This page is designed to assist you in answering any questions you might still have regarding any of your loan needs.  If you have a question that is not answered here, please email us and we will not only answer your question immediately, but we will add it to our faqs page also.

OUR MOST FREQUENTLY ASKED QUESTION IS:

How do I take advantage of your $250 lowest APR% Guarantee?

If one of our approved lenders cannot get you the lowest offer you find, then we will pay you $250.  Keep in mind in order to prove that you got a better offer somewhere else, you MUST close your loan with said better offer.  In the event you were given a better offer, but did not take it or the offer was not honored, then we are not responsible for paying the $250.  For complete written details, please go to our contact us page and submit a request for lowest APR% details and we will send them to you.  WE KNOW WE WILL GET YOU THE LOWEST APR OUT THERE.

 

How can I apply for a loan?

Simply go to our mortgage tools button and apply there or directly from our home page by accessing the pre-qualify now button from there.  You will receive a call from one of our preferred lenders within 24 hrs.

What are rates, terms, and APR?

All mortgages have an interest rate, a term, and an annual percentage rate (APR). For example, a mortgage might be defined as a 30-year fixed-rate loan at 7.625 percent, with an APR of 7.800 percent. In this example, the mortgage term is 30 years. As the borrower, you will pay back the loan in installments over the course of 30 years. The interest rate in this example is 7.625 percent. This means you must pay interest on the money you've borrowed at a rate of 7.625 percent per year. That is, in addition to paying back the loan, you will pay your lender an additional 7.625 percent of the current loan balance every year. This interest is basically the fee your lender charges you in return for lending you the money. The annual percentage rate (APR) is a measure of the cost of credit, expressed as a yearly rate. Because APR includes points and other costs such as origination fees, it's usually higher than the advertised rate. The APR allows you to compare different mortgages based on actual annual costs.

What is a Good Faith Estimate (GFE)?

It is an estimate of the fees that you will pay to close your loan.  The GFE may change between the time you apply for the loan and actually close, as it is an ESTIMATE only.

Can I pay off my loan early?

VA loans do not have any pre-payment penalties and therefore can be paid off early. Whether you are going to make an additional $50 a month principal payment or you end up selling your house before the loan is up, you will not be penalized.  If you do not have a VA loan, then it is possible that your loan come with a prepayment penalty.  You will need to discuss this option when applying with your lender.  Even if your loan has a prepayment penaltly you will still be allowed to make additional principal payments as long as you don't pay off the entire balance generally within a 3 yr period.

Can I be self employed and still get a loan?

Yes.  Even those that are self employed are eligible for all types of loan programs.  It is possible that the requirements to qualify for the loan might be a bit more strict.  Generally the lender will want at least 3 yrs of tax returns for a self-emplyed borrower.

How do I know how much equity I have in my home?

Equity is the value of a homeowner's interest in real estate. Equity is computed by subtracting the total of the unpaid mortgage balance and any outstanding liens or other debts against the property from the property's fair market value. A homeowner's equity increases as he or she pays off his or her mortgage or as the property appreciates in value. When a mortgage and all other debts against the property are paid in full, the homeowner has 100 percent equity in his or her property.

What is an appraisal and who completes it?

The appraisal determines the value of the property in question, which becomes a prime factor in determining the loan-to-value — or LTV — ratio (the amount of your loan divided by the value of your property). Your LTV is important because it determines your equity in the property. With the exception of leveraged equity and some second mortgages, our preferred lenders will arrange an appraisal of your property to verify its value. An appraiser is an authorized professional who estimates the value of the property and sends the information to your lender.

What is an impound/escrow account?

An impound account or an escrow account (the terms are interchangeable; each is used in different states) is the name of the account in which a lender collects payments you make toward your property taxes and hazard/fire insurance. If you have an impound/escrow account, each of your monthly payments will contain a fraction of your annual property tax and insurance costs. Your lender keeps these funds in the impound/escrow account and then pays your taxes and insurance directly when they become due. An impound/escrow account can be a convenient and trouble-free manner of ensuring that your insurance and tax payments are made on time. Additionally, choosing the convenience of an impound/escrow account allows New Freedom Mortgage to offer you a better rate or lower fee. Please note that impound/escrow accounts are mandatory for purchase or refinance Loans where the loan amount is 80.01 percent or more of the property value (loan-to-value ratios of 80.01 percent or more), unless otherwise restricted by laws in your property's state (in California, impound accounts are required for refinance loans, purchase loans with LTV of 90 percent or greater, and for second mortgages with LTVs of 80.01 percent or greater).

What is PITI?

PITI is the acronym referring to the above-referenced components of your monthly mortgage payments. That is, each month your payment to your lender will consist of:
  • Funds to be applied to the principal — to repay the actual money you borrowed
  • Funds to be applied to the interest — to repay the interest you're being charged on the loan, over the life of the loan
  • Funds being collected in an impound/escrow account to pay your property taxes when they come due
  • Funds being collected in an impound/escrow account to pay your hazard/fire Insurance when it comes due

What is PMI?

Private Mortgage Insurance (PMI) is usually mandatory for loans when the ratio of the amount of the loan to the value of the subject property is greater than 80 percent — that is, 80.01 percent% or more of the property is being paid for by the loan. Loan-to-value ratio (LTV) knows this as the loan. Basically, the lower your Loan-to-value ratio, the higher your equity in the property. You can think of equity as the part of your property you actually own. If you sold your property (for its appraised value), equity is the amount of cash you'd have left after you repay your loan balance in full. Common wisdom holds that the more equity a borrower has in a property, the lower the risk of defaulting on the loan. Thus, Private Mortgage Insurance (PMI) must be paid for lower equity (high LTV) loans to safeguard the lender from possible loan defaults.

What is PITI?

May 28 2008
PITI is the acronym referring to the above-referenced components of your monthly mortgage payments. That is, each month your payment to your lender will consist of:
  • Funds to be applied to the principal — to repay the actual money you borrowed
  • Funds to be applied to the interest — to repay the interest you're being charged on the loan, over the life of the loan
  • Funds being collected in an impound/escrow account to pay your property taxes when they come due
  • Funds being collected in an impound/escrow account to pay your hazard/fire Insurance when it comes due

How do I know what my rate will be?

Rates vary primarily based on the type and purpose of the loan, your credit history and income, value of the property, and the number of points you are willing to pay.

What are points and how many do I have to pay?

Generally speaking, points are fees added onto loans. One point is equal to 1 percent of your loan amount. Points are paid when the loan closes, not at the time you apply for the loan.

What will a loan cost?

Your monthly payments go partly to repay your loan and partly to pay the fees for your loan, many of them relating to the closing, or settlement. Most lenders require an up-front application fee to cover their expenses as they approve you. But New Freedom Mortgage doesn't. That's right — with us, it's free to apply! Additionally, lenders charge a loan origination fee. It's generally expressed as a single point (a point is defined as 1 percent of your loan amount). For example, if you were borrowing $100,000, your loan origination point would be $1,000 ($100,000 X 1%).

The typical fees that cover the loan processing and closing are:

Lender Fees
  • Origination fee
  • Appraisal fee
  • Credit report
  • Inspection fee (newly constructed homes only)
  • Underwriting fee
  • Document preparation fee/review fee
  • Tax service fee
  • Mortgage insurance

Title Charges

  • Attorney’s fees
  • Title insurance
  • Transfer tax (excludes refinances)
  • Recording tax

Miscellaneous Charges

  • Property survey
  • Termite inspection

Prepaid Expenses (not part of the actual cost of the loan, but included with payment)

  • Prepaid interest (interest that accrues between closing and the end of the closing month - paid in advance)
  • Homeowner’s insurance
  • Real estate taxes