Common Questions

What is the difference between a pre-approval letter and pre-qualification letter?

The pre-approval process is much more complete and thorough than pre-qualification. For pre-qualification, the loan consultant asks a few questions regarding income, employment, obtains your authorization for a credit check and subsequently, issues a pre-qual letter. Pre-approval process requires submission of proof of income, disposition of assets, credit report and prospective price range of property. Pre-approval can put you and your realtor in a better negotiating position, much like a cash buyer!

Does my credit score impact my interest rate or loan program?

Most definitely. The “FICO” credit scoring system was specifically designed to inform mortgage institutions the likelihood of a consumer meeting payment obligations. It stands to reason; the higher the credit score...the lower the interest rate! However, fear not! Marquee Mortgage Corp has many lender contracts who specialize in non-conforming or at risk lending and have credit repair specialists on staff to assist you in regaining those precious credit scoring points.

Is a large down payment required to purchase a home?

No. Borrowers may purchase a home with little or no money down; however, most lenders will require a reserve be maintained in a liquid account to cover at least two full mortgage payments. There are a variety of loan programs now available to consumers that eliminate large deposits down and in some cases, a seller is allowed to contribute up to 6% towards closing costs thus, assuaging ‘out-of-pocket’ costs to the borrower.

What is a Good Faith Estimate?

A Good Faith Estimate (GFE) is a list of the collective fees and charges the borrower is expected to pay for the extension of credit. The lender will provide this fee sheet to the borrower at the time of application or within three business day thereafter.

What are points? And should you pay?

Points are up-front interest charges paid to the lender that allow you to lower your interest rate; essentially prepaid interest, with each point equaling 1 percent of the total loan amount. There are several new schools of thought regarding the paying of points. The economists argue that paying the point (s) of up front is dramatically cheaper than the higher interest rate over the long term. For example, if you invested in a loan for $200,000.00 and paid 1.5% in points at an interest rate of 5.5% versus a no point loan for $200,000.00 at an earned rate of 6.% after 7 years you would actually have paid $7000.00 more in interest and $2,000.00 less in principal. Further, it is argued that the points paid for the purchase or improvement of the personal residence are deductible in the year paid. Again, the prospect of paying a couple of thousand dollars is not very appealing to most consumers; however, for the borrowers who are staying seven or better years, it makes more sense to pay points.

What is the difference between a mortgage broker and lender?

A mortgage broker advises and counsels you on the loans available from different wholesale lenders. The broker takes your application, distributes all applicable consumer protection materials and disclosures, fully processes the loan which involves the compilation of credit report, appraisal, verification of employment and assets and in some cases, submits the file through the automated underwriting system of Fannie Mae or Freddie Mac. When the file is complete, it is submitted for final approval by the funding, contracted lender.

Will I save money going directly to a mortgage lender or bank?

Not necessarily. In fact, you will probably fair better dealing with a mortgage broker because they do not add any net cost to the lending process. Brokers perform functions that would otherwise have to be done by employees of the lender. Furthermore, brokers may deal with multiple lenders–they can shop for the best terms, rates and programs on any given day and offer various market opportunities such as: applicants with poor credit, low or no down payments, non-owner occupied residences. Many mortgage brokers hold 20 to 30 different mortgage contracts.