to stay in the house?
- Which is more important: low monthly payments or low closing costs?
- Will my income increase or decrease in the next three years?
- How comfortable are you with your monthly payment potentially increasing?
- What is the difference between a fixed rate and adjustable rate mortgage?
With a fixed rate mortgage, the interest rate and payment remains constant over the life of the loan. With an adjustable rate mortgage, the interest rate can either increase or decrease, based upon the terms of the loan. This could cause the monthly payments to increase in order to have the loan paid in full by maturity.
- What is a convertible mortgage?
A convertible mortgage allows you to convert your adjustable rate mortgage to a fixed rate mortgage for a flat fee during a specific time frame. This fee can range from $250 to $500 based on the lender.
- What is a balloon mortgage?
A balloon mortgage loan has a fixed rate payment for the first five to seven years of the loan, then a lump sum payment is due on the balance of the loan at a specified date when it matures.
- What is a conventional loan?
A conventional loan is a fixed rate loan over a specific time frame. It’s secured by a mortgage or deed of trust with an acceptable loan-to-value (LTV) ratio range and is not guaranteed by VA or insured by FHA, FMHA or State Bond agencies.
- What is a jumbo loan?
A jumbo loan is a conventional loan that exceeds the maximum agency (Fannie Mae, Freddie Mac) mortgage amount guidelines for a conventional loan.
- What is PMI?
PMI stands for Private Mortgage Insurance. On a conventional loan, PMI is required if you borrow over 79.99% of your appraised value. This protects the lender against financial loss if the loan is defaulted.
- What is mortgage life insurance?
Mortgage life insurance would pay the balance owed on your mortgage home loan in the event of your death during the term of the mortgage. Mortgage life insurance is not required to obtain financing.
- What is hazard insurance?
Hazard insurance protects your investment in your home, providing compensation to the insured in case of property loss or damage.
- What are points?
Points represent an origination fee charged by the lender and loan discount points sometimes charged on the note rate to lower the interest rate.
- What is a buy-down?
A buy-down is a fee paid to lower the interest rate on a mortgage. The buyer, seller or any other interested party may pay it. A permanent buy-down would lower the rate for the entire term of the mortgage, while a temporary buy-down lowers the rate for a specified shorter term, generally three years or less.
- What is an origination fee?
The origination fee is charged by the lender, typically 1% of the loan amount you borrow. It’s used to cover expenses during the process of the loan.
- What are closing costs?
Closing costs are fees and expenses that both buyer and seller must pay at closing. They generally include:
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