Points are the upfront cash payment (each point equals 1% of the loan) paid by the borrower to secure a lower interest rate. Points are typically used when the borrower intends to maintain the loan for at least 5 years.

This is a contractual agreement that binds the borrower and the lender. It has four components namely: interest rate, length of the lock, loan program and points or credits.

FAQs Archive - Community Mortgage, Inc.

Q: What is a jumbo mortgage?

This is a mortgage that has a loan value larger than the maximum loan amount that can be purchased by Freddie Mac and Fannie Mae, $580,750 for San Diego County for 2016.

Q: What is a conforming loan?

This is a loan that conforms to the requirements of Fannie Mae and Freddie Mac – the 2 major Federal agencies that buy mortgages. Loans must conform in order for them to be purchased by either agency.

Q: What is the Loan Estimate?

This is the list of settlement costs that the lender provides to the borrower within 3 days after he or she receives the complete loan application.

Q: What makes a mortgage broker and a lender different?

A mortgage broker educates you on the different loans that are available. He also takes your application and processes the loan. He puts together the necessary information such as your credit report, employment and assets verification, appraisal and more. Once done, the lender then “underwrites” and funds the loan. Underwriting means that the lender decides if the borrower is qualified or not.