Because applying for a loan is not something you do everyday,

We are pretty sure that you may have a question, or two, or twenty. Rest assured that the experts at Radix Mortgage are always available to provide you with the answers you need.A mortgage is a big decision: You should have questions. Here are a few of the ones we get asked most often. If you have more, give us a call. We’re always happy to share our experience with you!

Is there anything I shouldn't do before I buy a home?

Yes. There are a few simple items that will save you thousands and make certain that the home you have searched for is yours. Know that the actions you take before making an offer to purchase and during escrow can create problems that may result in a slowdown in your closing, increase in your mortgage cost, or worst of all even stop the transaction.

  1. Do not make a major purchase. This could include the car you desire
    in your new driveway, big screen you must have in the family room or
    any item that could increase your debt to income ratio.
  2. Do not change a job unless it is necessary.
  3. Do not open new revolving credit accounts.
  4. Do not closing your open credit accounts. Believe it or not, this
    can work against you and lower your important credit score. Want more
    important tips? Call your Radix Mortgage consultant.

Will I save money going directly to a bank?

Probably Not. In fact, many banks or “direct lenders” often use inexperienced people to sell very “cookie cutter” loan programs that may not be best suited to your needs. These “lenders” have their key programs that may or may not work for you, and focus on getting you to “fit” into one of their programs. In addition retail “lenders” must cover their extensive overhead costs by selling
mortgages at a retail price wherein Radix Mortgage is a wholesale lender. We offer rates and programs of many traditional “lenders” allowing our trusted consultants to pick the best program for you. Take the simple example of buying a car; if you go to a specific dealership they are only
able to sell you the models they carry, which may not be the best available choice for you. Radix Mortgage works with multiple lenders and we “shop” for you, finding you the best terms available in the program that meets your goals. Radix Mortgage also works with lenders who specialize in
various market niches that other lenders may avoid, such as loans to applicants with poor credit ratings or loans to borrowers who do not intend to occupy the property.

What is pre-qualification?

Pre-qualification is the process of determining whether a client meets certain qualification requirements set by “lenders” on a requested loan. A pre-qualification is subject to verification of the information provided by the applicant. A pre-qualification is short of approval as there is not an extensive review of client information.

What is a jumbo mortgage?

A mortgage larger than the maximum eligible for purchase by the two Federal agencies, Fannie Mae and Freddie Mac, currently $417,000.

What is a rate lock?

A rate lock is a contractual agreement between a lender and a client subject to the verification of information provided by the client. There are four components to a rate lock: the loan program, the interest rate, the points and the length of the lock.

Should I refinance?

Rates constantly move up and down. “Should I refinance?” is the question that depends on your unique situation. Here are some common situations in which it can make sense:

  • To lower your interest rate.
  • To convert an adjustable loan to a fixed loan.
  • To consolidate higher rate debt.

Taking this further, here’s what you also need to consider:

  • The total cost of a refinance
  • The monthly savings you will enjoy.
  • The time you expect to remain in the home.

Review our easy calculators to better consider your options.

What's the difference between pre-approval and pre-qualification?

The pre-qualification process is not as thorough as the pre-approval process. A pre-qualification involves a mortgage consultant asking you a few basic questions, and generally obtain your credit score(s). Then, he or she will give you a “pre-qual” letter that basically states that you are “pre-qualified” for a purchase up to a specific dollar amount based on the information given subject to its final review. Pre-approval involves all of the steps of a full loan approval, except for the appraisal and the title search. A pre-approval is a much stronger item to have when you’re negotiating the right price for the home of your dreams.

What is the difference between a mortgage broker and a lender?

A mortgage broker is a professional who counsels you on the variety of loans available to you from a variety of different lenders and provides pricing at a wholesale level. He or she is the conduit between you and a lender. A mortgage broker takes your application, processes your loan (which involves assembling a complete file of information about your transaction, such as a credit report, an appraisal, verification of employment and assets) and is a very important ally making certain that errors are corrected before the final documentation is submitted to the lender who offers the program best suited for you. Having a trusted professional like Radix Mortgage on your side can be very important in correcting file errors that can save you thousands.

What is a fully documented loan?

It simply means that both income and assets have been disclosed and verified. The income is used to determine the applicant’s ability to repay the mortgage. Formal verification involves having the borrower’s employer verify employment and the borrower’s bank verify deposits. Alternative documentation, which can save time in the process, accepts copies of a borrower’s original bank statements, W-2’s and paycheck stubs.

What are some other types of loans?

You can find a complete list of common residential loans on our “<a href=”/loan-programs” title=”Loan Programs”>Loan Programs</a>” page.

What are some other types of documented loans?

Stated Income/Verified Assets. Income is disclosed and the source of the income is verified, but the amount is not verified. Assets are verified and must meet an adequacy standard, such as six months of stated income or two months of expected monthly housing expense. Stated Income/Stated Assets. Both income and assets are disclosed, but not verified. However, the source of the borrower’s income is verified. No Ratio. Income is disclosed and verified, but not used in qualifying the borrower. The standard rule that the borrower’s housing expense cannot exceed some specified percent of income, is ignored. Assets are disclosed and verified.

What if I have a low credit score or bad credit?

Let us aid in determining your true credit score. Very often, we have found that our clients are too tough on themselves and fail to realize that they may be able to quality for better terms than they may think. Further there are steps that can be taken to dramatically improve your credit score. Let one of our experienced consultants review your full credit report and score and work with you based on what we learn.

What are interest only payments?

An interest only loan has you pay only the monthly cost to you for borrowing the money under the loan. This means that the loan balance you borrow does not automatically reduce as in a traditional loan that amortizes. This type of loan can provide a lower monthly payment as you are not required to reduce the original loan balance. Basically, interest only payments are computed by taking the interest rate times your loan balance and divide by twelve (months). An example would be: A 5% interest only on $200,000 is computed .05 x $200,000 = $10,000 divided by 12 – $833.33 per month, interest only. This is a bit simplified, but the example is important, that’s the payment.

What is negative amortization?

Negative amortization occurs when a monthly payment option exists that is insufficient to meet the total monthly accrued interest on a loan. This is common when you have an interest rate lower than commonly seen in the market, such as a 1.0% interest loan. Your “true” rate is much higher and the lender increases your loan balance by the difference between what you actually paid and the actual note interest rate on our loan. This loan type is a trade-off for making the lowest possible payment but this loan is not without its risks. Before you consider this loan option we would strongly suggest obtaining a complete understanding of the risks by calling a trusted Radix Mortgage consultant.

What does fully amortized mean?

A fully amortized loan provides for a monthly payment that results in a zero balance at the conclusion of the loan term originally agreed to. A 30-year fully amortized loan therefore requires a payment of principal and interest necessary to pay your loan balance in full at the end of thirty years. Both fixed rate and adjustable rate loans can be (and usually are) fully amortized.

Why is the Annual Percentage Rate (APR) always higher than the loan’s interest rate?

This is a result of the federal regulation called “Federal Regulation Z” that requires an APR to be disclosed based on guidelines established within the regulation. The federal government attempted through the requirement of Regulation Z to have lenders provide an “all” inclusive rate that considers fees and costs associated to the mortgage. This was done to better allow consumers a way to compare different lenders loan rates. Unfortunately APR is not necessarily the best means to compare lenders and the true costs and differences between loans. We suggest a better way is to receive and compare the Good Faith Estimate provided by each lender.

What is a good faith estimate?

A Good Faith Estimate is basically a summary of the charges you should expect when obtaining your mortgage. This list of settlement charges includes lender fees broker fees as well as recurring costs that a borrower makes; an example would be prepaid taxes and interest. The Good Faith Estimate is an effective tool to review lender costs but often fails to include loan program terms that can greatly change the desirability of a loan. This inability of mortgage customers to have a concrete method for comparison of different lenders makes selecting a trusted mortgage consultant like Radix Mortgage your best first choice in avoiding predatory lending.

What is a conforming loan?

A conforming loan is a loan eligible for purchase by the two major Federal agencies that buy mortgages: Fannie Mae and Freddie Mac. The loan limits are currently $417,000 for a single family home.

What are points?

Points are an upfront cash payment that is required by many mortgage lenders as part of the charges for making the loan. Points are usually expressed as a percent of the loan amount; “two points” means a charge equal to 2% of the requested loan balance. Paying points to obtain a loan is not a requirement; call Radix Mortgage to discuss no point loan options.