1. HOW DO I KNOW HOW MUCH HOUSE I CAN AFFORD?
2. HOW LONG DOES IT TAKE TO GET PRE-APPROVED?
3. WHAT DOCUMENTATION DO I NEED TO BRING TO THE APPLICATION?
4. HOW DO I KNOW WHICH TYPE OF MORTGAGE IS BEST FOR ME?
5. WHAT HAPPENS ONCE I AM PREAPPROVED?
6. WHY AND HOW DO INTEREST RATES CHANGE?
7. WHY DID MY REALTOR REFER ME TO YOU?
8. WHY SHOULD I USE A REALTOR?
9. WHEN SHOULD I CONSIDER REFINANCING?
10. WHAT IS AN ORIGINATION FEE?
11. WHAT IS TITLE INSURANCE?
12. WHAT IS MORTGAGE INSURANCE?
13. WHY IS THE ANNUAL PERCENTAGE RATE (APR) DIFFERENT FROM THE INTEREST RATE?

HOW DO I KNOW HOW MUCH HOUSE I CAN AFFORD?
It’s smart to learn what you can afford before you begin looking at homes. Many first-time homebuyers make the mistake of looking at homes beyond their price range only to be disappointed. However,for a more accurate picture, contact Joyce or click on the apply on-line button for your free pre-approval.

HOW LONG DOES IT TAKE TO GET PRE-APPROVED?
Prequalified can be as soon as we have all the information and submit the loan to automated underwriting. We get the results instantly. An actual pre-approval through an underwriter can come within 24-48 hours; however it can take several days based on what type of loan you are applying for.

WHAT DOCUMENTATION DO I NEED TO BRING TO THE APPLICATION?
These items are extremely hopeful in obtaining an accurate and quick pre-approval

1. W-2’s: 2 years
2. Current pay stub: 30 days
3. Bank statement (all pages): 60 days

HOW DO I KNOW WHICH TYPE OF MORTGAGE IS BEST FOR ME?
The right type of mortgage for you depends on many different factors. These include your current financial picture, how long you intend to be in your home, whether you consider yourself to be a conservative or aggressive investor, and what changes you see for yourself in the next several years.

WHAT HAPPENS ONCE I AM PREAPPROVED?
You are ready to buy a home! Remember that it is very important to inform us of any changes in the financial information that was provided at the time of approval, as it may make a change in the amount or type of loan that you can qualify for.

WHY AND HOW DO INTEREST RATES CHANGE?
Many people are surprised to learn that rates change on a daily and sometimes hourly basis. Interest rates fluctuate in response to changes in the financial markets. The bond market is generally a good indicator of the general trend of interest rates. For a free article on "What moves interest rates" click here.

WHY DID MY REALTOR REFER ME TO YOU?
A high quality realtor knows that the key to a successful transaction means TEAMWORK with a professional mortgage banker. Any experienced realtor could tell you horror stories about times when a client made a poor choice of mortgage company, and ended up with big surprises at the closing table, or worse, no closing taking place at all! A good realtor will form relationships with trusted individuals who have proven themselves time and time again, so that they know you will be given the excellent service that you deserve. It is important to know that your realtor is NOT given any compensation or “kickbacks” for referring you to us. As mortgage professionals, we desire more referrals, both from you and your realtor, so consider the extra motivation this provides for us to take great care with your satisfaction!

WHY SHOULD I USE A REALTOR?
First and foremost, because you need an experienced professional working on your behalf. The realtor's commission is not paid by the buyer, but by the seller of the home being purchased, and it is in each party's best interest to have professional representation. As a seller, profits are generally maximized by having an experienced realtor market and sell your home, rather than deal with the headaches of trying to do it all on your own. See our page on "Selecting a Realtor" for more information.

WHEN SHOULD I CONSIDER REFINANCING?
Many different individual factors need to be analyzed to determine if refinancing is right for you, such as the length of time you intend to stay in your home, or the type of loan you currently hold. We are always happy to provide a recommendation to you for your particular circumstances.

WHAT IS AN ORIGINATION FEE?
In Minnesota, rates are typically quoted with a 1% origination fee. An origination fee is 1% of your loan amount. You can avoid all or part of this fee by paying a higher interest rate.

WHAT IS TITLE INSURANCE?
It is a policy provided by the title company guaranteeing the accuracy of the title work done on your home at the time of purchase. As a buyer, you are required to purchase a lenders policy of title insurance as part of your standard closing costs, which only protects the mortgage company. You may also choose to purchase an owners policy, which would protect you against any loss in the event of any legal issues relating to the title of your home.

WHAT IS MORTGAGE INSURANCE?
This is generally required in one form or another when the down payment is less than 20%, and protects the lender in the event of loan default. The lower the down payment, the higher the risk for the lender, and thus the higher the monthly premium. Depending on your particulars, there are ways in which mortgage insurance can sometimes be avoided at purchase, or dropped altogether at some point in the future.

WHY IS THE ANNUAL PERCENTAGE RATE (APR) DIFFERENT FROM THE INTEREST RATE?
The Annual Percentage Rate (APR) is the cost of credit expressed as an annual rate. Because you may be paying loan discount "points" and other "prepaid" finance charges at closing, the APR disclosed is often higher than the interest rate on your loan. This APR can be compared to the APR on other loan programs, to give you a consistent means of comparing rates and programs.

The APR is computed from the Amount Financed, and based on what your proposed payments will be on the actual loan amount credited to you at settlement. In a $50,000 loan with $2,000 Prepaid Charges, a 30-Year term and a fixed interest rate of 12%, the payment would be $514.31 (principal and interest). Since the APR is based on the Amount Financed ($48,000), while the payment is based on the actual loan amount given ($50,000), the APR (12.5553%) is higher than the interest rate.

The APR can also be effected by an Adjustable Rate Mortgage (ARM). For example, a One- Year ARM may have a first year interest rate of 6.0%, but will adjust yearly based on the index. The APR attempts to predict an average rate over 30 years. The APR is also increased if the loan has Private Mortgage Insurance (PMI). PMI is required on most loans that exceed 80% of the value of the house. The PMI is considered a "prepaid" finance charge when calculating the APR.