General Questions
Can I apply for a loan before I've found my property?
Yes. You can obtain pre-approval for a maximum purchase price, loan amount and loan program. Once the loan has been approved, any of these variables can be changed to match the specifics of the actual transaction. However, an interest rate can not be locked until a property address has been specified.
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Why do I have to pay title insurance?
Title insurance protects the lender and the homeowner against loss resulting from any defects in the title or claims against a property that were not uncovered in the title search and that are not specifically listed as exemptions to the coverage on the title insurance policy.
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What is APR?
APR is abbreviated for Annual Percentage Rate. The APR is the annual cost of the mortgage expressed in the form of a yearly rate. The APR is generally higher than the note rate because the APR includes the interest rate plus related costs such as points, fees for processing the loan and other pre-paid charges. The APR can be used to compare the actual cost of different types of mortgages.
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What are closing costs?
Closing costs cover all the charges associated with the transaction, including points, origination fee, appraisal fee, title insurance, survey, charges for credit reports, etc. Closing costs vary depending upon the loan product and the fees that are customary in your region.
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When can I lock an interest rate?
It all depends on the loan product and the lender. ARS Funding Group offers a wide range of lock-in periods depending on your needs.
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What does it mean to “buy down” the interest rate?
Buying down the rate refers to the payment of discount points in exchange for a lower interest rate. A discount point is one percent of the loan amount. As an example, paying two discount points on a $100,000 loan requires $2,000.
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Does my credit have to be perfect?
Your ability to purchase a home will depend, in part, on your credit history as profiled in a credit report. The information on the credit report is used to determine how responsible you are in meeting your obligations. You do not have to have perfect credit to be approved for a mortgage, but if you have a number of late payments, you may need to provide a letter explaining why those payments were late.
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What is amortization?
Amortization is the repayment of a mortgage debt with periodic payments of both principal and interest, calculated to retire the obligation at the end of a fixed period of time.
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What is an appraisal?
An estimate of the value of the property you intend to buy or refinance.
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How much do I have to pay up-front to apply for a mortgage loan?
ARS Funding Group requires up-front expenses for the credit report and the appraisal (this amount varies depending upon the region).
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How often do interest rates change?
Interest rates change daily and sometimes several times daily based on the bond market. Rates are also dependent on the type of mortgage loan and the loan balance.
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What is an escrow payment?
An escrow payment is the portion of your monthly payment held by your lender to pay the taxes and insurance associated with home ownership. Your lender or servicer is responsible for collecting and disbursing these funds as they come due. Escrows are also called impounds or reserves in some states.
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What is a point?
Points are prepaid interest which may be charged by the lender for the purpose of providing a lower interest rate. If points are paid, they are normally payable at the time of closing. Each point is equal to 1% of the principal loan amount. For example, $1,500 equals one point on a $150,000 mortgage. The more points you pay, the lower your interest rate will be, thus lowering your monthly payment.
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Do I need to pay an Origination Fee?
The origination fee is a percent of the loan amount and covers the cost of processing and closing your mortgage loan. An origination fee can be waived as lender paid with a higher interest rate.
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Are rates going up or down?
This is the million-dollar question! The bond market changes twice daily. No one can predict fluctuations in the bond market and therefore cannot predict which way rates will go.
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Should I lock now?
You have the option to lock in an interest rate or float at any time. Since no one person can accurately predict what rates will do, the decision to lock or float must be yours.
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What is the best way to compare rates from lender to lender?
At ARS we have many Approved Lenders. This enables us to shop around for you and find you the best rate available.
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How long will the loan process take?
It will take approximately 10 – 14 days to process your loan. Once we receive your loan application, the Client Coordinator assigned to your loan will be in continual communication with you regarding your loan status.
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