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FAQs | Mortgage Dictionary
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FAQs
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| We have assembled these Frequently Asked Questions for your convenience. If you do not find what you are looking for or have additional questions, please contact us.
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Q: What is APR?
A: The Annual Percentage Rate is the cost of credit expressed as a yearly rate. The APR combines interest rate, points, and related fees.
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Q: What is a Finance Charge?
A: The Finance Charge is the cost of credit expressed as a dollar amount. It includes any charge payable directly, or indirectly, by the applicant, and imposed directly, or indirectly, by the lender, as a condition of receiving credit.
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Q: What are Discount Points?
A: Discount Points are equal to a percent of the loan amount. 1.25 points are equal to 1.25% of the loan amount. For example: on a $100,000 loan amount that equals $1,250. Typically, if you pay points it will lower the Interest Rate.
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Q: What is a Loan Origination Fee?
A: Origination fees are expressed as points or as a percentage. A one point or one-percent origination fee is equal to 1% of the loan amount.
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Q: What are Escrows?
A: An Escrow Account is used to protect monthly payments for taxes and insurance obligations.
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Q: What is a Credit Score?
A: Credit scores were created for general use in making lending decisions and are based on credit data only. FICO* scores are one type of generic credit score. FICO scores range from approximately 400 to 900. The lower the score the greater the risk of default on a loan. A credit score below 620 gives a lender a strong indication that a borrower's credit reputation is not acceptable.
Under the Fair Credit Reporting Act all consumers can obtain a copy of their credit reports by calling:
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EquiFax: 800-685-1111 |
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Trans Union: 800-916-8800 |
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Experian: 800-682-7654 |
Learn more about Credit Scores.
*FICO: Fair ISAC Credit Company developer of FICO scores
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Q: What is Private Mortgage Insurance (PMI)?
A: Private Mortgage Insurance is a type of insurance provided by a private mortgage insurance company, to protect the lender in the event of loan default. This type of insurance is required when a borrower has less than 20% equity in a home. Private mortgage insurance is paid monthly.
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Q: What is ARM (Adjustable Rate Mortgage)?
A: A mortgage that permits the lender to adjust its interest rate periodically based on the movement of a specific index. Example: 1-3-5 year Treasury Bill. There are generally limitations, such as 2% on the amount the mortgage interest rate can go up or down.
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Q: What is PITI?
A: PITI is an acronym for the items included in a monthly payment: principal, interest, taxes, and insurance.
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Q: How do I determine how much I can afford?
A: Generally, you should qualify for monthly housing expense (PITI, or the monthly payment for mortgage principal, interest, property taxes and property insurance) equal to 33% of your gross monthly income. The best way to know with confidence is by getting pre-approved .
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How long does the mortgage process take?
Processing and closing a mortgage usually takes between seven and 30 calendar days. A Whitney Mortgage Lender can give you a precise estimate based on your individual situation.
How much does it cost to close a mortgage?
For purchases, most mortgages require a minimum down payment as a percentage of the sales price or appraised value [ whichever is less]. Moreover, some loans require a very low down payment. Closing costs include:
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Loan origination [varies with loan type and term] |
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Discount points [optional - can be paid to lower your interest rate] |
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Appraisal fee |
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Credit report fee |
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Flood zone determination fee |
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Title insurance fee |
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Deed recording fee |
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Survey fee |
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Pest inspection fee [if necessary] |
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Underwriting/document review fee |
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Interim interest [varies with the closing date] |
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Tax service fee |
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Attorney fee |
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Additional fees may apply as warranted by your state and/or personal situation |
Many of the same fees apply to refinance loans, but closing costs can often be included in the loan amount on refinances.
When should I apply?
Most borrowers apply once they have selected a property. However, you can get pre-qualified by Whitney so that you'll already know how much house you can afford before you start shopping.
Where do I apply?
If you want to apply for a Whitney mortgage, please call one of our Mortgage Lenders at 1-800-347-7272 [Ext. 6300], Monday - Friday, 8:00 to 5:00 CT. They will answer any questions you have and schedule a personal appointment at a time and location convenient for you.
What information will be required when I apply?
To speed the application process, here is some of the information you should gather:
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Sales contract |
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Social Security number[s] |
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Gross monthly income[s] |
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Name/address of each employer for past two years |
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W2 forms for past two years and year-to-date earnings |
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Last two monthly checking/savings account statements [if not Whitney accounts] and brokerage statement or name, address, account number and balance for each deposit account/brokerage account |
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Residence address, including landlord and/or mortgagee address and account number, for the past two years |
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Mortgagee name and address plus address and account number for other real estate owned |
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Name, address, account number, balance and monthly payment for all outstanding debts |
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If self-employed, last two years of personal and corporate tax returns, year-to-date profit and loss, business tax returns and balance sheet |
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Be prepared to pay the credit report, appraisal and flood certification fees |
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VA loans only: Certificate of Eligibility or DD124 |
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