Here are a few of the questions that we hear most often from our clients during the mortgage process. If you don't find the answer to your question, don't hesitate to contact us!

If you have a question regarding your Mortgage Loan for a Purchase or Refinance, please call 1st Quest Mortgage by phone.

Why should I choose 1st Quest Mortgage versus another lending source?

Because you want to work with an expert in debt planning!

Most people make the mistake of only associating interest rate with the objective of borrowing money. Too many times the consumer obtains a loan that is not monetarily beneficial to them.

At 1st Quest Mortgage, we offer extremely competitive interest rates and fees, but like most others we don’t stop there. Our average loan agent has logged in seven and a half years in the industry and brings a wealth of knowledge and expertise to their clients. Most people give a great degree of credence and credibility to their CPA and Financial Planners, and rightfully so. At 1st Quest Mortgage we demonstrate time and again the value of having a Professional handle the largest debt you obtain in your lifetime, a mortgage loan.

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If a loan is locked, and interest rates come down, can we obtain a lower interest rate?

Sometimes yes, but most of the time no. 

What an interest lock really is, is a commitment by both parties, that being the borrower of the money and the investor lending the money. The borrower is committing to the investor that they want to borrow a set amount of money at a certain interest rate, and that they will borrow that money within a given period of time, also known as the lock period. In return, the investor is guaranteeing the borrower that interest rate, as long as they close their transaction within that given period of time. Since interest rates could potentially go up from there, the borrower is now protected from the volatility of the market and therefore receives their locked in rate as long as they close in a timely fashion.

When you think of it logically, it would be unfair to the investor to have to provide a lower rate of interest and therefore, unlock the loan in the event that rates went down. This is because they certainly will never contact the borrower and ask them to take a higher rate of interest in the event that rates go up. The exception to this would be if there were significant movement in the marketplace in the downward direction. At this point in time, the investor sometimes will be willing to take the loss that would be generated from a commitment undelivered and renegotiate the rate with the client and offer them a slightly more attractive rate of interest.

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Do you offer loans with less than perfect credit?

The answer to this question is absolutely yes.

A couple of years ago credit scoring became such a major part of the mortgage industry that "sub-prime" loans became a very common occurrence. These less than perfect loans that are offered at a higher rate of interest, are offered by 1st Quest Mortgage and its loan officers in the event that it is necessary.

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Can you pull out more cash than what your home is worth?

The answer to this question is also "yes."

We do have the ability to obtain 125% second trust deeds for the customer. This simply means that the borrower can receive up to 125% of the value of their property, therefore borrowing more money than their home is worth. These types of loans carry a much higher rate of interest due to the fact that they are quite a bit more risky to the lender. Having a good credit score is an absolute requirement to being able to obtain one of these types of loans.

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Can my credit be cleaned up?

Without question, the answer to this is "yes."

It depends on the severity of the credit damage in many cases, and whether or not the borrower wants to do it on their own, or seek the advise of a professional service.

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What do you predict interest rates will do?

This is always a difficult question to answer and obviously none of us have a crystal ball.

The loan officers at 1st Quest Mortgage pride themselves on being students of the market. There are a great many factors, some logical and some illogical, that go into the fluctuation of interest rates. It’s very helpful to be a seasoned veteran in the mortgage industry as it relates to the forecasting of rates. The more years you log in as a mortgage professional the more that you become a knowledgeable source on market fluctuation. Depending upon the circumstances in the marketplace, 1st Quest Mortgage’s loan officers will advise on the forecast of the future of interest rates accordingly.

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Should we lock now?

The answer to this question in more cases than not should be yes.

It has been our experience over the many years of doing business in the mortgage industry, that those borrowers that like to treat their mortgage and subsequent interest rate like rolling the dice in Vegas, will lose more than they win. Timing the market is an extraordinarily difficult task. The appropriate approach in most cases is to lock your loan in when you know that your escrow has a definite close date attached to it. In the event that the market rallies significantly, we can always renegotiate that lock and attempt to get a more attractive rate.

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What does locking mean?

Locking is a securitization of an interest rate that is attached to a specific property address and to a specific borrower.

It guarantees that rate for the given lock duration. Borrowers can choose to lock in from anywhere from 7 – 90 days.

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How long am I approved for?

This is an absolutely outstanding question, and one that many borrowers ask us from time to time. The answer to it is simply, forever, as long as your financial situation does not change.

Of course, after a period of time the file becomes stale and the documentation within it become outdated. Recent bank statements, pay stubs and even tax returns sometimes are required to bring the file up to date. As long as ones income situation has not changed significantly and they have not incurred anymore obligations on a liability basis, their approval is, in fact, good indefinitely. Also you need to keep in mind that if interest rates go up it can affect someone’s long-term ability to qualify because their payment becomes higher.

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What is a prepayment penalty?

A prepayment penalty is a penalty to the borrower in the event that they pay their loan off within a given period of time. Not all loans have this feature.

As a matter of fact, most loans that 1st Quest Mortgage procures do not have prepayment penalties due to the fact that they can be quite limiting. At 1st Quest Mortgage we are big fans of people having flexibility with their money.

The rational behind a prepayment penalty is that the investor wants to be guaranteed of making a certain amount of money from the customer whether they are with them for a long period of time or not. Many investors attach prepayment penalties to loans because of the heavy amount of refinancing that has taken place through the 1990’s. Prepayment penalties vary from one lender to another in terms of their impact. Some which are referred to as soft prepays, actually are waived in the event of a sale and only kick in when there is a refinance.

The most common prepay is the following formula: 6 months interest on 80% of the principal balance owed at the prepayment. To figure this out on a $100,000.00 loan, if the customer’s interest rate is at 8%; you would first take 80% of $100,000.00 which is $80,000.00. Next you would multiply that $80,000.00 by 8%, which would give you $6,400.00. You would then have to divide that by 2 because the prepayment penalty states 6 months interest, which would give you a prepayment penalty in this particular example of $3,200.00.

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What are points, and when is it advisable to pay them or not?

Points are nothing other than up front money that is utilized by the consumer to buy their interest rate down.

If an interest rate at no points is at 8%, one might be able to buy it down to 7.75% by paying one point. Every point that you pay is equivalent to 1% of the loan amount. So on a $100,000.00 loan, one point would cost $1,000.00, two points would cost $2,000.00, etc.

The time that it is advisable to pay points is when you have a very strong opinion that you will be borrowing this money for an extended period of time. This is due to the fact that points, which are paid up front, can only be recuperated through time, via the savings that are received on a monthly basis as a result of the lower interest rate generated by paying the points. On a 30 year fixed rate mortgage, points typically take approximately 5 years to get back, therefore for the first 5 years that you are in that loan you are in the red, where getting yourself out of the red and into the black is the objective. Everything past that 60^th month becomes savings and therefore it was beneficial to pay the points. If you get out of that loan by refinancing or selling the property before that 5-year period, you have effectively wasted money by paying them.

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Why should I do my loan with a broker, and not the Internet or my bank?

A big misconception is that mortgage brokers cost the consumer more money. The loan officers at 1st Quest Mortgage have proven time and time again that this is a fallacy.

Some of the compelling reasons to use a broker are as follows: In general most brokers are more knowledgeable about their trade then bankers and salary employed people who work for Internet companies. One must understand the mentality of a broker, in that a broker is an entrepreneur and not an employee. What you get in working with an entrepreneur, is someone who is a specialist in his or her trade. What you get with an employee is someone who punches out and goes home at 5:00, who does not receive a monetary incentive to be great at what they do.

This is of course not to say that all brokers are specialists in their field, but in general this would be a true statement. One must make a decision up front as to what they are trying to achieve from their loan experience. An analogy would be that some people shop at K-mart for their clothes and others shop at Nordstrom. The reason that people shop at Nordstrom is due to the fact that they are looking for an overall customer service experience that would never be achievable at K-mart.

Presently the Internet is not a safe platform to be divulging personal financial information, hopefully in the future it will be and when it is 1st Quest Mortgage plans to utilize the Internet and its services to expedite and make more efficient the loan process.

The final reason for using a mortgage broker over a bank is simply due to a greater variety of products. When you go to a bank you have one option and that is their product only. The ability to go to many different sources and subsequently shop for the best loan program available in the marketplace is an advantage that a broker has that a bank never will. Don’t be confused, a broker does not cost you extra money due to being a middleman. The interest rate that is provided to a broker is a "Wholesale Rate". When you enter a bank as a consumer you are receiving a retail rate. Once a broker has "Marked Up" their wholesale rate it should be in accordance with a banks retail rate.

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What is the difference between non-recurring closing costs and recurring closing costs?

Non-recurring closing costs are closing costs as stated in the definition that do not reoccur.

Examples of non-recurring closing costs would be as follows: Your appraisal, your credit report, your escrow, your title insurance, lender fees, etc. an example of recurring closing costs are costs that would recur over and over again such as your mortgage payment, property taxes, insurance, etc. The reason that this is important is because lenders will allow for the broker/ banker, or even the seller to pay non-recurring closing costs on behalf of the client, but will not allow for the recurring closing cost to be paid by anyone other than the borrower themselves.

What do I look for when comparing Mortgage Brokers and Bankers?

Once again you first must ask yourself the question as to what you are looking for from your loan experience.

Is the most important thing to you the advise and consultation that you are going to receive? Is it the interest rate? Is it the speed with which things get done? These reasons and many others can compel someone to make a decision as to whom they want to work with.

At 1st Quest Mortgage we believe that we offer and provide all of these and many more. Our objective is to provide an extremely competitive interest rate with expert consulting and a high level of customer service with the integration of technology. The biggest mistake that is often made by the consumer is to shop rate alone. Typically what you will find is that there are many people out there that are willing to work for little to nothing, and in many cases the consumer ends up spending all and more of the money that they saved on Aspirin trying to cure the headache that they have received.

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When is the best time to close an Escrow?

There really is no best time to close an escrow.

On a purchase transaction, an escrow would be closed at the specified negotiated time between buyer and seller. On a refinance, you can try to target your close date near the end of the month therefore eliminating as much prepaid interest as possible and making your closing costs that you have to come up with less than it would be if you closed mid-month or even early in the month.

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Why would I use a builder's lender instead of an outside company?

It’s a very interesting thing these days that builders of new homes have decided to jump into the mortgage market. Many of them own their own mortgage companies, some of them have formed an alliance with an outside mortgage entity.

In some cases, the consumer truly does get a better deal from working with the builders mortgage company. Better deal being defined as a lower interest rate. What you will find in most cases is that the level of expertise of one who would work for a builder’s mortgage company is minimal so the type of financial advise that many people are seeking is not going to be provided. This is simply due to the fact that there are "several hands in the cookie jar."

You must ask yourself the question as a consumer, what type of service and financial consultation am I really getting if the person that I am working with is working for an extreme discount? The type of loan officer that would typically work for a builder’s mortgage company would lack the experience and knowledge that many people would want as it relates to the consulting of their finances. Benefits in many cases are that the builder is willing to provide perks as it relates to upgrades on the home. Once again, one must ask the question, am I really paying for this somewhere else that I don’t realize?

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How do you make your money?

There is no one answer to this question.

Sometimes a mortgage professional is paid directly by the lender for delivering the loan itself. In other cases the consumer pays them by paying points. And yet in other cases, the mortgage professional receives its revenues from both entities, a little bit from the borrower and a little bit from the lender.

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What does the new Private MI Cancellation Law mean to me as a consumer?

On July 29, 1999, President Clinton signed Senate Bill 318 (S-318) into law. The President's signing of S-318, also known as the Homeowners Protection Act of 1998. culminates a year's worth of the political process on Capitol Hill and put to rest, finally, the national debate about consumer's rights to have private mortgage insurance cancelled.

To understand the impact of S-318, it is important to clearly understand the role of private MI and how it works. When a borrower makes a down payment of less than 20 percent of the home's sale price, lenders often will purchase private MI to protect themselves against the borrower going into default. Research indicates that rates of default are significantly higher among borrowers making less than a 20 percent down payment.

The lender is listed on the MI policy as both the insured party and the beneficiary, but private MI provides advantages to the consumer as well.

With LPMI (Lender Paid Mortgage Insurance) the incremental cost of coverage is incorporated into the first mortgage note rate.

This new law succeeds in providing consumers with disclosure about their rights to have private MI canceled, and it establishes equity thresholds for automatic termination of private MI policies.

One new consumer-protective requirement is the Annual Disclosure. Lenders must inform borrowers annually with a written statement that they continue to have private MI and have the right to have it canceled upon request and subsequent to meeting the lender's cancellation criteria. 

For Borrower Initiated cancellation, for most conventional loans closed beginning on July 29, 1999, the borrower will have the right to cancel private MI coverage by written request (if the borrower has a good payment history and there is no decline in property value) at an LTV of 80%.

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