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Professional Financing Tips
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Keep Things Stable
You have probably heard some of the crazy things that have happened to people during their loan process. Believe it or not, sometimes they do it to themselves unknowingly. We want
to help you prevent this so please continue to make all of your payments on time during
the process even if you are already approved and please be wise about make any excessive purchases during the processing of your loan.
Insurance Requirements
Homeowner’s insurance is required for any home mortgage. Coverage should be enough to either cover the loan amount or replacement cost. If the coverage is insufficient, coverage will need to be raised. If the home is determined to be located in a flood zone, flood insurance will be required.
Pre-approval versus Pre-qualification
A pre-approval is an actual underwriter’s findings regarding your loan application whereas
a pre-qualification is a lender’s opinion. A pre-approval uses much stronger language and is much more thorough than a pre-qualification, however until the file has funded there are no guarantees.
Locking versus Floating your rate and Rate Extensions
During the application process, you will be given the option to lock-in or float your rate. By locking your rate you protect yourself against any negative fluctuations in the market, however if rates improve you must remain at your chosen rate. Your rate lock is good for a period of time, typically 30 days. If your loan does not fund within that time period there is a cost to extend the rate. FOR THIS REASON IT IS VERY IMPORTANT THAT YOU RETURN REQUESTED DOCUMENTS TO OUR CLIENT CARE TEAM WITHIN 24-48 HOURS OF REQUEST.
APR versus Interest Rate
You will find two separate percentages or rates disclosed within your application and closing documents. One is referred to as your note rate or the interest rate you have been quoted while the other is referred to as an Annual Percentage Rate, or APR. The APR is a calculation of your note rate with the addition of all loan related closing costs. Simply stated, if your loan has no loan related closing costs, the APR and the Note rate will be the same percentage.