General Questions

Sun West Mortgage does not charge an application fee for you to apply for a mortgage.
Sun West Mortgage has one of the fastest turnaround times in the industry, and we offer 20-day closings, but every borrower’s situation is different, and due to documentation requirements and varying response times from the borrower, the average time to close a loan may be higher.
A mortgage refinance refers to obtaining a new loan for the purpose of lowering your mortgage payments, converting your existing loan into a more affordable or manageable loan, or getting cash out on available equity on your home.
Sun West Mortgage recommends that you check with your existing lender regarding any prepayment penalties. There will likely be fees involved when refinancing your home, although you may have the option of rolling these costs into your new loan.

Most types of mortgages require a minimum amount of down payment, except for VA and USDA (RURAL) programs. You may also be eligible for down payment assistance programs that can help you towards minimum down payment requirement on some of the loan programs.

On Conventional Mortgages, your lender will require you to pay a Private Mortgage Insurance (PMI) premium as part of your monthly payments if you put down less than 20% of the purchase price of the property.

There are government loan programs available with less stringent down payment requirements as well, such as an FHA loan that will require only a 3.5% down payment, but again, these programs also require mortgage insurance premiums.

Mortgage insurance has been established by lenders and government agencies as a means to protect the investor before the mortgage is fully paid off. When a borrower defaults on his or her loan and the property is forced to be sold by foreclosure, the property may be sold for less than the original appraised value. Mortgage insurance, in such cases, allows the investor to file a claim with the insurance issuer to claim a partial or full portion of the amount of loss.
The Loan-to-Value (LTV) is a percentage of your loan in relation to your property’s appraised value or purchase price, whichever is lower. The LTV is one of the key risk measures used by mortgage banks to determine the size of the loan for which the borrower can qualify. The higher the LTV, the more risk for the lender and the less likely that a borrower will qualify for a loan.

Your mortgage interest rate is dependent upon a number of factors, including, but not limited to your credit score, size of down payment, loan purpose, occupancy, LTV ratio, and DTI ratio. Different mortgage products have different guidelines that may also indirectly affect what rates you can get.

The base interest rate in the market is determined by the secondary market through competing U.S. Treasury bonds, the price of which is determined by the market demand. All these factors combined will determine what interest rate you will get for your mortgage at a particular time. When you are ready to secure your interest rate during your mortgage application, you should contact your licensed loan officer to go over the lock process in more detail.

Closing costs are the fees associated with acquiring a mortgage loan. Such closing costs include but are not limited to:
  1. Lender fees
  2. Origination fee
  3. Discount points
  4. Third party service fees for appraisal, credit report, flood certification, etc.
  5. Title and escrow / attorney charges
  6. Transfer / intangible / mortgage tax as required by the city, state, etc.
  7. Per diem interest

The lender is required by law to provide to you a preliminary estimate after you submit your application.

The origination charge includes fees for services from loan application, preparation, underwriting, and processing. The origination fee is the fee(s) earned by the lender and/or broker for providing you the service when making the loan.
This process is formally known as a rate lock. After you submit your application, you are eligible to lock your loan. If you do not wish to lock at the time of application, you may choose to check with your loan officer regularly to check the current interest rate and then lock at a later time. It is important to note that until you lock your loan, your interest is subject to market fluctuations and may go up until it is locked. The expiration of your rate lock must be good until the date of funding of your mortgage loan.
An appraisal is required by your lender to professionally determine the value of the property you wish to buy. A licensed appraiser will be chosen to inspect the features of the house, the quality of the build, age, etc. The appraiser will then compare the asking price of the property to recent home sale data in the region to see if it is of fair market value. A lender will not approve a loan where the purchase price is greater than the appraised value unless you agree to bring in the difference of the two as part of your funds at closing.
Since the appraisal is primarily used so the lender will know that they are not approving a loan in excess of the property value, lenders will still only give you a loan for the lower of the two.

There are a few insurance types that are required when you get your mortgage, and each has a unique purpose.

  1. Private Mortgage Insurance (PMI): This is an insurance coverage that your lender will require you to purchase if your down payment is less than 20% of the loan amount. The purpose of this insurance is to protect the lender’s investment on the loan. This is generally paid from your escrow account each month and is collected together with your monthly mortgage payment.
  2. FHA Mortgage Insurance: This mortgage insurance serves the same purpose as a PMI, but has a different name because it is charged by your lender for taking out FHA government insured loans when you do not meet LTV requirements. You will be required to pay a portion as an upfront premium during closing, plus a monthly amount.
  3. Hazard Insurance: It is homeowner’s insurance required by the lender to protect their investment against damage to the property, before the loan is paid in full. Note that a separate Flood Insurance may be required in certain areas, in addition to Hazard Insurance.
  4. Title Insurance: Just as the name suggests, Title Insurance is indemnity insurance purchased to protect the property title. The title insurance protects against title defects and any possible lawsuits against it due to documentation deficiencies or lien claims. It is important because it protects both the lender and borrower’s interests.
With respect to mortgages, equity refers to the difference between the market value of the property and the amount currently owed on the mortgage. It is basically the amount of money the owner will be able to keep for him or herself after selling the house and after paying off the remaining mortgage amount.

The term escrow can refer to two things: the escrow process or an escrow account. The escrow process is an important part of the mortgage origination where a third party company is assigned to keep control of all funds and documents for all parties (seller, buyer, lender) in the transaction. Funds are sent to the escrow company to be processed and verified, and the escrow company, upon disbursement, prepares a settlement statement summarizing the distribution of funds and the terms of your mortgage.

An escrow account usually refers to an account for a mortgage by a lender to hold funds that will be used to pay towards property taxes and insurance, including mortgage insurance. The payments made from an escrow account will be shown in your monthly mortgage statements, so you don’t have to worry about managing these payments separately.