FREQUENTLY ASKED QUESTIONS
What documentation will I need to provide to get pre-approved?
The best place to begin is to apply online. Please use the link below.
In addition to an online application, our secure site allows for clients to upload the documentation we will need so that we can finalize a loan decision for you. Please note that we never charge for this pre-approval service. The normal list of documentation needed is below, however certain situations or loan types may require more or less. We like to have a 10-minute discovery call up front to help refine the list to just your needs:
Clear copy of your driver's license
Current months' worth of paystubs
2 years’ most recent W2s and 1099s
2 years’ most recent personal federal tax returns
2 years’ most recent corporate tax returns for any corporations in which you have 25% or greater ownership
Most recent 2 months' bank statements
Most recent quarterly (or last 2 months') retirement/investment statements
Mortgage statements for all properties that you own
Homeowners insurance declaration page for all properties that you own
Current HOA statement for all properties that you own (if located in a condo or PUD development)
Lease agreements for any properties which you own and rent out to tenants
Once we receive your documentation we typically turn around a decision within 24 hours.
How long is my pre-approval valid?
Pre-approvals are valid for 90 days. Updating your pre-approval is quick and easy. Since we already have most of your documentation we will simply need to obtain updated paystubs and bank statements from you and we may also refresh your credit report
My loan is pre-approved, now what?
Now the fun begins! You and your Realtor can begin your home search with the confidence of knowing that you are fully qualified for the price range in which you are looking. During the home search, your Realtor may come to us for updated pre-approval letters which are specific to the property and price you wish to write an offer on. Your agent will already have been furnished a credit score disclosure and redacted proof of funds to forward along with your offer. Additionally, we go above and beyond the competition by having a Hillhurst Mortgage team member contact the seller’s agent on your behalf to your creditworthiness and our ability to meet the contract deadlines. This helps make your offer stand out over other competing offers to help win the escrow. In the competitive real estate market, these details can make all the difference.
Why is my credit score online higher than the one on your credit report?
Online credit reporting companies are meant to provide an “all purpose” credit report. Credit scoring models vary depending upon the reason for your inquiry. For example, if you are shopping for a car, the auto dealership will run a credit report with scoring criteria that places more emphasis on your credit history as it relates to auto loans. A mortgage credit report is specific to home financing and has its own specific criteria.
Do you have to pull my credit during the pre-approval stage?
Your credit history and qualifying credit scores are as crucial to your pre-approval as your income and your assets. Having a formal pre-approval in hand when making purchase offers gives you an edge over other competing buyers because it assures the seller that you are ready and able to purchase their home. To ensure that we have done our due diligence, we can’t use a credit report from another lender.
One of the main fears that our clients share with us is that too many credit inquiries may lower their score. We understand this and want to provide you with some helpful information to alleviate this concern.
The excerpt below is directly CFPB (Consumer Finance Protection Bureau) website and pertinent article: Click Here
You can shop around for a mortgage and it will not hurt your credit. Within a 45-day window, multiple credit checks from mortgage lenders are recorded on your credit report as a single inquiry. Other creditors realize that you are only going to buy one home. You can shop around and get multiple preapprovals and official Loan Estimates. The impact on your credit is the same no matter how many lenders you consult, as long as the last credit check is within 45 days of the first credit check. Even if a lender needs to check your credit after the 45-day window is over, shopping around is usually still worth it. The impact of an additional inquiry is small, while shopping around for the best deal can save you a lot of money in the long run. Note: the 45-day rule applies only to credit checks from mortgage lenders or brokers – credit card and other inquiries are processed separately.
Does my spouse's credit score matter?
It depends. FHA loans require that we factor in your spouse’s debts when qualifying you for a home loan. Most Conventional and Jumbo loans, including VA loans, do not have that same requirement. Our knowledgeable team members are well versed in program guidelines and will prepare you up front if your spouse’s credit is a factor in your specific loan scenario.
What are impounds?
Setting up an impound account (also known as “escrow account”) with your loan payment servicer is a way to include property taxes and homeowner’s insurance in your monthly mortgage payment. With impounds, your mortgage payment will consist of a monthly amount for taxes and insurance. Then, your mortgage loan payment servicer will make the lump sum payouts to the tax assessor and insurance company when the premiums come due every year. When setting up your impound reserve account, the lender has to forecast the due dates and collect enough reserves from you up front so that they have sufficient funds to pay out the taxes when they come due. This will add more in funds up front at the closing of your loan, however the benefit is that it avoids your having to personally pay large tax and insurance bills during the year when it may be inconvenient to do so. You won’t need to pay your insurance or property taxes out of pocket ever again since they will be rolled into your mortgage payment each month.
If you are putting less than 10% down on your home, in most cases the lender will require you to set up an impound account for your taxes and insurance. If you have a down payment of more than 10% on your home, impounds are optional for you. Deciding on whether to have impounds is a question of your comfort level in coming up with large sums throughout the year to cover your taxes and insurance versus paying a larger monthly mortgage payment. There is no additional cost nor benefit to having impounds versus not having them. If you would like more guidance on whether an impound account is right for you, please give us a call.
Should I be prepared to pay anything other than the down payment?
The simple answer is YES!
Closing costs (which are all fees and costs above and beyond your down payment) are a part of any purchase or refinance. The amount will vary depending on the loan amount that you are applying for, the sales price (for a purchase), and the loan program/interest rate that you select. Most closing costs are not loan related costs, but rather they are third party fees such as: Independent Escrow and Title fees, Homeowner’s Insurance Policy, prorated Property Taxes, County Recording fees, etc. Loan costs are generally limited to your credit report, appraisal, underwriting fee, and occasional costs for property specific searches like a verification that your home is not in a flood zone. Beyond that, if you are paying “loan fee”’ it is likely because you have selected a rate that comes at a “cos” (also known as “points” or a “discount fee”).
At Hillhurst Mortgage, it is our policy is to present clients with three rate options: one that comes at a cost, one that comes at no cost, and one that offers a credit from the lender to help offset those other charges that we just described above (sometimes offering a No-Cost loan option). Whether you decide to buy down your rate by paying points or choose a rate that offers a lender credit, one thing you can always count on from us is that we will be honest and transparent with you about the amount of funds you should be prepared to bring in at closing. We work diligently to ensure that you not only understand the decisions you make, but that you are selecting the best loan program and interest rate for your specific circumstances, as everyone is different. What was best for your co-worker, may not be best for you.
How much of a down payment do I need?
We offer a variety of loan programs including VA loans which are available with No Down Payment. We also offer FHA loans require a minimum of 3.5% down, and Conventional First Time Homebuyer programs available with as little 3% down.
Can I roll closing costs into the loan?
Sometimes. Whether you are purchasing or refinancing your home, some loan programs allow you to select an interest rate that offers a credit from the lender to offset some or all of your closing costs, thereby allowing you to avoid coming out of pocket for those amounts. If you are refinancing your home and have enough equity, you will also have the option to structure the loan so that the costs are financed into your new loan amount. At Hillhurst Mortgage we take an in-depth analysis to ensure you make the right choice about how you handle the payment of closing costs.
How are mortgage companies compensated?
The days of charging higher rates to make more money are gone (and that's a good thing)! Our founders never operated that way traditionally anyway and they were relieved when regulations changed to prevent our competitors from up-charging consumers in exchange for more profits.
Mortgage Brokers are compensated at a fixed percentage based upon the dollar volume of loans closed, similar to how a real estate agent receives a fixed percentage of the purchase price on a sale. This amount does not change based upon a higher or lower interest rate, or specific type of loan program chosen. What this means to you is that our primary goal is to find you the very best rate and program to meet your specific needs. You can rest assured that compensation is never a factor in selecting the best options for our clients.
What are points and how should I consider paying them?
Before deciding whether or not to pay points to buy down your mortgage rate, calculate the cost to buy it down compared to the actual monthly savings. Bear in mind that a portion of your monthly payment may be tax deductible, so the savings may in truth be a little less than the exact difference between payments.
We recommend that you first decide how long you plan to be in your home and look closely at historical interest rate fluctuations in the market. Then, compare the monthly savings between the rates selected and calculate the recovery period (in months) it takes to make back the buy-down costs. To do this, simply take the cost of the buy-down and divide it by the monthly savings. The result of this calculation is the number of months it takes to recuperate the buy-down cost before you receive dollar one of savings. Have you recovered the up-front expense of the points you paid well within the period of time you plan on being in the home? Do you think rates will continue to go up and not provide you with a refinance opportunity before the recuperation of costs? If so, then buying your rate down and paying points might be a good option for you.
Don’t want to worry about these numbers? At Hillhurst Mortgage our team is well versed in comparing rates to help you decide whether paying points is something that makes sense for you.
Are there any up-front fees?
At Hillhurst Mortgage, we never charge our clients up-front application fees or credit report fees. As a borrower you should be prepared to pay for a property appraisal near the beginning of your loan transaction. This is a third-party fee that goes directly to the appraisal firm.
What is Mortgage Insurance (MI) and when is it required?
Mortgage Insurance protects both the borrower and the lender against missed mortgage payments due to certain unforeseen circumstances. Mortgage Insurance is required whenever a single loan exceeds 80% of the property value or sales price. You don't necessarily have to make a 20% down payment to avoid MI. There are many other options, including splitting your home financing into a first and second trust deed loan (also known as a piggyback loan). This limits the first trust deed lender’s exposure as they are only financing a portion of the total. Piggyback loans typically alleviate the need for mortgage insurance. Other options include self-insured loans (higher rates of interest in lieu of mortgage insurance), and VA loans that do not require mortgage insurance even up to 100% financing (However, VA loans do require a VA funding fee paid directly to the VA).
Mortgage insurance is not necessarily a negative thing. When a client is putting less than 20% down, our policy here at Hillhurst Mortgage is to compare loan scenarios with and without MI to help you determine which of the loan option is the best you both from a closing cost perspective and saving on monthly payments.
If I have a recent bankruptcy or foreclosure, can I still get a home loan?
There are loans available for borrowers who are as little as one day out of foreclosure and bankruptcy. These loans are called Non-Qualified Mortgages (Non-QM). They do however come at a premium. Additionally, they have larger equity requirements, requiring you to put down a higher than minimum down payments on standard conforming loans. The equity requirements can be 30% or more, but loan guidelines are changing every day, so please contact us for the newest updates.
For clients in which at least two years have passed since discharging their bankruptcy or three years since foreclosure, FHA and VA loan offer more flexibility and you may be eligible to qualify for one of these programs.
If you are concerned about your credit history and your ability to qualify for a home loan, the best place to start is to talk with a team member at Hillhurst Mortgage. We are experts at helping our clients to understand the different credit requirements associated with a mortgage. If now isn’t the time for you to get a loan, then we take pride in giving you guidance and setting up a plan to help you achieve your goals in the near future. We can also recommend credit repair if it applies to your scenario.
How long does it take to close a mortgage; can I close escrow within 30 days?
You can certainly close your loan within 30 days, if you choose Hillhurst Mortgage! We have a proven track record of closing loans in record time. Some competitors call their loans Rockets – we call ours Lightening! We have many examples of closing loans in the minimum disclosure time periods. As long as everyone cooperates and acts with urgency from the start of the transaction. Closing a loan in 17 days or less can happen with us – you can count on it!
When should I lock in my interest rate and is there a fee to lock it?
There is never a fee to lock your loan with Hillhurst Mortgage. If you are purchasing a home, we need a fully executed purchase contract in order to lock an interest rate in for you. This is especially important because we want to ensure that we have locked in your rate for a time frame long enough to get you to your close of escrow date.
If you are refinancing, locking is easy. We can secure your rate just as soon as we have received your loan application and supporting documents. Once we have reviewed these items, we will reach out to discuss rate and loan programs and help you to choose the best option.
How do Mortgage Brokers and Lenders come up with the interest rate options that they offer?
Mortgage rates are based on the price of mortgage-backed securities (MBS), which are bonds bought and sold on Wall Street. Rates change daily, and sometimes on a volatile day, may change more than once. Lenders publish daily rate sheets which offer a variety of loan programs and their corresponding interest rates, again all set by the market.
At Hillhurst Mortgage, our qualified Mortgage Analysts review rate sheets from the top lenders in the nation to find the lowest rates and best loan programs to meet the needs of our clients. We are not incentivized in any way to offer higher rates to our customers. In fact, our ability to choose from a variety of lenders allows us to be extremely competitive. We are rarely beaten when comparing apples to apples. If you find, a mortgage firm that is offering lower costs, there may be a piece of the puzzle missing. It just doesn’t happen very often, but if it does, we will be the first to have your back and tell you if we cannot beat a bonafide offer. Then, if things go awry, we will be there to help pick up the pieces and close your loan on-time if needed. We are here for our clients, always.
What is the benefit of using a local mortgage broker instead of a national bank?
Most experienced Realtors will echo our sentiments and often educate their clients on this very topic. When a property seller is presented with two different offers from two equally qualified buyers, often the buyer who has chosen to work with a national bank will lose out to the buyer who has a pre-approval from a known local mortgage broker. The simple truth is that banks run on their own timelines. They typically have large departments full of employees who punch a time clock and whose hours are limited. Large banks utilize a nationwide panel of appraisers and don’t always select local appraisers who are familiar with the area, result in you (the buyer) being unable to meet the deadlines in your purchase contract. Using an appraiser who doesn’t know the area can bring about an inaccurate appraisal with an unreasonably low value. When you work with Hillhurst Mortgage, you will get a completely personalized approach with a team available 24/7 who can meet your contract deadlines. Additionally, the lenders we work with only use appraisers who know the areas that we serve. The bottom line is that your local mortgage broker cares, their reputation depends on it, and real estate agents know it.
I have received so many disclosure documents. Which document should I look for in order to understand my total fees and costs?
The Loan Estimate (LE) is the document that all mortgage companies are required to provide you with once you have completed a loan application and you are in escrow on a property. The LE document replaces the Good Faith Estimate. It contains all of the fees and costs that you can expect to incur during your transaction.
If the numbers seem complicated or overwhelming, we are here for you! Give us a call and one of our experienced team members will walk you through the Loan Estimate line by line, so that you feel comfortable about the numbers and well-informed about what to expect.
What is a piggyback loan?
A piggyback loan is actually two loans, a first trust deed and a second trust deed loan that close concurrently. There are many common reasons to choose a piggyback loan scenario. Piggyback loans can split your financing up to avoid mortgage insurance, can be used to pull additional equity out of your home, and a variety of other reasons.
My loan is in process and the lender is asking me about large deposits in my bank account. I have plenty of money. Why does the lender care where it came from?
In recent years, since the “Mortgage Meltdown” or “Great Recession”, mortgage regulations have been put in place to ensure that the money being used for down payments and closing costs is the borrower’s money. Mortgage underwriters are trained to look for red flags that indicate the possibility of borrowed funds. One of the biggest red flags are large or unusual deposits in a borrower’s bank account. Lenders will ask for a detailed explanation and in some cases a paper trail to document that the large or unusual deposit was not a loan or funds from someone other than the borrower.
You might be thinking, “Why does it matter?”. It matters for many reasons, but the biggest is something called a Straw Buyer. A Straw Buyer is a person or business who buys something on behalf of someone else to circumvent legal restrictions or enable fraud. Loans made to Straw Buyers were a huge part of the mortgage meltdown and this is why lending regulations require documentation and explanations for large deposits.
The lender already verified my employment at the beginning of my loan. Why do they need to call my employer and re-verify it at closing?
This is another ramification of the Mortgage Meltdown and subsequent Great Recession. Misrepresentation and fraud were rampant, leading to the falsification of employment to qualify for a home loan that the borrower would otherwise not be able to afford. All lenders now perform a verbal verification of employment just days before closing to ensure that all borrowers are employed in the same position that they were when they applied for the loan.
NMLS #248170 | CA Department of Real Estate - Real Estate Broker - DRE #01109636