Common mortgage questions, straight answers

Faster than most people expect. I need a brief loan application, a credit check, and proof of income. In many cases we can turn it around in 24 to 48 hours.

In some situations an automated approval can be issued if the listing agent asks for one — useful when you're competing on a property and need to look like the strongest offer in the pile.

Pre-qualification is a conversation. You tell me your numbers, I tell you roughly what you can borrow. It takes ten minutes and carries very little weight with a seller.

Pre-approval means I've actually verified your credit, income and assets and a lender has reviewed the file. That's the letter that makes a listing agent take your offer seriously — and in a competitive San Gabriel Valley market, that difference is the whole ballgame.

Most loans close within 30 days; many of mine close in 21. A good working relationship with the lender is what drives response times, which is a large part of what you're paying a broker for.

If you need a shorter timeline, say so up front. Rush requests are possible, but they work far better when they're planned rather than discovered halfway through.

No. Every fee is disclosed up front, in writing, on your Loan Estimate. That's federal law and it's also just how I work.

If you choose a lender-credit structure, the non-recurring closing costs get credited back to you. Pre-paid items are separate and aren't included in that credit.

Pre-paids are easily confused with closing costs, but they're different — they're expenses you'd owe anyway, just collected at closing.

The usual ones are interest between your old loan and new loan, property taxes, homeowner's insurance, and HOA dues. You're not paying these to anyone as a fee; you're pre-funding your own obligations.

It covers non-recurring closing costs — the fees charged by the lender, title and escrow. Those get credited back to you.

It does not cover pre-paid items. And it isn't free: you're accepting a slightly higher rate in exchange for the lender covering those costs. Whether that's a good trade depends entirely on how long you'll keep the loan. I'll run both versions for you.

The borrower pays the appraisal up front — appraisers require payment before they'll schedule the appointment.

On many loans, appraisal fees incurred are refunded back to you at closing. I'll tell you exactly how it works on your specific file before you spend the money.

Definitely. Most lenders will want two years of tax returns to document income, and a current profit-and-loss statement can be used to support it.

If your returns show heavy write-offs, conventional guidelines may understate what you actually earn. That's when bank statement programs — qualifying on 12 or 24 months of deposits — or asset-depletion programs become the right tool.

PMI is private mortgage insurance. It applies when your down payment is under 20% and it protects the lender, not you, in the event of default.

On a conventional loan you can request removal once you've reached 20% equity. On FHA loans, the mortgage insurance generally lasts the life of the loan — which is a very common and very expensive thing for people not to know. Refinancing out of FHA once you have equity is often worth real money.

This comes up constantly, especially in multigenerational households. To exclude that other property's payment from your debt ratio, we document 12 months of payments made by the other party — cancelled checks or bank statements showing the money leaving their account.

Without that documentation, you have to qualify carrying both housing payments. Start gathering the statements early; it's the single easiest way to avoid a nasty surprise mid-escrow.

Less than most people assume. Conventional loans start at 3% down, FHA at 3.5%, and VA at zero for eligible veterans.

The real constraint usually isn't the down payment — it's closing costs and reserves on top of it. Under 20% down also means mortgage insurance, which changes the monthly math. Run it through the payment calculator with different down payment amounts and you'll see the shape of the trade-off immediately.

Fixed-rate loans are the most common — 10, 15, 20, 30 and 40 year terms. The rate never changes.

Adjustable-rate mortgages (ARMs) offer a lower rate for an initial fixed period, then adjust on a schedule tied to an index. Some loans also have an interest-only option where the minimum payment covers only the interest due. Each has a situation where it's the right answer and several where it isn't.

A mortgage broker works the wholesale channel rather than retail. I compare pricing across many lenders instead of selling one institution's products.

I like to compare it to shopping at Costco instead of a corner supermarket. Wholesale moves much larger volume and can typically offer better pricing. And if one lender's guidelines don't fit your file, I move it to a lender whose guidelines do — a bank simply can't do that.

Refinancing resets your term to the new maturity date. That's the part people miss.

If you're refinancing to reduce your rate, you have a choice: take the lower monthly payment, or keep paying the old amount and retire the loan earlier. If you're eight years into a 30-year loan and you refinance to a fresh 30, the lower payment can still mean more total interest. I'll show you both numbers so you're choosing rather than drifting.

No. None of the loans I place carry a prepayment penalty.

One thing to know: if you take a lender-credit (“no-cost”) structure, there's typically a disclosure asking you to keep the loan at least 180 days before refinancing again. Refinance inside that window and those credited closing costs are repaid to the broker.

Almost never for a rate-and-term refinance. If you locked something in the low 3s, that loan is an asset — protect it.

If you need to access equity, look at a HELOC or a fixed second lien instead. Those leave your first mortgage exactly where it is. A cash-out refinance would reprice your entire balance at today's rate to access a fraction of it, which is usually a bad trade. This is the most expensive mistake I see people about to make.

Your payments go to the lender that funded the loan. A mortgage broker arranges the financing and doesn't service it.

Depending on the lender, your loan may later be sold to a different servicer. If that happens you'll be notified in advance, and the terms of your loan don't change — only the mailing address does.

Yes, and that's largely the point. Rates move, guidelines change, and property values in the San Gabriel Valley have shifted enough over the past decade that a loan worth keeping in 2022 might be worth revisiting now.

I keep an eye on my clients' loans and reach out when something is genuinely worth a look. If you'd like that in writing rather than by phone, the newsletter covers the same ground.