When you have questions, we have answers.
A great loan is more than just a good rate. We’re here to give you the clarity you need throughout your home loan journey so can always more forward with confidence.
How do I qualify for a loan?
The idea of meeting with a lender can be intimidating, especially if you’re buying your first home. After all, this is probably the biggest purchase you’ll ever make!
Take a deep breath and relax—you don’t have to be stressed. Think of your first meeting with a lender as a get-to-know-you session. They’ll simply want to learn a few basics about you and your financial situation.
Then comes the paperwork! Once your loan process gets started, be prepared to provide proof of:
- Where you work
- Your income
- Any debt you have
- Your assets
- How much you plan to put down on your home
A good lender will clearly explain your mortgage options and answer all your questions so you feel confident in your decision. If they don’t, find a new lender. A mortgage is a huge financial commitment, and you should never sign up for something you don’t understand!
Can I get a mortgage without a credit score?
This is one of the most commonly asked mortgage questions, and the answer may surprise you.
If you’ve paid off all your debt—and we recommend you do before buying a home—it is possible you won’t have a credit score when you meet with a lender. That might make you nervous. But don’t worry; you can still get a mortgage.
If you apply for a mortgage without a credit score, you’ll need to go through a process called manual underwriting. Manual underwriting simply means you’ll be asked to provide additional paperwork for the underwriter to review personally. Your loan process may take a little longer, but buying a home without the strain of extra debt is worth it!
What’s the difference between being prequalified and preapproved?
A quick conversation with your lender about your income, assets and down payment is all it takes to get prequalified. But if you want to get preapproved, your lender will need to verify your financial information and submit your loan for preliminary underwriting. A preapproval takes a little more time and documentation, but it also carries a lot more weight.
Which is better? Think of prequalification as an initial step and preapproval as the green light signaling that you’re ready to start your home search. When sellers review your offer, a preapproval means you’re a serious buyer whose lender has already started the loan process. Speak with your Home Loan Specialist about how Fidelity can help you elevate your offer.
What is Private Mortgage Insurance?
Private Mortgage Insurance was originally formed in 1957 by Milwaukee real estate attorney Max Karl, who was frustrated with the process of closing loans with 100% government guarantees. He believed there had to be a better way. He took his idea of having a private company insure only the top portion of a mortgage to a group of investors, along with his family and friends (even his barber!), who contributed $250,000 in capital. With that, he established MGIC to provide an innovative, affordable alternative for families wanting to buy a home with less than a 20 percent down payment.
Private mortgage insurance (PMI) is insurance against the non-payment of, or default on, an individual mortgage or loan involved in a residential mortgage transaction. It protects a lender against loss if a borrower stops making mortgage payments. It also makes it possible for you to buy a home with as little as a 3-5 percent down payment. Fidelity Bank’s Home Loan Specialists will work with you to give you clarity regarding your personal situation and PMI.
What is a loan estimate?
A loan estimate (LE) is an important document for homebuyers to review, since it contains important details on your mortgage — such as the repayment term, interest rate and closing costs. The lender is required to provide you with this document within three business days after you complete your loan application. However, borrowers should not be hesitant to review the document with their loan officer and make sure they have a thorough understanding of what terms they have been approved for.
How long does the loan process take, from application to closing?
Time frames for processing a loan can vary depending on the type of mortgage you’re applying for. It could take around 30 days to complete the process from application to closing. During that time, you’ll want to make sure you submit any documents requested as quickly as possible. That way, you don’t unintentionally slow down the process.
What happens if my home appraisal comes in low?
A low appraisal can affect how much you can borrow and how much you’ll have to pay out of pocket.
For example, if the home you want is $200,000 but is only appraised at $170,000, your mortgage lender will loan you the appraised amount and you’ll have to come up with the extra $30,000 on top of your down payment.
Your other option is to try to renegotiate with the seller.
What might my monthly mortgage payment include?
What’s included in your monthly mortgage payment will differ depending on whether you have an escrow account for your taxes and insurance. Most lenders require this, particularly if you make a down payment of less than 20%.
At a minimum, every mortgage payment will include principal – the amount that goes toward paying off the balance of the loan – and interest.
Assuming you have an escrow account, your mortgage payment will also include your property taxes and homeowners insurance, each divided over a 12-month period. If you have mortgage insurance, it’s handled the same way.
Although it may or may not be included in your escrow account, if you’ll be living in a homeowners association, then your monthly or annual dues are included in your qualification as if they were part of your mortgage payment.
Collectively, you can remember the parts of your mortgage payment with the acronym PITIA: Principal, Interest, Taxes, Home Insurance and Home Association fees.
How much house can I afford?
While being prequalified or getting a verified mortgage approval will help you define the top end of their budget, it doesn’t mean that you should immediately go looking at houses in the upper end of your price range.
You don’t want to end up spending so much on your house payment each month that you’re unable to save for any emergencies that might come up. You also want to leave room in your budget for whatever sparks joy in your life. You should still be able to take the occasional trip and go to dinner with friends once a week, if that’s your thing.
You can use your mortgage approval as a starting point for sure, but don’t stop there. Before you hit the pavement to look at homes, you’ll want to take a hard look at your budget as well to determine a house payment you would feel comfortable with.
If you’re looking for a guideline, it’s generally a good idea to spend no more than 33% of your monthly budget on housing costs. Any more than that, and you might be overextending yourself.
What is "cash to close"?
Total amount you will have to pay at closing, in addition to any money you have already paid.
What is a Closing Disclosure?
A Closing Disclosure is a five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs).
What is homeowner’s insurance and why is it required?
Homeowner’s insurance pays for losses and damage to your property if something unexpected happens, like a fire or burglary. When you have a mortgage, your lender wants to make sure your property is protected by insurance. That’s why lenders generally require proof that you have homeowner’s insurance.
What is an escrow account?
An escrow account is set up by your mortgage lender to pay certain property-related expenses. Many lenders require that you pay your taxes and insurance using escrow, so they can make sure that the bill gets paid. Your mortgage servicer will manage the escrow account and pay these bills on your behalf. Sometimes, escrow accounts may also be required by law.
Your property taxes and insurance premiums can change from year to year. Your escrow payment and with it, your total monthly payment will change accordingly.
Do I need an attorney or anyone else to represent me when closing on a mortgage?
Technically, unless you hire an attorney to represent you at closing, no one else participating in the closing exclusively represents your interests. It’s important to understand that other attorneys present at the closing – for example, the lender’s or seller’s attorney – do not represent you. These people may not be able to answer your questions and are required to act in the lender’s or seller’s interests, not yours.
While some states require that there be an attorney present at closing, note that this attorney has a primary responsibility to the lender. If this is your first home purchase you may consider having your own legal representation. Your real estate agent or lender can provide recommendations if you do not have an attorney.
What is the difference between a mortgage interest rate and an APR?
The interest rate is the cost you will pay each year to borrow the 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 the cost of borrowing money than the interest rate. The APR reflects the interest rate, any points, mortgage broker fees, and other charges that you pay to get the loan. For that reason, your APR is usually higher than your interest rate.
How is my interest rate determined?
Lender’s review your credit score (Fico) and other loan traits such as loan-to-value (LTV), credit score, occupancy type, and number of units in a home. The lender then adjusts your rate based on these attributes to calculate your mortgage rate.
Why should I use Fidelity Bank for my home loan?
A. Flexibility & Local Decision Making
As a local mortgage lender Fidelity Bank can approve certain mortgages for qualified borrowers that bigger banks won’t. This is because big lenders approve loans by processing large numbers of applications with very rigid guidelines, so often, many qualified borrowers that fall just outside these rules are denied.
Fidelity Bank offers more flexibility and can work effectively with many borrowers who may need extra support or guidance during the loan process.
Fidelity Bank builds more solid connections with other people in the area. Because they are better-known, they have a great reputation and typically hold a track record of success. A solid reputation means Fidelity Bank has connections with realtors in the area.
C. Knowledge of Local Market
Another benefit of working with a Fidelity Bank is their extensive knowledge of the area. Fidelity knows the local market better than anyone else, so they have a better understanding of the local economy and property values.
Because Fidelity is an expert in the region, they know first-hand that every customer circumstance is unique. They can help you choose the right type of loan for your specific situation and go the extra mile to find the right solution for you. They may even be able to expedite your loan approval.
D. Personal Relationship
It’s a lot easier to develop a more personal relationship with Fidelity bank. We tend to be more responsive, even on weekends or after hours, and you can work with clients face-to-face. In-person interactions and a one-on-one connection help to decrease uncertainty and anxiety around the loan approval process.
E. Unique Loan Products and Services
Fidelity Bank has a wide variety of products to best fit your individual needs. Speak with one of our Home Loan Specialist today.
Also, see our article: 10 Reasons to Get Your Mortgage from a Community Bank
How do I use AccountChek to verify my assets, income, and employment?