Fort Lauderdale Mortgage Frequently Asked Questions

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Frenquently Asked Questions

1. What is today’s rate?

This is a very complex question that cannot be answered without additional information. In order for anyone to be able to answer this question accurately they would at minimum need to know your credit score, loan amount, value of the home, and type of loan. Anyone who gives you a rate without that information is just quoting you best case scenario which is dangerous since typically only about 10% of applicants qualify for best case scenario.

2. What are your closing costs?

The term closing costs is typically misinterpreted by most consumers. This is a very confusing subject for a lot of people, but as of January 1st, 2010 the new laws make it easier for consumers to shop and to hold their lender accountable to what they promise.

There are 4 categories of closing costs. Lender Fees, 3rd Party Fees, Pre-Paid Items, and Government Taxes & Fees. The most important are lender fees and 3rd party charges because the other 2 cannot be controlled or manipulated by the lenders and should be the same everywhere. Please see our educational pages to get more details about all 4 categories and how to make them all as low as possible.

3. How long does it take to close?
Closing time frames fluctuate based on the current volume of loans in underwriting but typically ranges from 10-15 business days for conventional loans and 15-20 business days on government loans. As always it could be faster or possibly even longer for unusual circumstances.

4. Do I have to get an appraisal?
95% of the time you will need an appraisal, even if you already have a recent appraisal. The laws now always require that an independent appraiser be appointed.

5. What are escrows?
Escrow is a term used to describe the savings account that your mortgage company holds for you to pay your annual taxes and insurance. If your taxes are $1200 per year that breaks down to $100 per month. Your monthly loan payment will already include this $100 per month. Your mortgage company then takes that $100 each month and deposits it in the savings account that they hold for you. After 12 months when your taxes are due, they go get the money for you and pay the taxes. Your homeowners insurance works the same way.

6. Do I lose points when my credit is pulled?
Maybe, but it is usually very very minimal. However it could hurt you if your credit score is in the low 600’s. It is usually not enough to even be noticed, maybe 1 or 2 points, but if your score is just barely above the 620 minimum you need to be very careful.

7. How much money do I need to put down?
Unless you qualify for a VA loan, or a USDA loan you must put at least 3.5% down for an FHA loan and 5%-20% down for conventional depending on qualifications.

8. Can I get a co-signer?
Yes, but typically only available for FHA laons and the other signer cannot currently have an FHA loan and you must still meet all other FHA requirements.

9. Why is the rate on the truth in lending different from my interest rate?
The rate on the truth in lending is your APR not your interest rate. Your payment is based of off your interest rate not your APR. Your APR is considered your true cost of credit after you factor in all of the costs associated with your loan.

10. What is a rate lock or float? When can I lock?
A Rate lock is where you lock in the current interest rate for a certain period of time during the processing of the loan. The protects you from interest rate changes while your loan is being processed. As long as you close your loan within the locked time frame your rate cannot change.

11. What happens after we are Clear to Close
After your loan is cleared to close a closing is scheduled and the closing documents are ordered. We prefer to schedule closings a minimum of 48 hours after we receive the clear to close. This allows all parties the proper amount of time to complete the finishing touches.

12. What is a Short Sale and what if I want to purchase one?
The following scenario is a short sale:
Homeowner has a home worth $100K and he owes $140K.
He is most likely behind on his payments and about to enter foreclosure.
You come along and offer to buy the home from him for what it is worth $100K.
He agrees, but the problem is, he cannot sell you that house and transfer ownership to you without paying off the $140K he owes the bank and he doesn’t have any money to do that with. In an effort to avoid foreclosure the bank may allow him to sell you this property for $100K and they would accept $100K as a payoff on the loan. The bank would consider this because if they foreclose it would cost them thousands in fees and in the end they would still only have a house worth $100K. In their mind it makes good business sense to accept $100K now and avoid all of the foreclosure costs, property carrying costs, maintenance costs, and real estate commissions. If the bank accepts the offer this is called a Short Sale.

13. Can the seller pay my closing costs?
Yes, most loans allow for up to 3% of the sale price in seller paid closing costs and some allow for up to 6%.

14. If I am Self-Employed how is my income calculated?
If you are self employed, it is best to contact us and allow us to review your tax returns to determine how your income will be calculated. We will typically review your last 2 years tax returns and add up the profits from both years for your business. We can add back in any depreciation deductions. We then divide by 24 months to determine an average monthly income. If your most recent years tax returns show lower profit than the year before then the income is considered declining and only an average from the most recent year will be used.

15. What does it mean to pay points and should I do it?
Paying points is a way of getting a lower interest rate. The more you pay in points the lower your rate will be. The benefit is that your monthly payment will be lower and you will always save more over the life of the loan by paying points. The downside is that it costs money upfront, and you typically have to keep the house a minimum of 3-5 years before the lower monthly payment has saved you the cost of the point(s). If you are going to keep this loan for 30 years then pay all the points you can afford to. If you are going to be in the home less than 5-7 years then seriously consider all options but usually it is better not to pay points in that situation.

16. Why do I have to pay for the appraisal upfront?
We have no control over the appraiser chosen, or the outcome of the value. The appraisal payment is required because we have to pay for it when we order it. Once the inspection has been done it is non-refundable regardless of the outcome.

*Based on a 740+ Credit Score
80% Loan to Value for Conventional Loans
96.5% Loan to Value for FHA Loans.