Mortgage FAQs and the home loan process.

1. How to Get a Mortgage at loanDepot
Chapter 1 - The Home Buying Mortgage Process
Chapter 2 - Frequently Asked Questions about Buying a Home
Chapter 3 - The Mortgage Refinance Process
Chapter 4 - Frequently Asked Questions about a Refinance
Chapter 5 - Reasons for Refinancing a Mortgage
Chapter 6 - Common Types of Home Loans
Chapter 7 - Questions to Ask a Mortgage Lender
Written by Rick Smith
Visitrick@gmail.com

2. Chapter 1 - The Home Buying Mortgage Process
Do you know that real estate agents and home sellers consider a lender pre-approved buyer more
attractive than a buyer who has not been pre-approved for a mortgage?
Step 1: Get pre-approved for a mortgage
A mortgage pre-approval is beneficial in many ways. First, it gives you an idea of what loan amount and
purchase price you can afford. Second, it strengthens your offer to the seller and the seller's real estate
agent. Third, by getting pre-approved, you're getting a jump start on the mortgage approval process.
Once you find your home and open escrow, you're already a few steps ahead.
Step 2: Determine which home loan best suits your needs
There are many home loan options available from first-time buyer programs to traditional conventional,
jumbo, and FHA loans. There are 30 year and 15 year fixed loans as well as adjustable and hybrid loans
such as a 5/1 ARM or 3/1 ARM.
Step 3: Contact a real estate agent and start shopping
Once you've been pre-approved for a mortgage and have an idea of what price range you qualify for,
you can work with a real estate agent to view homes for sale in the areas you'd like to live. Once you
find a home you like, you can work with the real estate agent to draw up an offer and complete a
purchase agreement. The seller has the option to submit a counter-offer and you may go through
several rounds of counters. Once you and the seller agree to the price and terms, escrow will be opened.
Typical escrow periods are 30 days but 45 and 60 day escrows are not uncommon.
Step 4: Review your home loan application and update your file
Depending on how much time has passed since your mortgage pre-approval, the lender may need to
collect some updated information and updated documents from you. The mortgage lender probably has
everything needed, but it is a good idea to go over the home purchase document checklist to ensure
everything is complete.
Once the mortgage lender has updated your file, your home buying specialist will go over the details of
your home loan program, confirm the rate that you want, and go over your closing fees. The lender
should make sure that you understand every detail of your mortgage program and answer any questions
you have before moving forward.
Step 5: Lock your mortgage rate
At this point, if you'd like to secure your mortgage rate, your lender will send you a lock agreement to
confirm the terms of the loan and rate. Once you review and approve the lock agreement, your home
buying specialist will collect a lock deposit fee to lock in your rate. The lock deposit will be credited
towards your closing fees at the end of the transaction. Once the lender receive the signed lock

3. agreement and lock deposit, the lender will send you some preliminary disclosures such as the good
faith estimate and truth-in-lending disclosure to review and sign, which detail the terms of your loan.
Step 6: Home inspection and appraisal
Shortly after escrow is opened, it is advisable to schedule a home inspection with a professional who will
walk you through the property to look for any red flags such as structural damages or appliances that
may not be working properly and other items that may need to be fixed. It is a small investment for
some peace of mind. Any major issues would need to be addressed before the close of escrow date.
While your loan is being reviewed and processed, the lender will schedule an appraisal appointment
with the seller's agent to confirm the value of the home. Unlike a home inspection, that appraisal is a
requirement to determine that the home is worth what you are paying for it.
Step 7: Home loan approval , signing and closing
When the mortgage lender has everything needed, your account manager will submit your complete file
to the underwriting department for approval. Once approved, the lender will prepare loan documents
for you to sign. Generally, you will sign your loan documents at the escrow or title office and it will
generally take between an hour and an hour and a half. After the lender receives the signed loan
documents back, the lender will review your file one more time to make sure everything is complete. If
everything looks good, your home loan should fund 3 days after signing.
More about purchase home loans at loanDepot

4. Chapter 2 - Frequently Asked Questions about Buying a Home
Question: How do I know how much I can afford?
There are several factors that determine the loan amount and purchase price that you can afford. For
qualification purposes, lenders look at income, debt, assets (how much money you have for the down
payment, closing fees, points, and other funds necessary to close your loan), as well as credit. There are
many different loan programs that offer different terms and rates, and some require lower down
payments than others and offer more flexibility in credit and income. The best thing to do is get pre-approved
so that you know what loan programs you qualify for, the price range you can afford, and
what your monthly payments will be. Lenders will often provide a pre-approval at no cost. You can also
use an affordability calculator to find out what your payments would be and determine what purchase
price and loan amount is comfortable for you.
Question: How much money do I need to buy a home?
Traditional conventional financing requires a down payment of 10 to 20% of the purchase price of the
home; however, there are other programs available such as an FHA loan that allows you to buy a home
with as little as 3.5% down. In addition to the down payment, you should be aware that there are other
fees associated with purchasing a home. For example, there are closing fees, pre-paid interest, and
prorated items such as property taxes and homeowner's insurance.
Question: What's the difference between a pre-qualification and a pre-approval?
A pre-qualification is an informal cursory review of your income, assets, and credit, usually conducted
over the phone. Once the necessary information is gathered, the lender issues an estimate of loan
amount and purchase price for which you qualify. A pre-qualification still gives a potential buyer a good
idea of affordability but it is not as comprehensive as a pre-approval which is a more formal, more
intense process where income, assets, and credit are documented and verified. A pre-approval is a
conditional approval that holds more weight with a seller and the seller's real estate agent than a pre-qualification,
especially if you are competing with another offer.
Question: Do I need a home inspection?
Although a home inspection is not required, it is a good idea to obtain the services of a professional
qualified inspector to help you determine the condition of the home you are looking to purchase. A
professional inspector will look for any structural issues as well as mechanical problems that may exist in
the home that could cause problems in the future. In addition to a structural review, an inspector will
also check faucets, toilets, appliances, and other items in the home to make sure everything is in
working order. If something needs to be addressed, you can discuss items prior to closing.
Question: What type of documentation do I need for a purchase loan?
Standard documentation collected for a purchase transaction includes information regarding your
income such as paystubs covering the most recent 30 days and W-2s for the last two years, asset

5. information such as bank or mutual fund stock statements covering the last 60 days showing source of
funds for your down payment, closing fees, points and pre-paid items needed to close your loan.
Question: How long is the purchase process?
A typical escrow period is 30, 45, or 60 days. The escrow period, defined on the purchase contract and
agreed upon by both buyer and seller, is usually what dictates when your loan closes. If you have already
entered escrow and are closing in less than 30 days, the lender can still close your loan on time if the
lender is brought into the loop as soon as possible.
Question: What happens at the loan closing?
Typically, you will sign your loan documents at a designated settlement office such as an escrow office
or attorney's office. In the presence of the signing authority, you will review and sign all your loan
documents and then present a certified or cashier's check to pay the remaining down payment, closing
fees and other applicable closing funds. You may also wire your funds directly into escrow. Your loan
processor will guide you through the process and will advise you on what needs to be done when.

6. Chapter 3 - The Mortgage Refinance Process
Before you refinance your home, it's important to know how refinancing works, what questions to ask,
research what options are available, and determine whether or not refinancing will benefit you.
Step 1: Define your goals
One of the most important steps before deciding whether or not mortgage refinancing can benefit you
is to determine what your objectives are. Is your goal to reduce your monthly payment or pull cash out
of your equity for home improvements or debt consolidation? Are you looking to fix your adjustable
rate? Once you determine your goals, you can take a look at the various home loan programs available
to decide which loan option helps you achieve those goals.
Step 2: Inquire online or call a lender
Once you've defined your goals and researched all the loan options available, you can submit your
information online or pick up the phone. Your Mortgage Banker can answer any questions you have
about how to refinance, the loan program you're considering or can make a recommendation for you
given your individual goals. The lender should make sure that you understand every detail of your loan
program and answer any questions you have before moving forward
Step 3: Select your loan program
If you decide you'd like to move forward with the refinance, your Mortgage Banker will confirm your
loan program, rate, and payment. At this point, you can lock in your interest rate to protect you against
any fluctuations in the market. Once your rate is locked, you should receive a lock agreement confirming
the terms of your loan and your banker may collect a lock deposit fee to finalize the lock. The lock
deposit should be credited towards your closing fees at the end of the transaction.
Step 4: Submit your documents
After the lender receives the signed lock agreement and lock deposit, your banker will provide you a list
of items to fax or e-mail so that the lender can verify all your information to get your loan approved and
closed quickly. Click here for the refinance document checklist. The lender will also send you some
preliminary disclosures such as the good faith estimate and truth-in-lending disclosure to review and
sign which detail the terms of your rate and loan. In a few days, the lender will contact you to schedule
the appraisal inspection. It is important to schedule the appraisal appointment as quickly as possible to
prevent any delays in your closing.
Step 5: The lender handles it from here
After the lender receives all your documents, your assigned Account Manager should contact you to go
over the next steps, which includes opening escrow, ordering the preliminary title report, and
coordinating with all the necessary parties to ensure your loan progresses smoothly and quickly. Once

7. the lender has everything needed, your loan file will be submitted to the underwriter for review and
formal approval.
Step 6: Close your home loan
Upon approval, the lender should contact you to schedule a loan document signing appointment. This
appointment will generally take 30 minutes to an hour and can be done at the convenience of your
home or at an approved settlement location. After the lender receives the signed loan documents, your
loan should close approximately 3 days later.
More about a refinance mortgage at loanDepot

8. Chapter 4 - Frequently Asked Questions about a Mortgage Refinance
Question: Should you refinance?
To determine whether or not it is a good idea for you to refinance, you should look at your specific
situation and your motivation for refinancing. The most common reasons to refinance are to reduce
your rate and/or payment, convert from an adjustable to a fixed rate, or pull cash out of your equity to
consolidate debt or improve your home. If your objective is to reduce your rate and payment, you
should review your current interest rate and see how much you can save with a 0 point loan and then
determine if it makes sense to pay points to reduce your rate further. If you are converting your
adjustable rate into a fixed rate, you may actually see an increase in your rate and payment but you’ll
get peace of mind knowing your rate will never increase again. If you are using the equity in your home
to consolidate debt, your overall loan balance and payment may go up, but you will save monthly
because you will eliminate the monthly obligations that you are paying off. Your mortgage banker can
run some numbers for you and help you determine whether or not refinancing makes sense for you.
Question: How much can you save?
Every situation is different. It depends on what your current interest is and what your motivation is for
refinancing. If your current rate is higher than what is available in the market, it probably makes sense
to refinance. To get an idea of what you could save by refinancing, check out a payment savings
calculator and input numbers specific to your situation.
Question: What if you have a second mortgage?
Typically, any second mortgages are paid off through the refinance. The lender will consolidate both
loans into one new first mortgage and you will only have one payment each month. If you’d prefer to
keep your second mortgage intact, the lender may be able to ask your second mortgage lender to
remain in second position and allow us to refinance the first loan. This process is called subordination
and there is typically a fee charged by the second mortgage lender.
Question: What are the costs associated with refinancing?
Fees associated with refinancing vary from lender to lender but there are standard fees that are typical
across the board. These fees include 3rd party fees such as credit report, title, escrow, notary, and
recording fees. Other fees include the appraisal fee and lender fees such as processing and
underwriting. If you are paying points to lower the rate, the cost of each point that you pay equals 1% of
your new loan amount. Aside from the closing fees, there will be prorated pre-paid costs for items such
as property taxes, interest, and homeowners insurance (if applicable). If you have enough equity in your
home, you can add all fees and pre-paid items into your new loan.
Question: What type of documentation do you need?
Standard documentation collected for a refinance transaction includes information regarding your
income such as paystubs covering the most recent 30 days and W-2s for the last two years, asset

9. information such as bank or mutual fund/stock statements covering the last 60 days and current loan
information such as your most recent mortgage statement and homeowners insurance declarations
page.
Question: Should you refinance only if the rate at least .5% lower?
There is no rule-of-thumb when it comes to refinancing because there are different reasons. If you are
currently in an adjustable rate looking to get into a long-term fixed loan, your rate and payment may
actually increase, but you will be in a better long-term situation knowing your rate and payment will not
change. If you are looking to consolidate debt, your loan amount and mortgage payments may go up but
your overall monthly outflow will decrease because you will have eliminated some or all of your credit
card bills and other monthly obligations. There are also no-cost and low-cost refinance options that can
lower your rate and payment with no or minimal investment. It is a good idea to go over your specific
situation with a mortgage expert to determine whether refinancing makes sense or not.
Question: How long is the refinance process?
Most refinance transactions close within approximately 30 days from application to closing. As long as
you do your part in delivering the documentation in a timely manner, the lender should be able to close
your loan within 30 to 45 days.
Question: What happens at the loan closing?
Depending on the state where your property is located, you can either sign in your home or at a
designated settlement location such as an escrow office or attorney’s office. In the presence of the
signing authority, you will review and sign all your loan documents and then present a certified or
cashier’s check to pay the closing fees and other applicable closing funds unless you decided to finance
the closing funds into your new loan. If you are pulling cash out of the equity in your home, you will
receive your funds 1 to 3 days after your loan closes

10. Chapter 5 - Possible Reasons to Refinance
1. Refinance to a lower rate and payment
This is one of the most common reasons for a home mortgage refinance. If your current interest rate is
higher than what is currently available in the market, it is probably a good idea to see how much you
could save by refinancing. There are no-cost and low-cost options that could save you money with little
to no investment.
2. Refinance to convert an adjustable rate into a fixed rate
Adjustable rate mortgage (ARM) loans are a great way to ease into your mortgage payments, especially
if you are a first time buyer or if you need lower payments initially. Eventually, if you decide you will stay
in your home longer, you may want to consider refinancing your mortgage into a long term fixed rate
loan. Doing so will give you peace of mind, knowing that your rate and payment will not change for a set
period of time.
3. Refinance an interest-only loan into a fully-amortized loan
Like ARMs, interest-only loans are a great way to minimize your mortgage payments at the beginning;
however, because you are not paying any principal, your loan balance does not decrease. If you plan to
keep your home long term, refinancing can help start paying off your loan. Often, you can refinance your
interest-only loan to a 30 year fixed rate loan while keeping your payments about the same.
4. Convert a 30 year loan to a shorter-term loan
Sometimes plans change and the home (and loan) that you thought you were going to have for a while
turns from a permanent situation into a temporary one. If you are planning to sell your home sooner
than you thought and no longer need a long-term rate, then you may consider converting your 30 year
fixed to either an ARM or a 3/1, 5/1, or 7/1 loan program, which often have lower rates and payments.
5. Take cash out to consolidate debt
Leveraging the equity in your home is one of the smartest ways you can make your money can work for
you. Use the cash from your home to pay off higher interest, credit cards, student loans, or medical bills.
By consolidating your debts, you can enjoy the benefit of having only one payment each month, and in
most cases your overall monthly outflow decreases.
6. Take cash out for home improvements
What better way to use your hard earned equity than to invest it back into your home with repairs or
home improvements? Whether you would like to fix your leaky roof or update your kitchen, you can tap
into your home's equity and have a possible tax deductible* way to tackle your projects. *consult with
your tax advisor
7. Take cash out to buy investment property

11. With home prices and interest rates at the lowest they've been in years, if you've been thinking about
buying a vacation home or an investment property, now may be a great time to take action. Tap into
your home's equity and use the cash for your down payment, home improvements, or for any reason.
8. Remove mortgage insurance
If you purchased your home with less than 20% down, chances are you're paying private mortgage
insurance (pmi). Refinancing will help you eliminate the extra expense if you've paid down your loan
balance and/or have seen an increase in your home's value to a point where you have at least 20%
equity in your home, or a loan-to-value (LTV) of 80% or less.

12. Chapter 6 - Common Types of Home Loans
Fixed Rate Mortgages
Fixed rate mortgage loans come in various types, and are generally the most popular loans for those
looking to buy or refinance their homes.
This is due to the security that fixed mortgage rates provide, ensuring consistent monthly payments,
without worry or hassle about changing interest rates.
If you are planning to own your home for several years or more, a fixed rate home loan may be your
best option.
The most popular loan program is the 30 Year Fixed Rate Home Loan, but 20 year, 15 year, and 10 year
fixed rate loans are also popular.
More about fixed rate mortgages at loanDepot

13. Adjustable Rate Mortgage (ARM)
Considering an adjustable rate mortgage?
An ARM loan may be a good option if you anticipate a significant increase in your income or property
value in the next several years.
Also, if you plan on staying in your home short-term, or would like to significantly lower your payment,
an ARM home loan might be right for you.
As the name implies, Adjustable Rate Mortgages (ARM loans) have interest rates that change at a pre-determined
frequency.
Federally insured FHA ARM rates to refinance or buy a home are also available.
More about ARM home loans at loanDepot

14. Jumbo Mortgage Loans
Jumbo mortgages are home loans that exceed the conforming funding limits set by government-sponsored
enterprises (GSE) Fannie Mae and Freddie Mac.
Conforming loans are home loans that meet Fannie and Freddie guidelines and typically, have a set
maximum loan amount.
The conforming loan limits set by Fannie Mae and Freddie Mac vary by county; some states and counties
have a higher conforming limit than others due to the cost of housing. In most housing markets, the
conforming limit is $417,000
Jumbo loans are considered to be higher risk than a traditional mortgage because you are borrowing a
larger-than-average amount of money.
This is one reason interest rates for jumbo loans are usually higher than conforming loans. Also, the
approval process for a jumbo loan is generally more rigorous and there are more stringent credit,
income and reserves requirements.
More about jumbo mortgage loans at loanDepot

15. FHA Home Loans
Insured by the Federal Housing Administration (FHA), FHA home loans are government-assisted
alternatives to conventional financing.
FHA loans were originally offered by lenders to first-time home buyers with imperfect credit. Now, FHA
loans are open to a wider audience, and are even popular options for homeowners looking to refinance.
Overall, FHA mortgage loans provide more flexibility in credit, income, and equity/down payment
requirements, and are great alternatives to conventional loans.
They do include a Mortgage Insurance Premium (MIP), as well as monthly mortgage insurance, but a
fixed rate FHA loan enables many homeowners who wouldn’t qualify for conventional financing to
purchase or refinance a home.
More about FHA home loans at loanDepot

16. VA Home Loans
The VA loan program is available to individuals who have served or are presently serving in the U.S.
military for refinancing or buying a primary residence.
The Department of Veterans Affairs (VA) does not lend money for VA loans, but it backs loans made by
private lenders (banks, savings and loans, or mortgage companies).
This essentially means that the Veterans Administration stands as the insurer for all their loan programs
and packages; they guarantee a portion of the loan to the lender if anything goes awry (missed
payments, defaults, etc.). This gives lenders a sense of security during the approval process.
Those who are eligible for a VA loan include: Veterans, Active-duty personnel, National Guard/Reserve
members and some surviving spouses.
Though VA loans do not require any pre-existing equity or income documentation, you must have an
adequate credit rating, sufficient income, and a valid Certificate of Eligibility. A VA loan can only be used
to purchase a home for your own personal occupancy.
More about VA home loans at loanDepot

17. Mortgage Loan Calculators
You can crunch your own numbers with online mortgage calculators and run as many different scenarios
as you'd like for home purchase, refinance, mortgage qualifying, rent vs. buy, ARM vs. fixed rate.
Online mortgage calculators at loanDepot
Mortgage Interest Rates
Most of the popular home loan rates are available online for you to compare. You can also personalize
your mortgage rate search by adding specific parameters.
Current mortgage rates at loanDepot

18. Chapter 7 - Questions to Ask a Mortgage Lender
You may have heard the old saying “You won’t know if you don’t ask”. This is especially true when
shopping for a mortgage to finance what may be the home of your dreams. Obtaining a mortgage is one
of the single most important and largest financial decisions you may make in your life. Before choosing a
mortgage lender or broker and determining which loan works best for you, be certain you have the
information you need to make an informed decision.
Before applying for your home loan, ask a lender or mortgage broker these key questions that will help
you select the lender that’s right for you and help you gather the information you need to know before
starting the mortgage application process.
1. How long does the loan process take?
The average loan process for a home purchase depends on the loan and lender. The process from
application to funding generally takes between 30 and 45 days.
2. How much will obtaining a loan cost me? Are those “out-of-pocket” costs or can I finance them into
the loan amount?
Mortgages come with fees to cover a range of services related to the process of funding your mortgage.
Fees vary from lender to lender so be sure to ask up front which fees to expect, and which fees can be
negotiated. Lenders are required to provide a written good-faith estimate of closing costs within three
days of receiving a loan application.
3. How do I qualify for a loan? When will I know if I qualify?
The determining factors in the qualification process are typically your credit score and history, your
property value, and your debt-to-income ratio. Other factors may be included in the consideration
process, but these three are the primary factors lenders consider when evaluating a potential
borrower’s credit worthiness.
In general, these factors determine the perceived level of risk associated with your ability to responsibly
manage a loan, and determine your loan decision as well as your interest rate, in some cases. Every
lender is different, so make sure you ask these important questions.
4. What kind of documentation must I provide to get approved for a mortgage loan?
Most lenders will require proof of income and assets before approving your loan. Lenders will be able to
provide you with their specific requirements.
5. Do I need an appraisal on the property I am hoping to buy or refinance? What happens if the
appraised value isn’t what I think it is?
Sometimes lenders do not need to obtain an appraisal, other times they require a full appraisal, and
there are levels in between the two. Appraisal needs are generally determined based on specific loan

19. programs versus being credit/income driven. This determination is typically made after reviewing your
application and the selection of a loan program that best meets your needs.
6. Can I refinance my mortgage if I don’t have equity in my home?
Most lenders require a homeowner to have at least 20 percent equity in a home before they’ll approve a
refinance. However, it is possible to refinance your mortgage if you don’t have equity in your home, or
even have negative equity. The federal government has implemented the Home Affordable Refinance
Program (HARP) to assist homeowners who may not have sufficient equity in their home to qualify for
traditional refinancing.
7. What’s my rate? The advertisement said …
Regardless of where you see the ads for ultra-low mortgage rates, some companies don’t disclose the
true terms of the deal as the law requires. Make sure you ask your loan officer, broker or mortgage
banker what the Annual Percentage Rate is for the loan you are applying for, what your monthly
payment will be, and how long the low interest rate will last.
8. What’s the best loan for me? What are my options?
Your lender should be able to answer this question easily once you provide pertinent information, such
as: employment history and verification, income, assets, credit score, debt, monthly expenses, down
payment amount, etc. It’s also important to discuss your short-term and long-term objectives so you
better understand your options and what will be the best loan program for you.
9. Who can I talk to throughout the process when I have questions?
The mortgage loan process may seem a little overwhelming; there are a lot of people involved, including
your real estate agent, the mortgage broker/lender, escrow officer, title company, and real estate
attorney. Because there are so many different people with different roles involved in the process, it’s a
good idea to find out if there is one point of contact for you if you have questions, or obtain a list of
people/roles and their contact information.
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