How long does the process take?

This is a team effort so as long as you work with your NHF team to get all the needed documentation the process from applying for to completing the mortgage home loan transaction should take 30 days.

What is the application process for a mortgage loan?

We take full advantage of an automated underwriting system that allows us to request as little information as possible to verify the data you provided during your loan application. The automated underwriting system compares your financial situation with statistical data from millions of other homeowners and uses that comparison to determine the level of verification needed. In many cases, a single W-2 or pay stub can be used to verify your income or a single bank statement can be used to verify the assets needed to close your loan.

What credit score do I need?

Your credit score is certainly a determining factor, but it is not the only one so this can vary. Typically, we look for credit scores of at least 580. The higher the credit score, the better rates we can get for you.

Can I apply for a mortgage loan before I find a house to buy?

Yes, applying for a mortgage loan before you find a home may be the best thing you could do. When you apply in advance, we issue a pre-qualification letter subject to you finding your new home. You can use the pre-qualification letter to assure real estate brokers and sellers that you are a qualified buyer. The pre-qualification process helps assure that you are looking in the right price range to comfortably fit in your budget. Having been pre-qualified for a mortgage may also give more weight on any offer you make.

When you find the perfect home, simply call your NHF Mortgage Home Loan Professional to complete your application. At this point, you may lock in your mortgage rates and we will complete processing your application.

Can I borrow funds to use as my down payment?

Yes, you can borrow funds to use as your down payment. However, any loan you take out for a down payment must be secured by an asset that you own. If you own something of value that you could borrow funds against, such as a car or another home, it is a perfectly acceptable source of funds. If you are planning on obtaining a loan, make sure to include the details of this loan in the Expenses section of the application.

How are mortgage interest rates determined?

Interest rates fluctuate based on a variety of factors, including inflation, the pace of economic growth, and Federal Reserve policy. Over time, inflation has the largest influence on the level of interest rates. A modest rate of inflation will almost always lead to low interest rates, while concerns about rising inflation normally cause interest rates to increase. Our nation’s central bank, the Federal Reserve, implements policies designed to keep inflation and interest rates relatively low and stable.

Does it make sense to pay points or an origination fee to lower the rate on the home loan?

Points/origination is considered a form of interest. Each point is equal to one percent of the loan amount. You pay them up front at your loan closing in exchange for a lower interest rate over the life of your loan. This means more money will be required at closing. However, you will have lower monthly payments over the term of your loan

To determine whether it makes sense for you to pay points/origination, you should compare the cost of the points/origination to the monthly payments savings created by the lower interest rate. Divide the total cost of the points/origination by the savings in each monthly payment. This calculation provides the number of payments you must make before you actually begin to save money by paying points/origination. If the number of months it takes to recoup the points/origination is longer than you plan to have the mortgage, you should consider the loan program option that does not require points/origination to be paid.

Can I lock in a rate?

Yes. A lock is an agreement between the borrower and the lender that specifies the number of days for which a loan’s interest rate and points/origination are guaranteed. Should interest rates rise during that period, NHF is obligated to honor the committed rate. Should interest rates fall during this period, the borrower must honor the lock.

When can I lock my mortgage rate?

Once we have reviewed your documentation and credit package, we notify you when you are able to request the lock.

What is a fixed rate mortgage?

A conventional fixed rate mortgage is a loan product featuring a fixed interest rate for the entire term of the loan. Monthly mortgage payments remain the same for the life of your loan. A fixed rate mortgage may be right for you, if you:
• Prefer easy budgeting and long-term planning
• If want to lock in a favorable rate for the long term
• Prefer predictable financing for an investment property
• Don’t plan to relocate, refinance or move in the next few years
• Don’t expect a significant increase in income in the next few years

What is an adjustable mortgage?

An adjustable rate mortgage (ARM) is a loan type that offers a lower initial interest rate than most fixed-rate loans. The trade off is that the interest rate can change periodically, usually in relation to an index, and the monthly payment will go up or down accordingly.

Against the advantage of the lower payment at the beginning of the loan, you should weigh the risk that an increase in interest rates will lead to higher monthly payments in the future. In short, you get a lower rate with an ARM in exchange for assuming more risk.

For many people in a variety of situations, an ARM is the right mortgage choice, particularly if your income is likely to increase in the future or if you only plan to be in your home for three to five years. Here’s how ARMs work.

How long does it take to get an appraisal and who arranges it?

Licensed appraisers who are familiar with home values perform appraisals. We order the appraisal as soon as the credit report fee deposit is paid. Generally, it takes 10-14 days before the written report is sent to us. We follow up with the appraiser to ensure that it is completed as soon as possible. If you are refinancing, and an interior inspection of the home is necessary, the appraiser should contact you to schedule a viewing appointment. If you don’t hear from the appraiser within seven days of the order date, please inform your NHF Mortgage Consultant. If you are purchasing a new home, the appraiser will contact the real estate agent, if you are using one, or the seller to schedule an appointment to view the home.

Will I need mortgage insurance?

Mortgage insurance should not be confused with mortgage life insurance, which is designed to pay off a mortgage in the event of a borrower’s death. Mortgage insurance makes it possible for you to buy a home with less than a 20% down payment by protecting the lender against the additional risk associated with low down-payment lending. Low down-payment mortgages are becoming more and more popular, and by purchasing mortgage insurance, lenders are comfortable with down payments as low as 3 to 5% of the home’s value. It also provides you with the ability to buy a more expensive home than might be possible if a 20% down payment were required.

What happens at a loan closing?

The closing takes place at the office of a title company or attorney who acts as our agent. If you are purchasing a new home, the seller may also be at the closing to transfer ownership to you, but in some states, these two events actually happen separately.

During the closing, you review and sign several loan papers. The closing agent or attorney conducting the closing should be able to answer any questions you have. If you prefer, you can also contact your NHF Mortgage Consultant. Just to make sure there are no surprises at closing, your Wilmington mortgage professional will contact you a few days before closing to review your final fees, loan amount, first payment date, etc.

The most important documents you will be signing at the closing include:

• HUD-1 Settlement Statement –
The Hud-1 Settlement Statement is also commonly known as the closing statement and both the buyer and seller must sign it. This document provides an itemized listing of the final fees charged in connection with your loan. If your loan is a purchase, the settlement statement includes a listing of any fees related to the transaction between you and the seller. If the loan is a refinance, the settlement statement shows the pay-off amounts of any mortgages that paid in full with your new loan. Most items on the statement are numbered according to a standardized system used by all lenders. These numbers correspond to the numbers listed on the Good Faith Estimate that is provided in your application kit.

• Truth-in-Lending Statement –
The Truth-in-Lending Statement (TIL) provides full written disclosure of the terms and conditions of a mortgage, including the annual percentage rate (APR) and other fees. It is exactly the same as the TIL that you received immediately after your initial application, except it has been updated to reflect the final rate and fee information. Federal law requires that all lenders provide you with this document at closing.

• Note –
The note is the document you sign to agree to repay your mortgage. The note provides you with all of the details of your loan including the interest rate and length of time to repay the loan. It also explains the penalties that you may incur if you fall behind in making your payments.

• Mortgage/Deed of Trust –
The mortgage/deed of trust document pledges a property to the lender as security for repayment of a debt. Essentially this means that you give your property up to the lender in the event that you cannot make the mortgage payments. The mortgage restates the basic information contained in the note, as well as details the responsibilities of the borrower. In some states, the document is called a deed of trust instead of a mortgage.

If your home loan is a refinance, federal law requires that you have three days to decide positively that you want a new mortgage after you sign the documents. This means that the loan funds won’t be disbursed until three business days have passed. The closing agent provides more details at the closing.