FAQs

Got a question about mortgages?

You've come to the right place! View our frequently asked questions about home mortgages, loan programs, your application and more!

APPLYING AND PREQUALIFICATION

Q: What information do mortgage lenders need from me to qualify for a mortgage loan?

A: To help you get a mortgage loan, mortgage lenders require information related to your employment, finances and information about the home you wish to purchase. They will ask you specific, detailed information about these topics so that they can arrive at a monthly payment that you can afford and will be able to sustain.

Q: Can I apply for a loan before I find a property to purchase?

A: Yes! This is considered a pre-qualification or pre-approval, and obtaining a pre-qualification or pre-approval before you find a home is a smart choice. Once completed, we will issue a letter stating that you have been pre-qualified or pre-approved subject to you finding your new home. You can use the letter to reassure Real Estate Brokers and sellers that you are a qualified buyer. The pre-qualification process helps ensure that you are looking in the right price range to comfortably fit in your budget and can be completed quickly by your loan originator.

A pre-approval is a more involved process than a pre-qualification but may give more weight to any offer you make on a property. Obtaining a pre-approval requires submission of documentation supporting your income, assets and debt. An underwriter will review your information, and if acceptable, issue a pre-approval letter.

When you find the perfect home, simply call your Envoy representative to complete your application. At this point, you will have the option to lock in your interest rate and we will complete processing your application.

Q: What is a Pre-approval?

A: A pre-approval allows you to get approved for a specific loan amount prior to finding the home you want to purchase. Being pre-approved can provide you with a great advantage if you are in a situation where multiple people are interested in the same home you are interested in.

Q: What is Pre-qualification?

A: Pre-qualification is the method of determining how much money a prospective homebuyer will be eligible to borrow before the loan application process occurs.

LOANS AND DOWN PAYMENTS

Q: How do I know what loan is best for me?

A: Review your current situation and future goals, and then answer these questions with your loan officer to help determine the best course of action:

  • 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?

Q: What is the minimum down payment for conventional, FHA, and VA loans?

A: Conventional loans generally require a minimum down payment of 5%, although options with as little as 3% down may be available.

FHA mortgages are available for as little as 3.5% down and VA mortgage have a no-down payment option for eligible veterans.

RATES

Q: What does APR mean?

A: Annual Percentage Rate ( APR ) is the percentage used to figure out the total cost of your loan by taking into account all fees charged by your lender in addition to your loan principle and interest.

Q: How are interest rates determined?

A: Interest rates are influenced by the financial markets and can change regularly. The changes are based on many different economic indicators in the financial markets.

Q: What is the difference between a fixed rate and adjustable rate mortgage?

A: 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.

Q: What is a rate lock?

A: A rate lock gives you protection from financial market fluctuations. You have the option of when to lock in your interest rate.

CREDIT AND INSURANCE

Q: What is the significance of a credit score?

A: A credit score is the primary indicator of how likely a person will repay future debt. Mortgage lenders review your credit history by reviewing your credit report. This report gives an indication of how well you have paid your bills and other financial obligations in the past. Additionally, the report will show how much debt you already have, for example, your credit cards, car, student and other types of loans.

Credit scores range between 300 and 850. The higher the credit score the better. Your credit score will play a role in determining the amount of money you can borrow and the terms of your loan, including the interest rate

Q: What is private mortgage insurance (PMI)?

A: PMI is insurance that covers the lender in the unfortunate event that the borrower is not able to repay the loan and the lender is not able to recover costs of the foreclosure through selling the property. Whether or not a loan will have PMI depends on the type of loan and the down payment made.

Q: What taxes and insurance must I pay as a home owner?

A: Homeowners are required to pay property taxes and they must also carry homeowners insurance to protect their home. In some cases the lender may require the taxes and insurance to be paid into an escrow account. If your loan has an escrow account, each month 1/12 of your annual tax and insurance payments will be collected as part of your monthly payment and placed in the escrow account. When the annual tax and insurance payments are due, the lender will make the payment on your behalf using the funds that have been accruing in your escrow account. Because tax and insurance figures can increase or decrease over time, your escrow account will be reviewed annually and may be adjustment up or down to take this fluctuations into consideration.

Q: Do I need a home inspection AND an appraisal if I am purchasing a home?

A: Both a home inspection and an appraisal are designed to protect you against potential issues with your new home. Although they have totally different purposes, it makes the most sense to rely on each to help confirm that you have found the perfect home. An appraisal is generally required on every loan by the lender, but a home inspection is an optional service that the buyer may wish to obtain. A home inspection is a much more thorough inspection of the property and is highly recommended.

Q: How long will the loan process take?

A: 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.

Q: How much money will be required at closing?

A: The amount you’ll need to close your loan includes your down payment, closing costs and prepaid amounts for property taxes, and insurance escrow accounts. Prior to closing, Envoy will provide you with the final amount.

Contact a Loan Officer Today!