FAQs
FREQUENTLY ASKED QUESTIONS
Starting Out
Credit Information
Applying for a Loan
Loan in Process
About Lund Mortgage
What should I do to help financially prepare for a home loan?
- Use cash instead of credit for your purchases.
- Avoid making any large credit purchases—the added debt could impact your ability to qualify for a loan.
- Manage all outstanding accounts carefully, and avoid skipping any payments.
- Contact creditors immediately if you have a problem or concern about your ability to make payments on time.
- Put money aside into savings so you'll have a financial cushion in case of an emergency.
Can I get prequalified for a home purchase loan before I find my property?
Absolutely. In fact, we recommend you do this before you even start looking for a home. A loan prequalification will provide you with an approximation of the size of loan you qualify for and help you determine how much of a home you can afford. It can be done by providing your income, expense, and asset information to your loan officer. Generally, a credit report is not run.
Can I get preapproved for a home purchase loan before I find my property?
Yes. A loan preapproval takes the prequalification process several steps further. A residential loan application will need to be completed, and you may be asked to provide documentation on your finances. This documentation includes, but is not limited to, current paycheck stubs, tax returns, bank statements, and stock and bond account statements. A credit report is also required for loan preapproval.
Getting pre-approved for a loan can give you an advantage in buying a house. It sends a signal to the seller and the agents involved that not only are you serious about your offer, you have the finances to back it up.
How do I choose a real estate agent?
Allow us to refer one of our many realtors that we do business with. Lund Mortgage has become the preferred lender of many residential and commercial realtors.
What if I have little or no credit?
Use your good payment history on rent and utilities, as well as credit obtained through a family member. Provide a year's worth of canceled checks to validate consistent monthly payments. This information will become part of your application for the mortgage loan.
How do I increase and protect my credit rating?
Here are a few general tips to assist you in raising and maintaining your score:
- Maintain two to three revolving charge accounts (such as Visa or MasterCard) in good standing.
- Have a couple of other credit card accounts, such as department stores or gas cards, in good standing.
- Avoid "finance" company credit card offers.
- Avoid credit inquiries—they lower your credit score.
- Pay your bills on time, or within 30 days from the date they are due.
- Don't max out your credit cards—the ratio of available credit to your total credit balances is very important.
- Don't apply for multiple credit lines: that triggers an inquiry of your credit, which lowers your credit score.
What if I have a credit problem because of an unusual situation?
If you normally pay your bills on time but failed to pay because of an unusual or temporary situation, write a detailed letter explaining the circumstances. Also provide supporting documentation to your explanation, such as a doctor's letter that will add credence to your case. This information will become part of your loan application. Your lender may be able to overlook a credit problem if you can provide a good reason for neglecting your obligation.
What should I do if I continually struggle to pay my bills?
The best thing to do is seek professional counseling to help you with your credit situation. Consumer Credit Counseling Services is a nationwide non-profit organization that provides credit counseling free or for a reasonable fee. They can help you develop a solid plan for regaining control of your finances.
How will my credit score affect my loan application?
Credit scoring plays a significant role when you apply for a loan. Higher credit scores help you to be eligible for more loan options. If you've had credit difficulties in the past, there are still mortgage programs available, but they will usually cost more and will vary depending on the severity of your credit problems.
How do I know that I am getting the best rates available?
Lund Mortgage's rates reflect the most reputable lender programs availible and are continually updated.
When should I choose a fixed-rate loan?
A fixed-rate loan offers a borrower the comfort of knowing exactly what their payments will be, month after month, for the life of the loan. Loan terms can range from 15, 20, 30, and up to 40 years. In a low-rate environment, borrowers tend to prefer a fixed-rate product that can protect them from possible interest-rate increases.
When should I choose an adjustable-rate mortgage or ARM?
Generally speaking, an ARM enables borrowers to secure a loan at an initially lower interest than a fixed-rate loan. This means a borrower has lower monthly payments for a specific period of time when compared to other loan options. Lower monthly payments may allow you to qualify for a higher loan amount.
How does an adjustable-rate mortgage (ARM) work?
The interest rate on an ARM is tied to a market index and is fixed for a specific period of time. Once that period of time is over, the interest rate is adjusted periodically (every 6 to 12 months) following the changes in the interest rate of index that is associated with the loan. Examples of market indexes include, but are not limited to, LIBOR, Constant Maturity Treasury, and 11th District Cost of Funds. If you are interested in an adjustable-rate mortgage, it is important to discuss all of the features and options of an ARM with your loan officer so they can help you make an assessment of the best ARM to meet your specific needs.
What does it mean to "lock a rate"?
"Rate locks" are a way of protecting from a possible rise in interest rates during the processing of your loan. With some lenders, you can lock your rate up to 90 days. Generally speaking, if you choose to lock for an extended period of time, the cost of the loan goes up. Furthermore, if rates improve during the processing of your loan, you will still get the rate you locked.
What is a "point"?
A "point" is essentially 1% of the loan amount. For instance, one point on a $100,000 loan is equal to $1,000.
When should I pay points on a loan?
The decision to pay points on a loan depends heavily on a borrower's circumstances. In certain situations, it can be very advantageous for a borrower to pay points on their loan. Generally speaking, the longer you plan to keep a loan the more sense it makes to pay points to get a lower interest rate. One way to determine this is to calculate the break-even point of how long you would have to keep the loan in order to save over the cost of paying points up front. If you are comparing two loans with the same interest rate, and one of them doesn't require you to pay points, then there is no reason to pay points. Another consideration may be tax purposes. Points paid on a new home loan are immediately deductible as interest.
How does the credit report process work?
The approval process requires a credit report. Lund Mortgage uses a three-bureau credit check to gather information regarding your credit history. Once this information has been positively evaluated, the loan process begins.
How does the appraisal process work?
Once a credit check is completed, a licensed appraiser is assigned to appraise your property. Appraisals usually range between $300 and $650, depending on value, size, location, and occupancy status of the home.
How long does the loan process take?
Depending on the circumstances, the whole loan process usually takes
2 — 4 weeks. The more complex your financial and property situation is, the longer the process takes.
How will I know when my loan is approved?
Your loan officer will notify you when you loan is approved.
What is the difference between Lund Mortgage and a bank or portfolio lender?
Because we do business with all the major lending institutions in the state, our focus is on offering the broadest selection of loan products. We offer unbiased product choices based on finding the best match for each borrower's needs. Working with a bank directly might sound like it could save you money, but because you are limited to that one bank's loan program, you are not assured of getting the best home loan, as you are with Lund Mortgage.
Is the information I provide you over the Internet secure?
Lund Mortgage will never let anyone else view or use the information you provided for any purpose other than getting you your mortgage. We are absolutely committed to protecting the privacy of your financial information and we have the very latest and most powerful security technology in place to prevent any unauthorized access to your information.