Here we address frequently asked questions involving topics such as the home loan process, mortgage terminology and more.

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What are interest-only home loans?

An interest-only home loan is a product that gives you the option to pay only the interest accrued for a certain period of time. At the end of the interest-only term, your payment will adjust to include principal repayment, as well. To see the difference in payment for an interest-only mortgage vs. one that includes principal-and-interest, use our handy calculators, or ask your Carlyle Financial mortgage banker if an interest-only home loan is right for you.

Should I choose a 15-year home loan or a 30-year home loan?

Simply put, it depends on how much you can desire to pay monthly on a mortgage and how quickly you want to pay down your home loan balance.

A 30-year mortgage has lower monthly payments but will have more interest paid over the life of the home loan. The 15-year mortgage typically has higher monthly payments (because you are paying your mortgage balance in less time) but builds equity more quickly. Ultimately you should choose the loan product that fits your budget and is in line with your future financial goals. If you’d like to see the numbers for yourself, use our handy calculators, or talk with your Carlyle Financial mortgage banker to determine which option works for you.

What can I do to improve my credit score when applying for a home loan in California?

Your credit score is based on a variety of factors, including credit history, payment history and amount of debt owed.  Before applying for a home loan, consider taking a few easy steps to improve your credit score, which could result in a lower interest rate.  Don’t open or close any new credit cards and don’t incur any new debt.  Also be sure to pay all of your bills on time: this simple step has a huge impact on your score.

For more tips on how to boost your credit score, visit our blog.

How long will it take to close on my home loan?

One of the benefits of working with Carlyle Financial is our expedited closing process.  The amount of time it takes to close on your home mortgage loan depends on a few different factors, particularly the type of loan, and documentation required to submit the file.  A typical new purchase loan takes just 21 days to close at Carlyle Financial, compared to 45 days with other lenders, and a refinance loan generally only takes 30 days to close, compared to 60 days with other lenders.

Click here for more information on our expedited closing process.

How is a mortgage bank different from a retail bank or mortgage broker?

Carlyle Financial is a mortgage bank, which combines the best characteristics of both retail banks and mortgage brokers.  While a retail bank is a direct lender like a mortgage bank, they usually only have a limited number of products to offer their customers.  A mortgage broker, on the other hand, works with multiple lenders to offer more loan options, but this comes with a price – they don’t offer direct funding, so you may have to submit multiple applications to get the loan you need.

Carlyle Financial offers the best of both worlds as a mortgage bank.  We are a direct lender, meaning we approve and fund everything in-house, just like a retail bank.  Because our mortgage professionals are hand-picked for their diverse expertise, we can offer the largest array of loan options to truly fit the needs of each of our clients.

Learn more about our role as a mortgage bank.

What types of home loans can I get through Carlyle Financial?

Carlyle Financial is here to help you meet your financial goals.  We offer a variety of conforming, jumbo and super jumbo home loans, including purchases, refinancing, interest-only mortgages and FHA loans.  Our mortgage experts are happy to review each of these options with you to determine what’s best for your situation.  Click here to learn more.

What’s a fixed-rate home loan versus an adjustable-rate home loan?

A fixed-rate home loan keeps the same interest rate for the entire term of the home loan. Fixed-rate home loans are usually offered with 15-, 20- or 30-year terms. An adjustable-rate (or ARM) home loan has an interest rate that’s fixed for an initial period of time (usually for three, five, seven, or 10 years), and then adjusts periodically during the remaining term of the home loan. Read more about understanding mortgage rates here.

What’s a Truth-in-Lending statement?

You will be issued a Truth-in-Lending (TIL) disclosure within three business days of receiving your home loan application. This document discloses all costs associated with originating and closing your home loan. In addition, the TIL disclosure contains information regarding the annual percentage rate (APR), finance charge, amount financed and the total payments required. This estimate will give you a good idea of how much cash you’ll need at closing to cover pro-rated taxes, along with the first month’s interest and other settlement costs. It may also contain information on security interest, late charges, prepayment provisions and whether the mortgage is assumable. If you have an adjustable-rate home loan, the statement may outline the limits on the adjustments—annual and lifetime caps—as well as give an example of what your next year’s payment might be, depending on interest rates.

If you’re wondering what else goes on during the home loan application, check out 5 Ways to a Smooth Home Loan Process.

What are income and debt ratios?

The income ratio is your total monthly housing expense divided by your monthly qualifying income. The debt ratio is your total monthly housing expense plus any recurring debts (i.e. monthly credit card minimum payment, car payments or other loan payments) divided by your monthly qualifying income. The allowable qualifying ratios can vary based on the details of the home loan program for which you’re applying. Learn more about all of the factors that may influence your mortgage interest rate.

What’s a cash-out refinance?

A type of refinance where the borrower receives a certain amount of the total mortgage in the form of cash. The difference between your home loan balance and your home’s value is called equity. Over time, the outstanding principal on your home loan decreases as the equity in your home increases. You may be able to refinance your home for more than you currently owe (but less than the total value of the home) and use the remaining proceeds for home improvements, debt consolidation or other major purchases.

Find out more about the benefits of refinancing.

Why should I consider refinancing my current mortgage loan?

There are many reasons that you may benefit from a refinance. Refinancing can:

●     Lower your monthly payment

●     Lower your interest rate

●     Switch from an adjustable rate to a fixed rate or vice-versa

●     Refinance for a higher amount in order to pay off other debts or get cash

●     Change the remaining term of your home loan

Check out our guide on how to know it’s time to review your mortgage.  You can also use our handy calculator to determine how much money you’ll save by refinancing. Whatever your needs, your Carlyle Financial mortgage banker can help you decide what makes the most sense for you.

What’s title insurance, and why do I need it?

The function of title insurance is three-fold: to make sure that (1) your rights and interests to the property are clear; (2) the transfer of title takes place efficiently and correctly; and (3) your interests as a homebuyer are fully protected. Before issuing a policy, the title company performs an in-depth search of the public records to determine if anyone other than you has an interest in the property.

After a thorough examination of the records, any title problems can be cleared up prior to the purchase of your property. Once a title policy is issued, the title company will pay the legal fees involved in the defense of your rights if any claim covered under your policy is ever filed against your property. The company also remains responsible for covering losses arising from a valid claim. This protection remains in effect as long as you or your heirs own the property.

Most lenders require you to purchase title insurance before receiving a home loan.  It’s generally a one-time payment included in your closing costs, rather than a recurring fee like other types of insurance.

Am I obligated to purchase flood insurance on my property?

Federal law requires all lenders to investigate whether or not each home they finance is in a special flood hazard area as defined by the Federal Emergency Management Agency (FEMA). The Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 help to ensure that you’ll be protected from financial losses caused by flooding. If your property lies within Flood Zone “A” or “V,” federal law requires that you maintain and provide proof of flood insurance coverage as standard homeowners insurance doesn’t protect you against damage from flooding.

What’s mortgage insurance, and when is it required?

Mortgage insurance protects the lender in case you default on your home loan. You’ll need to purchase mortgage insurance if the equity in your home is below a certain level that’s required by the home loan program for which you’re applying.  Once you pay off enough of your mortgage and have enough equity in your home, you may be able to refinance to get rid of your mortgage insurance.

Your Carlyle Financial mortgage banker can help you determine if mortgage insurance is required in your particular situation, and what the different payment options are.

Why is homeowners insurance required?

Homeowners insurance protects you financially in the event that your home and property is damaged. Lenders require that you maintain a policy with sufficient coverage on the property that is being financed.

What’s a rate lock?

A rate lock is a guarantee that your home loan pricing will be held for a set period of time. A rate lock protects you from rate fluctuations for the duration of the lock period.

Should I pay points to get a lower interest rate?

Paying discount points will lower your interest rate, but you should know that there are more factors to consider. Each point will cost you 1% of your original home loan amount at settlement.  To determine whether it makes sense to pay discount points, you’ll need to compare the cost of the discount points to the monthly savings created by lowering the interest rate.  You’ll also want to consider how long you plan to stay in the home to make sure those savings add up. Your Carlyle Financial mortgage banker can help you decide if paying points makes sense for your individual home loan scenario. Use our loan rate comparison calculator to compare different financing scenarios.

What’s the Annual Percentage Rate (APR)?

The APR is the yearly interest rate on your home loan plus the various fees to service and maintain it. The APR is a more accurate reflection of the cost of the home loan than the interest rate itself.

What’s the difference between pre-qualifying for a home loan and being pre-approved for a home loan?

While many applicants confuse these terms, each of these steps can give you a distinct advantage when shopping for a property. Becoming prequalified is the initial step in the mortgage process, and it’s generally fairly simple. You’ll need to supply us with your overall financial picture, including your debt, income, and assets.

After evaluating the information, we can give you an idea of the mortgage amount for which you qualify. This will help you determine how much property you can afford before you begin shopping for a home. In addition, prequalification can be attained over the phone, or via our website with little or no costs involved.

Mortgage prequalification doesn’t include an analysis of your credit report, or an in-depth look at your ability to purchase a home.

A pre-approval occurs after you complete a home loan application and supply us with the necessary documentation to perform a check on your financial background and current credit rating. Based on this information, we can tell you the specific mortgage amount for which you’re approved. You’ll also have a better idea of the interest rate you’ll be charged on the home loan and, in some cases, you might be able to lock in a specific rate.

With pre-approval, you’ll receive a conditional commitment in writing for an exact home loan amount, allowing you to look for a home at—or below—the price level. This puts you in an advantageous position when dealing with a seller with multiple offers from buyers, as he or she will know that you’re one step closer to obtaining an actual mortgage.

Where will the closing take place?

The closing will take place either at the escrow office or at a place convenient to you—as long as a notary is present.

What’s an escrow account?

An escrow account is an account that holds funds from homeowners’ monthly payments toward insurance and/or real estate taxes, included as part of your regular monthly mortgage payment. The lender will then make the necessary payments when your taxes and insurance are due. Contact your Carlyle Financial mortgage banker to discuss whether an escrow account is required for your home loan, and whether or not you should establish one even if your home loan program does not require it.

What documents will I be asked to sign at closing?

At the time of closing, you’ll be required to sign a package of documents from your lender and the escrow company handling your transaction. Some of the most important standard home loan documents include:

●      Promissory Note: a written promise to pay a specific amount at a specific time. You’re agreeing to repay your home loan.

●      Deed of Trust: a pledge of property as security for a debt. If you fail to pay the home loan, you’re agreeing that your lender can take the property.

●      Uniform Settlement Statement (HUD-1): a settlement summary form required by RESPA that’s used by closing agents. This form shows all of your closing costs.

●      Truth-in-lending disclosure: a statement required by the TILA Act that includes the annual percentage rate (APR), as well as other facets of the mortgage. This tells you how much you’ll pay for your mortgage over the entire home loan period.

●      Right of Rescission Disclosure. On certain refinance transactions, this disclosure is a statement of the buyer’s right to nullify the transaction within three days after closing.

Read more about Carlyle Financial’s home loan process.

Can I finance the closing costs into my refinance loan?

In some situations, the closing costs can be financed into the home loan. Your mortgage banker will discuss the pros and cons of financing any costs rather than paying them directly at closing.

What fees are included in the closing costs?

Closing costs cover each of the fees and expenses associated with a mortgage loan transaction. The homebuyer and/or seller will pay the costs at the closing. These costs typically include, but are not limited to, a home loan origination fee, discount points, attorney fees, title insurance, appraisal and survey, as well as any items that must be prepaid, including taxes and insurance escrow payments.

Can I use a gift from someone else for my down payment?

Yes, gifts can be an acceptable source of down payment funds from a relative or other eligible source. We’ll ask for the name, address and phone number of the gift giver, as well as the donor’s relationship to you. Prior to closing, we’ll verify that the gift funds have been transferred to you by obtaining a copy of your bank receipt or deposit slip for the transaction.

Can I borrow funds to use towards my down payment?

Borrowed funds can be used toward your down payment in certain home loan scenarios. If you’re planning on borrowing money against another asset you own, or from another source, make sure you discuss this with your Carlyle Financial mortgage banker to determine what impact it may have on your home loan application.

How much money will I need for a down payment?

The amount of money required for a down payment varies based on the type of home loan product for which you apply. Carlyle Financial provides a wide range of products, including FHA-insured home loans, which require a lower down payment than other traditional mortgage products.

What’s a jumbo mortgage?

Jumbo mortgages are designed for home loan amounts that exceed the conforming home loan limits established by Fannie Mae and Freddie Mac. Jumbo mortgages may have different guidelines and requirements than conforming home loans. Is a jumbo mortgage right for you? Read more about your jumbo home loan options here.

What’s a “Good Faith Estimate?”

The Good Faith Estimate, or GFE, is a document that sets out the costs associated with a mortgage, including the interest rate, lender fees, title charges, prepaid interest and insurance. As a lender, we are required to provide you with a GFE within three days of receiving your home loan application. Because the GFE is simply an estimate, some fees can change before closing. If you’ve locked in your rate, lender fees and the interest rate may not increase, and certain other costs may not increase by more than 10%.

What type of documentation will you need from me to process my home loan?

In general, a home loan application will require information on your income, assets, credit and current debt. Carlyle Financial makes every effort to keep documentation needed from you at a minimum. Some situations require additional information, but we’ll let you know what’s required upfront so there are minimal delays when processing  your home loan. Learn more about our home loan process.

Should I begin the home loan process before I begin shopping for a home?

Yes, speaking with a Carlyle Financial mortgage banker before you find a home is a good idea. We’ll help you determine what type of mortgage you can qualify for and help you establish a payment budget so you know your target price range. To add strength to your offer once you find your dream home, consider obtaining a pre-approval.

What steps are involved in obtaining a mortgage loan?

The mortgage loan process can be broken up into four basic parts: application, processing, underwriting, and closing. Learn more about each step of the Carlyle Financial home loan process here. Check out our blog for tips on making your home loan process as smooth as possible.

What are the advantages of using a mortgage bank?

Mortgage banking offers you the best of both worlds by direct lending + more financing options. Learn more about the advantages of a mortgage bank.