Anyone looking for any type of financing needs to be prepared - here you go!

1. Professional Financing Tips
Don’t Skip Payments
We strongly recommend that you make all payments on their due date, even while your new mortgage is in
processing. There is no net benefit to you regardless of what others might say.
Do Not Make Drastic Changes
The loan program that has been proposed to you is based on your current credit, debt load, equity position,
employment and income situation. Please do not make changes that would affect these items. If changes in
employment or debt load are unavoidable, we ask that you notify your mortgage planner immediately.
Insurance Requirements
Homeowner’s insurance is required for any home mortgage. Coverage should be enough to either cover the
loan amount or to rebuild the home new. If the coverage is insufficient, coverage will need to be raised. If the
home is determined to be located in a flood zone, flood insurance will be required.
Pre-approval versus Pre-qualification
A pre-approval is an actual underwriter’s findings regarding your loan application whereas a pre-qualification is a
lender’s opinion. A pre-approval uses much stronger language and is much more thorough than a pre-
qualification, however until the file has funded there are no guarantees. Most loans that are considered
CONFORMING are issued pre-approvals whereas most NON-CONFORMING loans will only receive a pre-
qualification.
Locking versus Floating your rate
During the application process, you will be given the option to lock-in or float your rate. By locking your rate you
protect yourself against any negative fluctuations in the market, however if rates improve you must remain at
your chosen lock-in rate.
APR versus Interest Rate
You will find two separate percentages or rates disclosed within your application and closing documents. One is
referred to as your note rate or the interest rate you have been quoted while the other is referred to as an
Annual Percentage Rate, or APR. The APR is a calculation of your note rate with the addition of all loan related
closing costs. Simply stated, if your loan has no loan related closing costs, the APR and the Note rate will be
the same percentage.
Good Faith ESTIMATE
Your initial loan disclosures will include a document entitled the Good Faith Estimate. This document is an
estimate of your total settlement at closing. The odd days interest, property taxes, homeowner’s insurance
premium, and payoffs can sometimes change from the initial date of disclosure. Your closing costs will remain
the same or improve.
Escrowing on New Construction
Some lenders require that escrows for taxes be based on the previous year’s amount. On loans involving new
construction, this will sometimes result in a deficiency balance for the next year’s tax bill. We highly recommend
that you save back the difference to avoid a dramatic payment increase. Your mortgage planner will be able to
provide you with the estimated tax amount.
Right to Rescission
Any time you are refinancing your primary residence, federal law requires that you are given a 3 BUSINESS day
right to rescind. This is usually not an area of concern except when a client is expecting cash out from the loan.
In these cases, just remember the funds will not be available until 3 BUSINESS DAYS past your closing date.
Fixed Rate versus ARM rate
The terms and conditions of your loan are detailed on your Federal Truth in Lending Statement. This document
will be provided to you at closing and are also a part of your application documents. PLEASE HAVE YOUR
MORTGAGE PLANNER POINT OUT WHETHER YOUR INTEREST RATE IS FIXED OR ADJUSTABLE.
Prepayment Penalty
The terms and conditions of your loan are detailed on your Federal Truth in Lending Statement. This document
will be provided to you at closing and is also a part of your application documents. PLEASE HAVE YOUR
MORTGAGE PLANNER POINT OUT WHETHER YOUR LOAN HAS A PREPAYMENT PENALTY.
My loan has a fixed / adjustable rate and there is / is not a prepayment penalty.
This document has been reviewed with me/us. We acknowledge receipt of this information.
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Borrower Initials Date Co Borrower Date