What is the difference between pre-qualification and  pre-approval?

Pre-qualification is a lender's opinion of your ability to obtain a loan. Pre-approval is an underwriter's decision that you are qualified. When it comes to writing an offer for a home, a pre-approval letter contains much stronger language to the seller and the listing agent and often is the determining factor in winning the contract in a competitive bid situation.

Is it alright to use internet statements instead of a hard-copy bank statement to verify banking and investing accounts?

Internet statements are allowed if:

• The document contains full name
• The document contains the last four digits of the account number.
• The document is supported by an actual statement from a consecutive month.

Underwriters will usually accept a previous month's internet statement as long as it can be supported with the next consecutive month's hard-copy statement. An important note to remember is that banking and investment statements always designate the total number of pages. For instance, your statement may say 1 of 3 or 1 of 5 pages. This tip is valuable. Please include all pages of your statements, even if there is nothing on the last page, and even if the first page is an advertisement. With all due respect to our underwriters, they are wonderful, but they always assume that any missing pages contain the "secrets of life." In reality, they cannot see what is on or not on those pages, so the missing pages always present a challenge. Fannie Mae, Freddie Mac, VA, and FHA, by their guidelines, still require all pages of statements to verify accounts.  Receiving partial statements is probably the greatest reason we have to go back to our customers and ask for additional documentation.

Who is responsible for ordering the appraisal and survey, and when is it ordered?

Freedom Financial Services will order the appraisal and survey for you. The builder may also order the survey just after completion or just before closing. Old surveys cannot be used when a home is changing owners because of the possibility there has been an encroachment to the property lines, building lines, or easements. In most instances, we do not need a survey on a refinance transaction. We order the appraisal on all refinance and home purchase loans.

What does locking your interest rate mean, and when and how do you lock your interest rate?

Locking your interest rate refers to guaranteeing a specific interest rate for a specific period of time. That period of time is called the "lock period." The lock period guarantees that rate, as long as your loan closes, and funds prior to the expiration date of your lock. If your closing is delayed beyond your lock expiration date, you could be exposed to higher market rates. So it is always good advice to lock for a period longer than you need or longer than your actual closing date. Usually 30 to 45 days is advisable for existing home purchases, and 30 or more days for new construction. Typical lock periods are 15, 30 and 45 days. The market can be volatile, and rates move with market activity. Up and down. Let's look quickly at the four possibilities for rates:

• Rates can go up slightly
• Rates can go down
• Rates can stay the same
• Or rates can go WAY up.

The bottom line is this - we work for you, and we will do exactly what you wish concerning your rate lock. We will always give you our advice if you ask, but the final decision is yours. Prior to locking your interest rate, we will ask for your target interest rate. That is the rate you would like to obtain. We will also ask for your bail-out interest rate. That is the rate you want to cut your losses with in the event that interest rates do begin to trend upwards. If you have not locked in when you receive your application from our office, you are going to notice that the rate on the application is somewhat higher than the market interest rate. You are not stuck with that interest rate. We have intentionally used a higher rate to qualify you in the event that rates do go up prior to locking in. You are still approved and we do not have to re-approve you. You are not exposed to any more paperwork. Once you have a property under contract, you can then lock your rate by calling our office and simply requesting the lock-in. We will fax or e-mail a confirmation to you at this time.

In summary, times have changed. Don't wait to lock your rate.

Will my loan be sold, and if so, who would be servicing my loan?

We service some of our loans, and we sell some of our loans. The answer depends on your type of loan product. We originate, process, underwrite, close, and fund your loan from our office. That gives us control of the transaction and the ability to assist you. We are able to go out and shop your loan with multiple investors to make sure that we obtain a competitive interest rate for your loan type. We service our customers for life. If you ever have concerns or problems with your mortgage loan, we want you to call us. We can represent you to the investor that currently has your mortgage loan. The loan will be serviced by an investor, but we will service you for life.

You might not be familiar with all the terminology used in the loan process, so we would like to take this moment to clear up two important ones - origination and discount points.

Briefly speaking, origination and discount points are both a percentage of your loan. If we are talking about 1%, it would be 1% of the loan amount. Let's say your loan amount was $200,000, then your origination or discount point would be $2,000. The origination and discount point will affect your mortgage loan interest rate usually by ¼ of a point for each point on fixed rate loans, and usually by 3/8 of a point on adjustable rate loans. Check with your CPA or financial planner for tax deductibility, but generally speaking origination and discount points are tax deductible when you are buying a primary residence and may be deductible in a refinance transaction.

The next question that should be addressed is when you sign your application, are you committed to borrow the money?

A lot of people feel like once they have signed the application they are obligated to borrow. That is absolutely not the case. In fact, none of the documents that you have received from us, until you are actually at closing and sign your note, obligates you to borrow money. So, all we are doing with an application is approving you, putting you into a position to buy and close, or be approved for the mortgage loan that you are applying for.

Let's go back to the terminology. What is the difference between your Annual Percentage Rate (APR) and your interest rate?

This will come on your Truth in Lending (TIL) disclosure, and quite often the APR is higher than the actual note rate, or the actual quoted interest rate. The initial interest rate is located on page one of the 2010 Good Faith Estimate in the "summary of your loan" section. This is the note rate, or the rate that you were quoted. You may or may not be locked at this rate. The rate in the upper left hand corner of the TIL is also known as the APR. The APR is different from your note rate or the rate that you were quoted. The APR includes, in addition to interest, some of the additional costs of obtaining your financing. Simply stated, if there were no costs in obtaining your financing, your note rate and APR would be the same.

So you've been going through this process with us, and you would probably like to know how you will be updated on the status of your loan.

A loan officer will set up communication expectations with you. We encourage you to stay in contact with your loan officer as much as you would like.

Winding up the loan process brings up another set of questions. Where will you be closing, how much will you have to bring to closing, and can you bring a personal check?

Closing will usually take place at a title company. To know how much to bring to closing, we are going to call you within one day of your closing date to reconfirm the terms of your loan and to give you an amount so that you can go ahead and arrange funds to bring to closing. Personal checks in the state of Colorado are not an acceptable source of funds for closing. So you will have to have verified funds wired directly from your bank to the title company, or you can get a cashier's check, or a money order.* In any event, your loan officer will call you one day prior to closing to give you wiring instructions, a dollar amount, and to give you the details on the closing location.

*Gifted funds follow the same rules.