1. What’s involved with getting approved for a mortgage loan?

First a loan application will need to be completed. At Scout we’ve found that the most efficient way to do this is over the phone. Once the application is complete, we’ll evaluate your debt to income ratio, credit history and assets. Upon final approval, we’ll bring the loan documents right to your door for signing and then we’ll fund the loan. It’s really quite simple. The entire process will take approximately 21 days.

2. What costs are associated with getting a mortgage?

There are potentially three different types of costs associated with getting a mortgage; Origination Fees, Discount Points and Closing Costs. Origination Fee represents a fee paid to the broker or bank for services performed. Discount Points represent the prepayment of interest. It’s used to buy down your rate. Closing Costs represent costs paid to the appraiser, title/escrow company, credit reporting company, etc. to cover the costs of getting your loan approved.

3. What’s a reasonable amount of closing costs to pay for a mortgage?

It’s always difficult to determine what is reasonable or what makes sense. The easiest way to avoid making a mistake is to get a mortgage with a low rate and low closing costs. Scout Mortgage offers both.

4. How do I determine if it makes sense to refinance?

There are many variables that determine whether or not a refinance makes sense. The primary consideration is how much will I save each month and how long will it take to me to recover the cost of refinancing.  The longer it takes to recover the costs, the less likely that refinancing makes sense.  One way to ensure that you start savings immediately is to refinance without paying closing costs.  Anytime you can drop your rate for free, it just makes sense.

5. Should I choose a Fixed or Adjustable Rate mortgage?

The two factors that should be considered are 1) how long do I think I will live in the house and what is the probability of this prediction holding and 2) what’s the difference between a Fixed and Adjustable Rate mortgage. If you’re unsure, please don’t hesitate to call one of our seasoned mortgage professionals at 480.607.7906.

6. Can I lock in my interest rate?

Yes, typically Scout Mortgage offers its clients a 30-day rate lock.

7. What is the minimum down payment required?

With the recent turmoil in the US Housing Industry, minimum down payments range from 3% for FHA and 10% for a Conventional mortgage.  Lending guidelines are changing rapidly.  Please contact Scout Mortgage for the latest on down payment requirements.

8. Is comparing Annual Percentage Rates (“APR”) an effective way to choose between two different mortgages?

No.  The APR is based on a fatal assumption that you will hold the mortgage note for its entire term, typically 30 years.  If you hold the note for less time than its entire term, then the APR begins to move higher.  The shorter the time you hold the note, the higher the APR.  The best way to shop for a mortgage is to insist on a mortgage with the lowest rates and lowest costs.

9. What is a Good Faith Estimate of Closing Costs (“GFE”)?

Anytime you apply for a mortgage, the Broker or Bank is required to provide you with a GFE.  The GFE is an estimate of what all the numbers will look like on the HUD-1 Settlement Statement at closing.  When it is time to close your loan, you should compare the GFE to the numbers on the HUD-1 Settlement Statement.  Do not sign the loan documents if there are major differences in estimates or there are additional charges that were not disclosed up front on the GFE.

10. Why do some Lenders require a security deposit or an application fee?

Scout Mortgage is unique in that we never require an upfront security deposit or an application fee. Therefore, the onus is on us to perform and deliver the loan we promised upfront.

11. Are interest only loans risky?

Not necessarily.  In the past, an Interest Only payment option was only available on an Adjustable Rate Mortgage (“ARM”).  The option to make an Interest Only payment expired when the initial fixed rate period (usually 3 or 5 years) of the ARM was over.  When the rate on the ARM began to adjust, the borrower was left with a double whammy:  A higher rate and a Principal and Interest Payment.  However, now borrowers can obtain a 30 year fixed rate mortgage with the option to make Interest Only payments for 10 or 15 years mitigating much of the risk.

12. Can I get a better interest rate if I go directly to my bank?

No.  The advantage of working with a mortgage broker is that brokers have relationships with many banks.  Mortgage brokers know which banks have the lowest rate and best loan programs and the bank with the lowest rate may not be your bank. Additionally, a mortgage broker will continue to work for you after the loan closes by monitoring interest rates. If interest rates drop, your mortgage broker will contact you to lower your rate. This is what we at Scout call our complimentary mortgage management service. Your banker on the other hand would prefer to keep your loan at the higher rate.

13. Should I get pre-qualified for a loan before I look for a house?

Yes, It’s a good idea to get to know how much house you can afford without getting in over your head.  A pre-approval will also strengthen qualifications as a buyer. At Scout Mortgage, we offer complimentary pre-qualifications.

14. What if interest rates go lower after I close?

It’s not a problem. At Scout Mortgage we continually monitor our customer’s loans. Whenever we can lower your rate for FREE we’ll let you know.

15. Why is my loan payoff amount higher than my principal balance?

Mortgage interest is paid in arrears.  In other words, you pay the accrued interest at the end of the month.  Therefore, when you pay off a mortgage you need enough funds to cover the principal balance plus the interest that has accrued since your last payment.

16. Are bi-weekly payment plans worth the expense?

No.  The same results can be obtained for free by dividing your principal and interest payment by 12 and adding this to your monthly payment.  This will save you the initial set up fee and the monthly charges typically associated with bi-weekly payment plans. The theory behind the bi-weekly payment plan is to make 26 half payments or 13 full payments during a 12 month period.

17. I’ve been making regular mortgage payments for several years, does it make sense to refinance and start the term over again?

The most important item on your mortgage note is the interest rate.  You can control the term or how quickly you pay off your note.  Many of our clients refinance to lower their interest rate, but then continue to keep making the original payment calculated at the higher interest rate.  By doing so, our clients accelerate the pay off of their mortgage and save thousands of dollars in interest expense.

18. What’s the best way to shop for a mortgage?

The best way to shop for a mortgage is to insist on a mortgage with the lowest rates and lowest costs.

19. How do Mortgage Brokers get paid?

Brokers typically get paid from the Bank that they sell your loan to. Brokers may also charge a fee to the consumer for their services. Scout Mortgage never does.