Forms

Loan Process Overview

What is the procedure from application through close?

Applying for your loan is the first step in the mortgage financing process. This starts with completing a mortgage loan application. You can provide this information to your Mortgage Consultant in a variety of ways: in person, via fax or apply on-line.

Your Mortgage Consultant will use this information to determine the type, rate, and loan program that meets your needs.

Things to understand when choosing a loan program:

1. Fixed rate or adjustable/ARM loan? ARM loans offer lower rates but the monthly payments will move with interest rates.
2. Eligibility for government programs such as FHA or VA? Otherwise you loan is considered to be a conventional loan.
3. If your loan balance is over $322,400 your loan qualifies as Jumbo.
4. Down payment on conventional loans, if less than 20% you may need (PMI) private mortgage insurance.
5. You should consider a budget for you monthly mortgage that is in line with your lifestyle and financial feasable.

Understanding rate and total loan cost. While your rate is determined by your financial situation. Options range from: Discount Points are points or fees paid up front that reduce the interest rate. They are expressed as a percentage of the loan balance. i.e. 1 point on $100,000 loan is $1,000. Depending on the duration of ownership this may prove to be a financialy sound option. This is not advisable for short term ownership.

Keep in mind one of the most beneficial aspects of Mortgage interest that it is tax-deductible. A higher rate is more tax shelter for income.

Processing and Underwriting

You will receive disclosures within 3 business days after we receive your application.

Disclosures you will receive include:

1. Good Faith Estimate: an estimate of all the fees associated with getting your loan. (California recieves MLDS)
2. Truth-in-Lending: a detailed description of the loan you have chosen.

Standard applications take 24 - 48 hours for approval. Approvals are "conditional" as support documentation will need to be gathered. i.e. A condition may be VOF "verification of funds" and requires 2 months bank statements to verify your assets in the bank. Processing is verifying the documentation and checking that the numbers support the origional numbers completed on the application.

An underwriter will review the automated underwriting feedback, based on submitted documentation on income (DTI), assets (reserves), credit (FICO), and appraisal (LTV).  A title search to verify all liens is ordered and when these tasks are completed you final decision of approval is released.

Closing your Loan

Closing your loan is the final step in getting your mortgage. Closing procedure vary slightly depending on the state and whether your loan is a refinance or a purchase. In certain states the closing agent is a title company. In other states it may be an attorney.

Purchase Transactions:

• Your "cash to close" will include your down payment and all other closing costs.
• Typically escrow distributes funds to the mortgage lender the remaining balance, less fees is paid to the Seller.
• The Seller and Buyer close at different times.

Refinance Transactions:

• A "cash-out" refinance is when you recieve money back from the transaction. There is a three-day waiting period, or "right of recession" before your funds are available.
• Closing is the signing of final loan documents, including the Mortgage Note and Deed of Trust.

Loan Programs

"THE BEST RATE ON THE WRONG LOAN IS FAR MORE EXPENSIVE THEN A FAIR RATE ON THE RITGHT LOAN"

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FAQ

How do I know how much house I can afford?

Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford.

What is the difference between a fixed-rate loan and an adjustable-rate loan?

With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.

How is an index and margin used in an ARM?

An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).

How do I know which type of mortgage is best for me?

There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. United Pacific Lending can help you evaluate your choices and help you make the most appropriate decision.

What does my mortgage payment include?

For most homeowners, the monthly mortgage payments include three separate parts:

• Principal: Repayment on the amount borrowed
• Interest: Payment to the lender for the amount borrowed
• Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.

How much cash will I need to purchase a home?

The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:

• Earnest Money: The deposit that is supplied when you make an offer on the house
• Down Payment: A percentage of the cost of the home that is due at settlement
• Closing Costs: Costs associated with processing paperwork to purchase or refinance a house