What is the NEW LOAN ESTIMATE (LE)?
The New Loan Estimate (LE) is replaced by the Good Faith Estimate (GFE) and the initial Truth In Lending document (TIL). The LE (Loan Estimate) provides Geneva Financial borrowers with easy to understand information on loan terms and estimates of the borrower’s loan and closing costs. This will make it easier to have comparison shopping for your loan terms. It is provided to all Geneva Financial borrowers within 3 business days, after they have submitted their loan applications.
What is the ANNUAL PERCENTAGE RATE?
APR, or annual percentage rate, is your predicted interest rate stated as a yearly rate. An APR for a loan can include fees you may be charged, for example, like origination fees. APR or Annual Percentage Rate is important because it can give you a good idea of how much you’ll pay to take out a loan.
What is the AMOUNT FINANCED?
Amount financed is the actual amount of credit made available to you, a Geneva Financial borrower in a loan. It is the total amount of credit you have been approved for from a lender. The amount financed is an important factor for calculating the installment payments that you, the borrower, will have to pay over the life of the loan.
Does this mean I will get a lower mortgage than I applied for?
No, if your loan is approved for the amount you applied for, that is how much will be credited toward your home purchase or refinance at settlement.
What is the ANNUAL PERCENTAGE RATE different from the interest rate for which I applied? Why is the AMOUNT FINANCED different?
The Amount Financed is lower than the amount you applied for because it represents a NET figure. If someone applied for a mortgage of $50,000 and their prepaid finance charges total $2,000, the amount financed would be shown as $48,000, or $50,000 minus $2,000. The A.P.R. is computed from this LOWER figure, based on what your proposed payments would be. In a $50,000 loan with $2,000 in prepaid finance charges, and an interest rate of 14%, the payments would be $592.44 (principal and interest) on a loan with a thirty year loan term. Since the A.P.R. is based on the NET amount financed, rather than on the actual mortgage amount, and since the payment amount remains the same, the A.P.R. is higher than the interest rate. It would be 14.62%. If this applicants loan were approved he would still receive a $50,000 loan for thirty years with monthly payments @ 14% or $592.44
How will my payments be affected by the Disclosure Statement?
The Disclosure Statement discloses your estimated payments. The interest rate determines what your monthly principal and interest payment will be combined.
What is the FINANCE CHARGE?
A finance charge is the total amount of interest and loan charges you would pay over the entire life of the mortgage loan. This is assuming you keep the loan through the full term until it matures (when the last payment needs to be paid) and includes all pre-paid loan charges. The loan charges include Origination Charges, Discount Points, Mortgage Insurance and any other applicable lender charges.
What is the TOTAL OF PAYMENTS?
This figure indicates the total amount you will have paid, including principal, interest, prepaid finance charges, and mortgage insurance if you make the minimum required payments for the entire term of the loan. This figure is ESTIMATED on the Disclosure Statement and is estimated in any adjustable rate transaction.
This number tells you the total amount of money you will have paid over the life of your mortgage. This total includes principal, interest, mortgage insurance (if applicable), and loan costs. It assumes that you make each monthly payment as agreed – no more and no less – until the end of the loan.
My statement says that if I pay the loan off early, I will not be entitled to a refund of part of the finance charge. What does this mean?
Basically this means you will be charged interest for the period of time in which you used the money loaned to you for your home. Your PREPAID finance charges are not refundable, and neither is any interest which has already been paid. If you pay the loan off early, you should not have to actually pay the full amount of the original "finance charges" shown on the disclosure. This charge represents an estimate of the full amount the loan would cost you if the minimum required payments were made each month through the life of the loan.
Why must I sign the Disclosure Statement?
Lenders are required by law to provide the information on this statement to you in a timely manner. Your signature merely validates that you have received this information, and does not obligate either you or the lender in any way.
What is the difference between a pre-qualification and a pre-approval?
Pre-qualification and pre-approval both refer to a letter from a lender that specifies how much the lender is willing to lend to you, up to a certain amount and based on certain assumptions. These letters provide useful information, but are not guaranteed loan offers. This letter helps you to make an offer on a home, because it gives the seller confidence that you will be able to get financing to buy the home. It is not a guaranteed loan offer.
Is it okay to use on-line bank statements?
Only if the statements have the bank logo, name and correctly reflect your account number.
What is meant when locking my interest rate and when do I lock?
It means that a commitment has been made between Geneva Financial and the investor on your behalf regarding the interest rate in your mortgage loan. Your Geneva Financial loan officer watches the market on a daily basis to make sure that when we lock your interest rate, it is in the best interest for you and your loan.
How do rates move?
Mortgage interest rates can change daily, sometimes hourly. If your interest rate is locked with Geneva Financial and your investor, your rate won’t change between when you get the rate lock and closing, as long as you close within the specified time frame and there are no changes to your application. Rate locks are typically available for 30, 45, or 60 days, and sometimes longer. If your rate is not locked, it can change at any time.
Do you sell my loans?
Yes. It is called transferring and it is done at closing. Geneva Financial will provide all the information about your investor to you and we are available to help you make sure that first payment arrives safely. .
What is a target rate?
Your target rate is the rate your Geneva Financial Loan Officer will discuss with you to be the original optimal rate of interest for your mortgage while reflecting your current situation.
Am I committed to you because I have signed or reviewed my loan application?
No you are not. We would love to have you part of the Geneva Financial family and if at any time there are any problems, please consult with directly your loan officer or our Sr. Vice President/Branch Manager-Mike Hill. MHill@genevafi.com
It is when you complete signatures on your closing documents and your loan funds, that you are committed.
What are my origination and discount points?
These are percentages of the home loan amount that you and your Geneva Financial loan officer discuss regarding your rate and total cost of originating your mortgage loan.
Where will I be closing, how much do I bring to close and can I bring a personal check?
The contract will specify everything. It will show where you will be closing, and 3-5 days prior to closing, Geneva Financial will contact you regarding how much money you need to bring and it should be in the form of a cashiers check made payable to the title company provided. You can have a check of up to $1000.00 for any difference in the amount you are told and the actual amount needed. Any extra money is refunded to you at closing.
How will I be updated on my loan?
The Geneva Team will contact you with anything prior to the completion of your application. In addition, we will contact you after the application has been originated. Once your home loan is approved and the appraisal of your property is in, we will contact you regarding any needed additional information. Finally, the Geneva team will be contacted you 7-10 days prior to closing for confirmation of all details and again, 3-5 days before closing to go over final figures. Feel free to always ask questions. There is never a ‘dumb’ question.
What are Closing Costs?
Closing costs are the expenses, over and above the price of the property, that buyers and sellers normally incur to complete a real estate transaction. Costs incurred may include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed-recording fees and credit report charges. Prepaid costs are those that recur over time, such as property taxes and homeowners' insurance. The lender is required by law to state these costs in a “good faith estimate "within three days of a home loan application. Typically these costs will range between 2% and 3% of the mortgage amount.
What is Private Mortgage Insurance (PMI)?
Private mortgage insurance, also called PMI, is a type of mortgage insurance you might be required to pay for if you have a conventional loan. Like other kinds of mortgage insurance, PMI protects the lender—not you—if you stop making payments on your loan.
PMI is arranged by the lender and provided by private insurance companies. PMI is usually required when you have a conventional loan and make a down payment of less than 20 percent of the home’s purchase price. If you’re refinancing with a conventional loan and your equity is less than 20 percent of the value of your home, PMI is also usually required.