Mortgage FAQs

I am considering purchasing a new home. How do I begin?

It generally is best to go ahead and get pre-approved for a loan before you begin your home search. When you are approved, Realtors and Sellers are more likely to look at offers more seriously, knowing that the mortgage loan is taken care of.

What are the differences between mortgage “prequalification” and “preapproval”?

Prequalification is the process where the lender reviews your credit report and uses the information you supply to determine how much mortgage you can afford based on your income.  Preapproval occurs when all credit, assets and employment is verified and the mortgage is approved, subject to the appraisal of the property you have chosen to buy. Final loan approval occurs when the property has been appraised; all documentation has been underwritten by SouthWest Bank Mortgage professionals. 

How long does it take to get a loan approved?

Unless it is an extraordinary circumstance, we will generally have an answer for you before you leave our office.

How long does it take to go through the whole process and finally close on the purchase?

Again, depending on the loan type, it can take as few as 2 weeks, or up to 30 days. We always strive to meet the closing date that the buyers and sellers have agreed to.

What will I need for down payment?

Down payment is determined by the type of loan program you select. FHA minimum down payment is 3.5% of the sale price of the home. A VA loan requires -0- down payment.  Conventional loan programs require a minimum of 5% down payment.  Jumbo Loans ($417,000+) require minimum 20% down payment.  Investor transactions require minimum 20% down payment. Regulations are subject to change at any time, consult the SouthWest Bank mortgage professional .

What is the difference between closing costs and pre-paid items?

Closing costs are the actual fees involved in obtaining the loan. Examples may include: credit report, appraisal, lender administration/origination fees, survey, title company fees, etc.
Pre-Paid fees are the fees that are required to pay the interest due at closing; 1st Year of your homeowner insurance premium; and the required amounts necessary to initially fund your escrow account if taxes and insurance are included in your new home loan payment. Some loan programs require tax/insurance included in your monthly payment; others with minimum 20% down payment, would allow you to choose to pay your annual taxes and insurance separate from your mortgage.

What is Mortgage Insurance? 

Insurance required protecting the investor against a portion of the loss if the borrower stops making their mortgage payments.

What does the term APR mean?

APR is a term that simply refers to the Cost of your Credit, expressed as an annual rate. Due to fees that you pay to obtain the loan, the APR is often higher than the actual interest rate that you pay on your loan.  APR is disclosed on a form called the Truth-In-Lending.

For more information and/or to schedule an appointment, contact one of our Mortgage Professionals.