frequently asked questions.
What types of mortgage options does PrimeLending offer?
• Fixed Rate and Adjustable Rate
• FHA, VA, and USDA Loans
• Jumbo and Conforming Loans
• Conventional Financing
• Renovation Loans
• Float Down Option
What is a prequalification* letter, and why should I have one?
A prequalification* letter comes from the lender. The letter states that the lender agrees to provide a mortgage to you, the homebuyer, under certain conditions. Prequalification* letters help you set realistic goals while you’re house hunting. Additionally, they can provide you with the same negotiating ability as a cash buyer and enable you to move quickly once you find the perfect home.
Should I get prequalified* before I search for a home?
Absolutely. If your credit score and finances are already in order prior to your house hunt, the process goes much smoother. The prequalification process is simple:
1. Gather your personal financial information such as bank statements, W-2 forms and paycheck stubs, and meet with your PrimeLending loan officer.
2. Your PrimeLending loan officer will pull your credit report and evaluate your financial documents. With this information, you and the loan officer are able to discuss the best home financing options that will help you achieve your financial and homeownership goals.
3. Once you are prequalified*, PrimeLending will give you a prequalification letter to inform your real estate professional and the seller of the property that you’re a preferred and serious potential buyer. This will give more weight to any offer you extend on a property as well as allow you to relax and enjoy the process of looking for your new home.
Do I have to pay for the prequalification* process?
No. We invite you to use our website for information, to compare interest rates and terms for various loans, for prequalification* at no charge; and if you need additional assistance, please call us.
Can I still qualify for a loan even if I have past credit problems?
Yes, and you are not alone. Everyone finds themselves in tough financial situations at one point or another. Don’t allow previous problems to discourage you from trying for a fresh start.
What's the difference between interest rate and APR?
According to the Consumer Financial Protection Bureau (CFPB): “The interest rate is the cost of borrowing money expressed as a percentage rate. It does not reflect fees or any other charges you may have to pay for the loan. An Annual Percentage Rate (APR) is a broader measure of cost to you of borrowing money. The APR reflects not only the interest rate but also the points, broker fees, and certain other charges that you have to pay to get the loan, including certain of your closing costs. For that reason, your APR is usually higher than your interest rate.
How do I know what my interest rate will be?
Your PrimeLending loan officer will advise you of the rates available for your loan product. When you are ready, you can lock in your interest rate. You can lock in your rate for up to 180 days (additional restrictions and fees may apply for lock terms in excess of 90 days). This guarantees your rate for the entire lock period.
Should I get a loan with a fixed or adjustable rate?
When deciding on the type of rate you want, it’s all a matter of time. You’ll want to think about a fixed-rate mortgage if you plan to live in your home for more than a few years. Fixed rates provide you with stable payments and protection against increasing mortgage interest rates. An adjustable-rate mortgage would be more suitable for you if you foresee living in your home for only a few years. With an adjustable-rate mortgage, you open yourself up to the possibility of having your monthly payments increase or decrease each time your interest rate changes.
What are “origination points”, “discount points”, and “origination fees”?
Paying origination or discount points allows you to lock in a lower interest rate.
Typically, origination points are applied and disclosed at the time of locking in an interest rate. On the other hand, discount points can be added at the time of lock or later in the process if you choose to pay to reduce your interest rate.
Origination fees are the fees required to originate the loan. They can include processing fees, underwriting fees, administrative fees, and several others. Your loan officer can give you a complete breakdown of these fees as they vary from state to state.
What is a loan-to-value ratio?
To find your LTV, simply divide your current loan amount by the total value of your home. For example, if your home is worth $220,000 and you owe $160,000, your LTV is 73%.
What is PITI?
PITI is principal, interest, taxes and insurance – the basic components of a monthly mortgage payment if escrows are being included.
What does waiving escrows mean?
When you waive escrows, you take the responsibility of paying your taxes and insurance rather than having them included in your monthly payment. Waiving escrows may add a fee to your closing costs. You can only waive escrows if your loan program allows for this.
What is a pre-payment penalty?
A lender may charge a pre-payment penalty if the borrower decides to pay off the home loan early. Some loans with lower rates will contain a pre-payment penalty, which discourages refinancing if interest rates fall. This ultimately benefits the lender with a higher rate of return on the loan. Although home loans are structured in various ways, a pre-payment penalty is typically a percentage of the unpaid balance or the amount of interest on a specified number of months. Statistically speaking, most homebuyers will either move or refinance before paying off the loan, so they rarely see the benefit of a slightly lower interest rate in exchange for a for a possible pre-payment penalty. None of PrimeLending’s loans carry prepayment penalties.
Will I have two separate payments if I have a second lien?
The second lien is often from a different lender than the first lien (or loan). Borrowers with a second lien, therefore, will make two separate payments each month – one on the first lien and one on the second lien.