How
do I apply for my mortgage? Click
on the Apply Online button anywhere on this
site.
You will be taken to a brief form.
This form asks some basic questions concerning
the mortgage for which you are applying.
When
will I be contacted?
After
you submit your loan application, it is routed
to the proper mortgage professional within
moments.
An experienced member of our team will
contact you by the next business day to discuss
your specific needs.
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Who
is Fairway Funding Group?
Fairway
Funding Group, Inc. is a correspondant mortgage lender that offers mortgage programs
for all people, regardless of their credit
or verifiable income.
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What
makes our rates the most competitive?
Through our network
of lending institutions and the volume of
transactions we close each year, we have established
preferential rates and terms with the most
aggressive lenders in the country. This allows
us to pass these savings on to you, our customers,
and provide a high quality loan and tremendous
rates.
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What
are the most common made mistakes in buying
or refinancing a home ?
- Looking
for a home without being pre-approved:
As a pre-approved buyer, you are offering
the seller more confidence that a deal can
be made thereby allowing you to negotiate
more aggressively. Additionally, by being
pre-approved, you will close more quickly.
- Choosing
a lender just because they have the lowest
rate. While the rate is important,
consider the total cost of your
loan including the APR , loan
fees, discount and origination points.
When receiving a quote from a lender or
broker, insist that the discount points
(charged by the lender to reduce the interest
rate) be distinguished from origination
points (charged for services rendered
in originating the loan). Also, be sure
to choose a reputable company that will
deliver the loan as agreed.
- Not receiving
a Good Faith Estimate. Within three
business days after the broker or lender
receives your loan application, you must
receive a written statement of fees associated
with the transaction. This is both the law
and the best way to determine what you'll
pay for your loan. Bring the Good Faith
Estimate (GFE) with you when you sign loan
documents. You should not be expected to
pay fees which are substantially different
from those contained in your GFE.
- Not getting
a rate lock in writing. When a
mortgage company tells you they have locked
your rate, get a written statement detailing the
interest rate, the length of the rate lock,
and program details.
- Buying
a home without professional inspections.
Unless you're buying a new home with warranties
on most equipment, it's highly recommended
that you get property, roof and termite
inspections. This way you'll know what you
are buying. Inspection reports are great
negotiating tools when asking the seller
to make needed repairs. When a professional
inspector recommends that certain repairs
be done, the seller is more likely to agree
to do them.
If the seller agrees to make repairs, have
your inspector verify that they are done
prior to close of escrow. Do not assume
that everything was done as promised.
- Not shopping
for home insurance until you are ready to
close. Start shopping for insurance
as soon as you have an accepted offer. Many
buyers wait until the last minute to get
insurance and do not have time to shop around.
- Signing
documents without reading them. Whenever
possible, review in advance the documents
you'll be signing. (Even though some specifics
of your transaction may not be known early
in the transaction, the documents
you'll sign are standard forms and are available
for review.) It's unlikely that you'll
have sufficient time to read all the
documents during the closing appointment.
- Not allowing
for delays in the transaction. In
a perfect world, all real estate transactions
close on time. In the world we live in,
transactions are often delayed a week or
more. Suppose you asked your landlord to
terminate your lease the day your purchase
transaction was scheduled to close. A day
or two before your scheduled closing date,
you discover your transaction is delayed
a week. In a perfect world, no one is inconvenienced
and your landlord is willing to work with
you. More likely, however, your landlord
is inconvenienced and angry. Will you be
thrown out? Will you have to find interim
housing for a week or more? The eviction
process takes a little time, so the Sheriff
won't immediately remove you, but this type
of stress-producing episode can be avoided.
How? Terminate your lease one week after
your real estate transaction is scheduled
to close. That way, if there is a delay
in closing your transaction, you have some
leeway. This approach might cost a little
more, then again, it might not.
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There are many
reasons to refinance and click
here to see why.
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You
cannot close a mortgage loan without locking
in an interest rate.
There are four components to a rate
lock:
- Loan program.
- Interest
rate.
- Points.
- Length of
the lock.
The longer
the length of the lock, the higher the points
or the interest rate. This is because the
longer the lock, the greater the risk for
the lender offering that lock.
Let's say you
lock in a 30-year fixed loan at 8% for 2
points for 15 days on March 2. This lock
will expire on March 17 (if March 17 is
a holiday then the lock is typically extended
to the first working day after the 17th).
The lender must disburse funds by March
17th, otherwise your rate lock expires,
and your original rate-lock commitment is
invalid.
The same lock
might cost 2.25 points for a 30-day lock
or 2.5 points for a 60-day lock. If you
need a longer lock and do not want to pay
the higher points, you may instead pay a
higher rate.
After a lock
expires, most lenders will let you re-lock
at the higher of the original price and
the originally locked price. In most cases
you will not get a lower rate if rates drop.
Lenders can
lose money if your lock expires. This is
because they are taking a risk by letting
you lock in advance. If rates move higher,
they are forced to give you the original
rate at which you locked. Lenders often
protect themselves against rate fluctuations
by hedging.
What do you
do if the rates drop after you lock?
Most lenders
will not budge unless the rates drop substantially
(3/8% or more). This is because it is expensive
for them to lock in interest rates. If lenders
let the borrowers improve their rate every
time the rates improved, they spend a lot
of time relocking interest rates, since
rates fluctuate daily. Also they would have
to build this option into their rates and
borrowers would wind up paying a higher
rate.
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PMI or Private
Mortgage Insurance is normally required
when you buy a house with less than 20%
down. Mortgage insurance is a type of guarantee
that helps protect lenders against the costs
of foreclosure. This insurance protection
is provided by private mortgage-insurance
companies. It enables lenders to accept
lower down payments than they would normally
accept. In effect, mortgage insurance provides
what the equity of a higher down payment
would provide to cover a lender's losses
in the unfortunate event of foreclosure.
Therefore, without mortgage insurance, you
might not be able to buy a home without
a 20% down payment.
The cost of
PMI increases as your down payment decreases.
Example: The cost of PMI on a 10% down payment
is less than the cost of PMI on a 5% down
payment. Your PMI premium is normally added
to your monthly mortgage payment.
The decision
on when to cancel the private insurance
coverage does not depend solely on the degree
of your equity in the home. The final say
on terminating a private mortgage-insurance
policy is reserved jointly for the lender
and any investor who may have purchased
an interest in the mortgage. However, in
most cases, the lender will allow cancellation
of mortgage insurance when the loan is paid
down to 80% of the original property value.
Some lenders may require that you pay PMI
for one or two years before you may apply
to remove it.
To cancel the
PMI on your loan, contact your lender. In
most cases, an appraisal will be required
to determine the value of your property.
You will probably also be required to pay
for the cost of this appraisal. Another
way of canceling the PMI on your loan is
to refinance and to get a new loan without
PMI.
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The annual
percentage rate (APR) is an interest rate
that is different from the note rate. It
is commonly used to compare loan programs
from different lenders. The Federal Truth
in Lending law requires mortgage companies
to disclose the APR when they advertise
a rate. Typically the APR is found next
to the rate.
Example:
| 30-year
fixed |
8% |
1
point |
8.107%
APR |
|
The APR does
NOT affect your monthly payments.
Your monthly payments are a function of
the interest rate and the length of the
loan.
The APR is
a very confusing number! Even mortgage bankers
and brokers admit it is confusing. The APR
is designed to measure the "true cost
of a loan." It creates a level playing
field for lenders. It prevents lenders from
advertising a low rate and hiding fees.
If life were
easy, all you would have to do is compare
APRs from the lenders/brokers you are working
with, then pick the easiest one and you
would have the right loan. Right? Wrong!
Unfortunately,
different lenders calculate APRs differently!
So a loan with a lower APR is not necessarily
a better rate. The best way to compare loans
in the author's opinion is to ask lenders
to provide you with a good-faith estimate
of their costs on the same type of program
(e.g. 30-year fixed) at the same interest
rate. Then delete all fees that are independent
of the loan such as homeowners insurance,
title fees, escrow fees, attorney fees,
etc. Now add up all the loan fees. The lender
that has lower loan fees has a cheaper loan
than the lender with higher loan fees.
The reason
why APRs are confusing is because the rules
to compute APR are not clearly defined.
What fees are
included in the APR?
The following
fees ARE generally included in the APR:
- Points -
both discount points and origination points
- Pre-paid
interest. The interest paid from the date
the loan closes to the end of the month.
Most mortgage companies assume 15 days
of interest in their calculations. However,
companies may use any number between 1
and 30!
- Loan-processing
fee
- Underwriting
fee
- Document-preparation
fee
- Private
mortgage-insurance
The following
fees are SOMETIMES included in the APR:
- Loan-application
fee
- Credit life
insurance (insurance that pays off the
mortgage in the event of a borrowers death)
The following
fees are normally NOT included in the APR:
- Title or
abstract fee
- Escrow fee
- Attorney
fee
- Notary fee
- Document
preparation (charged by the closing agent)
- Home-inspection
fees
- Recording
fee
- Transfer
taxes
- Credit report
- Appraisal
fee
An APR does
not tell you how long your rate is locked
for. A lender who offers you a 10-day rate
lock may have a lower APR than a lender
who offers you a 60-day rate lock!
Calculating
APRs on adjustable and balloon loans is
even more complex because future rates are
unknown. The result is even more confusion
about how lenders calculate APRs.
Do not attempt
to compare a 30-year loan with a 15-year
loan using their respective APRs. A 15-year
loan may have a lower interest rate, but
could have a higher APR, since the loan
fees are amortized over a shorter period
of time.
Finally, many
lenders do not even know what they include
in their APR because they use software programs
to compute their APRs. It is quite possible
that the same lender with the same fees
using two different software programs may
arrive at two different APRs!
Conclusion
:
Use the APR as a starting point to compare
loans. The APR is a result of a complex
calculation and not clearly defined. There
is no substitute to getting a good-faith
estimate from each lender to compare costs.
Remember to exclude those costs that are
independent of the loan.
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