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General FAQ & Getting Pre-Approved
For those just getting started.
What can I expect from working with a team vs. just one Loan Officer?
In a word – responsiveness!
When our founders were top-producing loan officers, they discovered that they were often communication-bottlenecks because all information flowed through them. When they were preoccupied with other projects or multiple clients, couldn’t update clients or to respond to inquiries in a timely manner. In response to this problem, our founders created JVM’s renowned “Super Team” system. Every team member is kept apprised of every client in minute detail with the use of JVM’s unique, state-of-the-art and highly secure information management system.
You need to only email [email protected] or call (855) 855-4491 and you are guaranteed a 60-minute response time during business hours, every time, from an informed team member.
Why don’t you have loan officers and how does that benefit me?
We don’t have loan officers so we can offer you lower rates AND better service!
When our founders managed a loan officer-centric mortgage company prior to 2010, they discovered that their loan officers not only relied heavily on back-office staff, they often knew much less too because they were not exposed to as many files or loan-related issues. In addition, loan officers often command high levels of compensation that result in higher rates. Our founders realized that they could provide both better service and lower rates by eliminating the loan officer role altogether.
How fast can I close on my mortgage after my offer is accepted?
We can close most transactions as fast as 14 calendar days – from “contract to close” (the day you get your keys). Some loan types require longer closing periods if they are particularly complex or if they require us to rely on third parties for significant aspects of the transaction, so please confirm your closing period with one of our team members.
An example is Veterans Administration (VA) loans, where we have to rely on the services of both the Veterans Administration and VA-certified appraisers who often do not work as quickly as the appraisers in our standard appraisal network. Because of this, we need 21 calendar days to close a VA loan.
How will JVM’s fast close help me if sellers don’t want to close quickly?
No matter how quickly sellers want to close, what they want most is certainty. When sellers accept an offer, they know they will be tying their property up in escrow for some time. They also often have plans to move to another home. Sellers do not want their transactions blowing up at the 11th hour because financing was not 100% guaranteed – this puts enormous stress on them, subjects them to penalties, and can even leave them homeless. So, one of the primary criteria sellers consider when evaluating competing offers for their homes is the likelihood or certainty of a timely closing. JVM’s reputation, fully pre-underwritten pre-approvals, and willingness to close very quickly (even when sellers don’t want to), all reinforce the “certainty” that sellers look for when deciding which offer to accept.
Another technique buyers can employ to make their offers more enticing to sellers who do not wish to close quickly involves offering a fast close anyway but with a “seller-rent-back” after close. A “rent-back” refers to a situation where sellers rent back the home they just sold from the buyer who just bought the home. This technique is often very enticing because it guarantees a fast close and cash in the sellers’ pockets much sooner while also allowing sellers to remain in their former home for up to 59 days (the maximum allowable “rent-back” period) if necessary. Please ask a JVM team member to elaborate on this technique if you are interested.
Why does JVM recommend working with a Realtor?
We strongly recommend the assistance of an experienced Realtor/Real Estate Agent for the following reasons:
- Experienced Real Estate Agents have access to the Multiple Listing Service (MLS) and can better assess all the properties available in your price range, outside of property listing sites like Zillow, Trulia, Redfin, etc.
- Real Estate Agents know the local market much better in most cases, and can help you avoid purchases that are not in your best interest. Appropriate offer-prices can be difficult to assess, and a Real Estate Agent’s guidance is crucial in a competitive market.
- Without a Real Estate Agent’s expert guidance, you might pay too much or offer too little and not get the house you want. Real Estate Agents also make sure your buyer rights are adequately protected and that you get all of the necessary inspections done properly.
- And finally, Real Estate Agents help you effectively negotiate for seller credits for closing costs and repairs, among other things. Please let us know if you need a Real Estate Agent referral; we know experienced Real Estate Agents in most major markets throughout California and Texas.
How long does it take to get pre-approved? What’s the difference between a pre-approval and a pre-qualification?
A typical pre-approval takes 1-2 days. If you have an upcoming offer deadline, please let us know and we will happily expedite accordingly.
The pre-approval process is much more involved than most buyers realize (especially because JVM is so thorough) but we can fully pre-approve you in several hours if necessary.
Pre-Approvals VS. Pre-Qualifications
Many lenders offer only “pre-qualifications.” Pre-qualifications can be much faster because they are much less thorough, involving only a preliminary income analysis without a full review of tax returns, assets accounts and credit profiles.
JVM avoids pre-qualifications because they do not uncover potential issues and listing agents and sellers are much less likely to accept an offer accompanied only with a pre-qualification.
How long does my pre-approval remain valid?
Your pre-approval remains valid as long as the primary criteria we used to pre-approve you remains the same.
The primary criteria includes your employment, your income, your debt obligations, your assets, and your credit. If any of these criteria change, please let us know so we can evaluate their impact on your qualifications and pre-approval.
What documentation do I need to provide in order to get pre-approved? Do you require more documents than my bank/credit union?
For the vast majority of mortgage loans available, all lenders require the same documentation:
- Tax Returns
- Paystubs
- W2s
- Investment Account/Bank Statements
- Credit Report
Some types of mortgage loans allow much less documentation if you are a particularly strong borrower with a large down payment, low debt ratios, and/or excellent credit. Similarly, there are “Non-QM” loans available if you do not qualify in a traditional manner. These loans may only require bank statements or other alternative documentation sets, but they also come with higher rates and down payment requirements. When we work on your pre-approval, we will always qualify you for the best loan available with minimal documentation requirements.
This is due to regulations though, and is not because one lender is more demanding than another. ALL lenders are subject to the same regulations and requirements.
Why do you ask for so much paperwork up front?
We collect so much up front to protect you! JVM will fully pre-underwrite your file to ensure we have an airtight pre-approval. Our strong pre-approvals make your offers much more compelling and much more likely to get accepted by sellers.
It is, however, extremely important that we miss no potential issues when we are issuing your pre-approval because you and sellers alike depend on them, and because you will be subject to penalties and even the loss of a security deposit if a deal-killing issue arises after you are in escrow. Many lenders only do “pre-qualifications” instead of full pre-approvals with minimal documentation requests. They portray this as a courtesy to borrowers but they are really subjecting their borrowers to substantial risk because there are so many potential issues that can arise after receipt and review of all documents.
Here are some examples of deal-killing issues that we have seen other lenders miss:
- Commission income was not seasoned. Lenders cannot use commission income until there is a two-year history, and just reviewing pay-stubs and W2s without getting verification of employment forms filled out will not tell lenders whether or not there is sufficient seasoning.
- Child support ends in two years. Lenders cannot use child support income to qualify a borrower unless it will continue for at least 3 years, requiring a deep dive into a divorce decree to make sure.
- Retiring in two months. Lenders require employment to continue indefinitely or beyond two years before they can use the income from an employer for qualification purposes. If a borrower is retiring soon, the income from the job cannot be used. Again, a formal verification of employment is necessary to establish job continuity.
Can we avoid pulling my credit during the pre-approval process?
Along with your income, employment, and assets, your credit profile is crucial during the evaluation process for any lender’s pre-approval or pre-qualification.
JVM’s full pre-approval process requires that we run our own credit report for several reasons. First and foremost, we use Fannie Mae’s and Freddie Mac’s specialized software as part of our pre-approval process. The specialized software requires that we have our own internal credit report in a specific format that integrates automatically with the software. We need to integrate the entire report too; we cannot just use a score or information that is conveyed to us. In addition, we need to make sure we have a valid and up-to-date report to ensure we have an accurate pre-approval.
Credit reports and information provided by third parties cannot be verified as 100% accurate and therefore should not be relied on when the stakes are so high with respect to mortgage pre-approvals.
We of course understand the concern you may have in regard to inquiries on your credit report. Because of this, we like to remind everyone that the major credit bureaus consider all credit inquiries from mortgage lenders within a 45-day period to be a single inquiry from a credit score perspective. This allows you to “shop” among different lenders, if necessary, and avoid an adverse impact on your credit.
Why is my credit score online so much higher than the one you are reporting?
Online credit reporting tools often yield higher credit scores than those that mortgage lenders pull with their reports. This is because the scoring criteria that mortgage lenders use is more stringent than the scoring criteria that is used by the online tools.
As discussed above, we are required to use our own internally generated report that adheres to the specialized scoring criteria for mortgage lenders.
Does it matter if my spouse/partner has a low credit score?
Yes. It matters because credit scores can significantly affect your interest rate. When lenders check credit, they access the three major credit bureaus and rely on the credit scores those three bureaus generate. Lenders then correlate to “the middle” of the three scores when they qualify you.
If there is more than one borrower on a loan application, lenders correlate to the lowest middle score of all the borrowers on the application.
For example, if a wife and husband are applying for a loan and the wife has a middle credit score of 800 while the husband has a middle credit score of 650, their interest rate could be impacted by as much as 1% because of the husband’s credit score! One solution is to remove the husband from the loan (and still keep him on title) but that only works if the wife has enough income to qualify on her own. The other solution is to have the husband work with one of our recommended credit repair agencies to improve his credit score prior to getting into contract to buy a home. This process, however, can take several weeks or even months.
Who is Vellum Mortgage/JVM’s “Mortgage Bank?”
Vellum Mortgage is the “Mortgage Bank” with which JVM is affiliated. A mortgage bank is an entity whose sole purpose is the underwriting and funding of mortgage loans. This is in contrast to a “commercial bank” that holds deposits, issues checking accounts, and makes commercial loans.
JVM Lending operates independently of Vellum and affiliates with Vellum solely and only to get our loans underwritten and funded in the most efficient and cost-effective manner possible. By affiliating with a mortgage bank the size of Vellum, we can offer much lower rates than we could if we set up our own much smaller mortgage bank.
As a borrower or an agent, all of your interactions will be with JVM Lending only. We are 100% independent with our own tech stack, website, marketing, systems, hiring, training, accounting, and everything else required of a fully functional business.
We share this info in our FAQs because our clients receive disclosures and other information from Vellum for regulatory reasons, and it sometimes confuses people.
What is “Loan Servicing” and does JVM “service” the loans it funds?
Per Investopedia, loan servicing includes sending monthly payment statements, collecting monthly payments, maintaining records of payments and balances, collecting and paying taxes and insurance (and managing escrow funds), remitting funds to the holders/owners of the mortgage, and following up with any delinquencies.
One of the things that sometimes confuses borrowers is the fact that servicers are often separate entities from the mortgage holders or the investors that buy mortgage loans.
When a mortgage bank like JVM/American Pacific Mortgage (APM) funds a mortgage it has to sell the loan at a premium shortly after funding in order to make money.
When mortgage banks sell their loans, however, they can hold on to the servicing themselves, sell the loans with the servicing rights, or sell the loans separately from the servicing rights.
A mortgage bank might hold onto servicing rights if it wants to collect the fee income itself over time, but more often than not mortgage banks sell servicing rights when they sell their loans.
While JVM/APM does retain some servicing, we either opt to sell or are forced to sell servicing rights in many cases, depending on loan type.
The investors that buy our jumbo loans, for example, typically demand servicing rights along with the loan (so we are not allowed to service them even if we want to).
Borrowers also sometimes request that we avoid specific servicers because they had experiences with them in the past.
Unfortunately though, while mortgage banks can sometimes avoid servicers with particularly poor reputations, they more often than not have no control over who ends up handling the servicing.
This is particularly the case when servicing rights get sold or transferred more than once after a loan is sold.
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Interest Rates & Loan Process FAQ
For those already in the mortgage process.
What will my interest rate be?
Your interest rate is impacted by several different factors including property type, down payment, loan amount and credit score. JVM is happy to provide current market rate quotes for your particular scenario at any time, but rates cannot be guaranteed until locked.
NOTE: Rates cannot be locked unless a property has been identified and we have an address to associate with the rate-lock.
Here are factors that will influence your interest rate:
- Property Type: Condos, high-rise condos and multi-unit dwellings (2 – 4 units) usually have higher interest rates associated with them, as compared to single-family dwellings.
- Property Use: Investment properties have higher rates than owner-occupied properties.
- Credit Scores: Credit scores significantly affect rates. Having a 750 mid-score might have a rate as much as 1% lower than if you were to have a 670 mid-score.
- Down Payment: The bigger the down payment, the lower the rate, in most cases.
- Loan Amount: Very small loans (under $150,000 for example) can have higher rates, as can very large jumbo loans (over $3 million for example). In addition, “low balance” conforming loans under $647,200 will have lower rates than “high balance” conforming loans (from $647,200-$970,800).
- Loan Type: FHA and VA rates are usually lower than conforming (Fannie/Freddie) rates, and our jumbo rates are currently the lowest of all for very strong borrowers.
- Rate Lock Period: Interest rates can be “locked in” or guaranteed prior to close of escrow for 15, 30, 45, or 60 days in most cases. The longer the lock period, the higher the rate.
- Fixed Period/Loan Maturity: The longer a rate stays fixed, the higher the rate. For example, a 7/1 ARM (fixed for seven years) will usually have a lower rate than a 15-year fixed-rate loan, and a 15-year fixed-rate loan will have a lower rate than a 30-year fixed-rate loan.
- 1st/2nd Combo Loans: Loans with a concurrent 2nd mortgage can have higher rates too, depending on the loan-to-value ratio.
If several of the above factors work in tandem, your rate could be significantly affected.
For example, if you have a 690 credit score and are buying a high-rise condo with 5% down with a high-balance loan, your interest rate might be 1% to 2% higher than if you were buying a single-family home with 25% down, have a 750 credit score, and a low-balance loan.
When can I lock in my rate?
For a purchase, we can lock in your rate as soon as we receive a ratified purchase contract that identifies a property address and closing period.
For a refinance, we can lock in your rate as soon as you provide the authorization, after you and one of our Mortgage Analysts have discussed the terms and benefits.
What is the difference between my APR and the interest rate quoted to me for my mortgage?
The interest rate we quote you is the actual rate that will be on your mortgage promissory note. The APR (Annual Percentage Rate) is a recalculation of your effective mortgage interest rate to include your closing costs as well as the interest you will pay on the loan. These closing costs can include origination fees, points, escrow fees and mortgage insurance.
The APR may be somewhat misleading on loans that require large mortgage insurance premiums, like FHA loans. APR quotes are required, however, to prevent lenders from quoting artificially low interest rates to attract business and then charging substantial fees to cover the cost of the low rates.
If rates drop immediately after I close my loan, when is the soonest I can refinance into a lower-rate mortgage?
If rates fall, we can lock you into a new, lower rate as soon as four months after you close – but, we cannot close your new loan for at least 180 days after your initial loan closes. This is because most lenders sell every loan they fund on the secondary mortgage market for a premium (more than the principal loan amount), as that is how all mortgage lenders make enough money to cover overhead.
For example, if we fund a $400,000 loan with “no points” and/or “no origination fees” charged to you (the way we fund almost all of our loans), we make no money from you. We instead make all of our money by selling your loan on the secondary market to an investor (in most cases). Because that investor is paying a premium for your loan, they want to keep it long enough to recoup some of the premium they paid to us for the loan by collecting the interest you pay monthly on your mortgage. They therefore subject us to a very large “early pay off penalty” if your loan is paid off (by refinancing) within 180 days of our sale-date to the investor. Because these penalties are so large and damaging to our business overall, we respectfully ask you to avoid refinancing and/or paying off your loan for at least 180 days after closing.
As an ongoing service to our clients, we will monitor your rate very closely after your loan closes to make sure we (and you!) never miss a refinance opportunity. So, if rates do fall after you close, we will definitely reach out to you to discuss refinance opportunities. We will, however, not close your new loan until the 180-day period has passed.
What should I look for when comparing rate quotes from different lenders?
We recommend reviewing the below items closely when comparing quotes:
I. Closing Costs.
Our rates tend to be very low compared to most other mortgage banks and we are also very honest and up front about ALL potential closing costs – with respect to both recurring fees (interest, property taxes, insurance, etc.) and non-recurring fees (one-time fees such as title, escrow, appraisal, etc.). The vast majority of closing costs are imposed by third-parties, such as title companies and appraisers, and are costs that we have no control over. Many lenders, however, fail to disclose all the potential closing costs with their rate quotes in an effort to appear more competitive. When comparing quotes, if one lender’s closing costs are significantly lower, make sure you know whether they are omitting third-party fees.
II. Lock Periods.
Another factor to consider is the lock period. Interest rates can be locked in for 7 days, 10 days, 15 days, 30 days, 45 days, or 60 days (or even longer in some cases). The shorter the lock period, the lower the rate. Some lenders will give you rate quotes for very short lock periods to appear more competitive than they actually are. This is misleading, however, when you have a 30-day escrow for example but the rate quote is for a 10-day lock. If the lock period is only 10 days but your close date is 30 days away, you could not lock in a rate for 20 days at least – and the market could move significantly in that time.
III. Can their quoted rate be locked now?
When potential buyers are shopping for loans but are not yet in contract, many lenders quote under market in an effort to lure buyers into their system. They do this because they know they will not have to honor their quote in the short term because the buyers are not in contract on a home yet. This is because you cannot lock in your rate until you are in contract with a property identified (in most cases). Then later when you are in contract, those unscrupulous lenders can simply claim that rates went up since they last quoted you. At JVM, we will always only quote rates we can actually lock.
What is the difference between an FHA and conventional loan?
There are a few differences between these types of loans:
- Mortgage Insurance: The main difference between an FHA and a conventional loan is that FHA loans are insured by or backed by the U.S. Federal Government. FHA stands for Federal Housing Administration, and that Federal agency backs every FHA loan with its massive insurance pool. That pool is funded by up front “Mortgage Insurance Funding Fees” of 1.75% of the loan amount at the close of escrow and by monthly mortgage insurance premiums equal to 0.85% (in most cases) of the loan amount divided by 12. These mortgage insurance premiums are mandatory and permanent in most cases, even when down payments are substantial (20% or more of the total purchase price). In contrast, conventional loans are not backed by the Federal Government. Conventional borrowers putting down 20% or more do not need any mortgage insurance but buyers putting down less than 20% will need “Private Mortgage Insurance,” or PMI. The insurance is deemed “private” because is provided by private sector insurance companies and not by the government (like with FHA). We should emphasize here that the mortgage insurance referenced above only protects lenders in the event of a default; it does not protect you as the borrower.
- Down payments: FHA only requires 3.5% of the purchase price for a down payment. Conventional loans have 3% down options for some qualifying buyers but the majority of conventional buyers need to put down at least 5%.
- Rates: FHA interest rates are lower than conventional interest rates, despite what many lenders convey. These lower rates, however, are offset by FHA’s much higher mortgage insurance premiums in most cases.
- Guidelines: FHA is also much more flexible with respect to credit and underwriting guidelines.
- Which option is best? For strong buyers with substantial down payments, lower debt ratios, and good credit, conventional financing is always the better option because buyers can avoid the Up Front Mortgage Insurance Premium altogether, and avoid the monthly mortgage insurance premium if they put down 20% or more. If strong buyers put down less than 20%, conventional financing is still the better option because the Up Front Mortgage Insurance Premium is avoided once again and private monthly mortgage insurance is much cheaper than FHA’s. For buyers with lower credit scores (under 700), limited funds, and higher debt ratios, FHA is often a much better option.
Can I put $0 down?
All of JVM’s loan products require a down payment towards the purchase price, with the exception of VA financing.
JVM does, however, offer both FHA and conventional financing with very low down payment options. FHA requires only 3.5% of the purchase price for a down payment, and our conventional options require as little as 3% down for qualified buyers. Both FHA and conventional loans also allow gift funds to comprise 100% of the down payment.
Eligible veterans can take advantage of VA financing that requires no down payment, as long as the loan amount is within county loan limits.
I am receiving gift funds from a family member to help with my down payment. How does that affect my loan?
In most cases it won’t affect your loan at all, as most lenders are very flexible when it comes to gift funds. Our only advice when it comes to gift funds is to have your donor wait and deposit your gift funds directly into an escrow account AFTER you are in contract to buy a home. This avoids a lot of unnecessary paperwork for both you and your donor. Please reach out to one of our team members if you would like additional details. Please reach out to one of our team members if you would like additional details at [email protected].
Do I have to pay origination fees (or points) to JVM?
The short answer is “no,” but you can pay points to buy down your rate if you choose to. We typically quote interest rate options with no points or origination fees.
The no points option will usually be associated with a higher rate. With the no points option, our entire commission is earned when we sell a loan to an investor for a premium on the secondary market. (See the FAQ If rates drop immediately after I close my loan, when is the soonest I can refinance into a lower-rate mortgage? for additional information.)
We typically do not recommend that you pay points to buy down your interest rate because the return on investment is too small. If you do opt to pay points, a 1% discount fee will usually buy down an interest rate by approximately a 1/4%, depending on loan type and market conditions.
Can I roll closing costs into the loan?
Closing costs cannot be rolled into a purchase loan per se. You can, however, put less money down and obtain financing with a higher loan-to-value ratio if guidelines allow, thus freeing up some cash for the closing costs. During the pre-approval process our Mortgage Analysts can work with you on multiple loan options to arrive at a comfortable cash to close amount.
Should I be prepared to pay anything other than the down payment?
The short answer is “yes.” You will be responsible for your down payment and all of your closing costs. As discussed in our JVM Buyer’s Guide, there are both recurring and non-recurring closing costs that can range from $4,000 to $20,000 or more, depending on the purchase price, the loan amount, and the type of loan. Please see Closing Costs – Non-recurring and Recurring.
You can get assistance with your down payment and closing costs with gift funds, seller credits, and lender credits. These too are discussed in the JVM Buyer’s Guide.
What are impounds? Should I get impounds?
Impound or escrow accounts are maintained by lenders or servicers and are set up to allow you to pay your property taxes and hazard insurance on a pro-rata monthly basis instead of on a semi-annual or annual basis.
For example, if property taxes are $6,000 per year, and hazard insurance is $1,000 per year, you would have a total of $7,000 to divide into twelve monthly payments of $583 per month. You would simply add the $583 to your principal and interest payment and make the larger payment to your lender or servicer each month. The lender/servicer will then pay the property tax and hazard insurance bills on your behalf.
Impound accounts are usually required when a down payment is less than 10% of the purchase price in California or less than 20% in Texas. Impound accounts are always required for FHA and VA loans.
Many of our conservative buyers like the security, safety and forced savings that an impound account imparts. They also like not having to worry about coming up with the necessary funds to make the large property tax and insurance payments when they come due.
Despite this, we often recommend that you do not set up an impound account, when allowed. This is because impound accounts often require substantially more cash at close of escrow (that you may not have or might need for required “reserves” after close of escrow). In addition, we like to remind our buyers that lenders and servicers usually do not pay interest against impound account balances.
Will my loan have a prepayment penalty or a balloon payment?
None of the mortgage loans JVM currently offers have either prepayment penalties or balloon payments.
Why does having local appraisers matter?
It matters significantly because appraisals can easily make or break your transaction. We maintain our own network of highly qualified and experienced appraisers who are always local to the areas in which they appraise. This is key because every neighborhood has substantial nuances that can significantly affect value. Prior to cultivating our own appraiser network, we frequently had issues with appraisers who were appraising areas with which they were not familiar. Because of this, they often provided poor-quality appraisals that did not support contract prices and broke up transactions.
Neighborhood nuances that can affect value include local school ratings, views, traffic influences, commute times, and other external influences such as parks, schools, cemeteries, freeways, railroads, and commercial establishments. Different areas also value various amenities very differently. A view-lot near the San Francisco Bay will be worth much more for example than a view-lot in a less appealing area. Other amenities that can command significantly different values from area to area include swimming pools, basements, covered patios, large garages, bonus rooms, and in-law quarters. Appraisers need to understand ALL of these nuances in order to accurately appraise properties and support contract prices.
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