Resource Center

Section 7: Frequently Asked Questions about the Loan Process

7.1. FAQs

Q: “How can I verify that Intercap Lending is an approved VA lender licensed in my state? Is this a program offered by the Department of Veterans Affairs?”

A: There are 4 simple ways you can verify this:

  1. Call your Regional VA Loan Office. To do this, click http://benefits.va.gov/homeloans/contact_rlc_info.asp, call the Regional Loan Center’s telephone number, give them Intercap Lending’s VA Lender ID Number (955023-00-00). They can verify our company’s good standing.
  2. Visit our website: http://www.Intercaplending.com and review the licensing section of our website.
  3. Visit the VA’s website: http://www.benefits.va.gov/HOMELOANS/. This page explains the programs that we offer.
  4. Visit http://www.nmlsconsumeraccess.org/. Verify that your Loan Officer and Intercap Lending are licensed to do business, and are in good standing within your state.

Q: How do I take advantage of home loans offered by Intercap?

A: There are 4 simple steps:

  1. Apply for the loan
  2. Send in the requested documents.
  3. We will process your file and calculate the closing figures for your new loan. Once we have the final numbers, your loan officer will review them with you.
  4. When we are ready to close we will schedule a time to have you meet at the office of the title company or we can have a local Notary meet with you to sign the closing documents.  Whichever is easiest.

Q: How long does the whole process take?

A: The length of time to properly prepare, process, and close a purchase home loan will vary depending on the complexity of each individual’s scenario. The most common length of time is 20-35 days from the time you’re pre-approved.

Q: What is the difference between pre-approved and pre-qualified?

When a home buyer is pre-qualified, he or she has provided the lender with the basic information to determine which loan program the home buyers may qualify for.  Whereas, when a homebuyer is pre-approved, the lender has collected, verified and presented the information needed for underwriting and approval.

Q: Is there a difference between a credit score and a FICO score?

A: The big three credit bureaus — Equifax, Experian and TransUnion — compile information about your borrowing habits and use it to create detailed credit reports. Several companies create credit scores by using the data in your credit report. The FICO credit score is the most commonly used credit score. It was invented by FICO, the Fair Isaac Corporation. Like all credit scores, it’s used by lenders to determine your dependability as a borrower.

Q: How do I establish credit?

A: In order to have a credit report, you must have at least one credit account in your name. There are several options for getting that first account.

  • Apply for a secured credit card. If you’re building your credit score from scratch, you’ll likely need to start with a secured credit card. If you’re building your credit score from scratch, you’ll likely need to start with a secured credit card. A secured card is backed by a cash deposit you make upfront; the deposit amount is usually the same as your credit limit.
  • Get a co-signer. It’s also possible to get a loan or an unsecured credit card using a co-signer. Be sure that you and the co-signer understand that the co-signer is on the hook for the full amount owed if you don’t pay.
  • Become an authorized user on someone else’s credit card. A family member or significant other may be willing to add you as an authorized user on his or her card. As an authorized user, you’ll enjoy access to a credit card and you’ll build credit history, but you aren’t legally obligated to pay for your charges.

Once you’ve opened an account, you need to always pay the bills on time. If it’s a credit card you should keep the balances as low as possible, ideally paying in full each month. Never have a balance greater than 30 percent of your credit limit.

It takes at least three months and often six months of activity before a credit score can be calculated. Make a small purchase each month and then pay it in full right away to show you are responsible with your credit use. In time, you will build strong credit scores.

Q: What should I avoid as far as my credit is concerned when purchasing a home?

A: Do not open any new lines of credit when you are in the process of purchasing a home. This means do not purchase a new car. Do not open a new credit card.

Avoid making any large purchases. Do not rack up a bunch of credit on your existing credit cards. Do not go buy a bunch of new furniture or appliances on credit.

Don’t Change Jobs.

Do Not Allow any Credit Inquires After Loan Approval

Don’t Give Earnest Money Directly to a For Sale By Owner

Q: What is the difference between interest rate and APR?

Your interest rate is the monthly cost you pay on the unpaid balance of your home loan. An Annual Percentage Rate (APR) includes both your interest rate and any additional cost or prepaid finance charges such as the origination fee, points, private mortgage insurance, underwriting and processing fees. Whole your interest rate is the rate at which you will make your monthly mortgage payments, the APR is a universal measurement that can assist you in comparing the cost of mortgage loans offered by different mortgage lenders.

Q: How is Intercap Lending able to offer interest rates that are lower than other lenders?

A: We specialize in providing a smooth loan process from start to finish and we look forward to providing the best mortgage experience possible. Since we process a high volume of all types if loans, we are willing to pass the lower rates and terms to home owners. We work to be as competitive as possible when assisting homeowner secure the lowest interest rates possible.

Q: How long is this loan rate offer good for?

A: Interest rates on a mortgage change every day or more frequently with the market. The only way to guarantee this lower rate is to begin the process to lock in your rate as soon as possible. We will secure the rate for you once we receive the initial packet and you give us the green light to proceed.

Q: What is the difference between a front-end ratio and back end ratio?

A: The front-end ratio is the sum of your monthly mortgage payment including taxes and insurance (Principal, interest, taxes and insurance or PITI) as a percentage of your gross monthly income.

If you make $10,000 gross income per month and your PITI payment is $2,000 then your front-end ratio is 20%.$2,000/$10,000=.8 or 80%

The back-end ratio takes the sum of your PITI and the minimum monthly payments on your credit cards, your car payments, your student loans and any other monthly debt that shows on your credit report divided by your gross monthly income.

If in the above example you have two $500 car payments and $500 per month in credit card and student loan payments, your back-end ratio is now 35% …

$500+$500+$500+$2,000=$3,500/$10,000=.35 or 35%

Q: What is the difference between mortgage insurance and homeowners/hazard insurance?

A: Mortgage Insurance (also known as mortgage guarantee and home-loan insurance) is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan. Mortgage insurance can be either public or private depending upon the insurer.

Homeowners coverage provides financial protection against loss due to disasters, theft and accidents. Most standard policies include four essential types of coverage: Coverage for the structure of your home; Coverage for your personal belongings; Liability protection; Coverage for Additional Living Expenses

Q: Is PMI or mortgage insurance required with your Home Loan?

A: It all depends on the loan program you choose.  Some loan programs require PMI and others don’t. Your Loan Officer will present the pros and cons of each program and give you the opportunity to make the choice that will best fit your needs.

Q: Are there any pre‐payment penalties?

A: Just like the Principal Mortgage Insurance, it all depends on the loan program you choose.  Some loan programs require prepayment penalties and others don’t. Your Loan Officer will present the pros and cons of each program and give you the opportunity to make the choice that will best fit your needs.

Q: Are there any out‐of‐pocket costs?

A: Other than an appraisal and termite report, we have available loan programs that don’t require any out of pocket costs!  We do not charge an upfront application fee, no deposit, no fee to lock in a rate and we work to ensure there are no surprises!  If you choose to buy down your loan, or decide not to roll any closing costs into your loan, you may need to bring funds to closing, but this is completely up to you. Your Loan Officer will review the different programs and applicable fees with you at the time of application. Contact us to discuss your options in more depth. 

Q: If refinancing, how does the escrow refund work?

A: After closing, we will pay your current loan in full, and any money that your current lender has kept in your escrow account will be refunded to you. This check will be sent 2 to 3 weeks after your loan has been paid off. We will create a new escrow account to cover your new escrow payments.

Q: If refinancing, which months of mortgage payment will I defer?

A: Typically, you will defer the mortgage payment in the month that you close, and you may also defer the following month’s payment. This all depends on when the underwriter approves your loan for closing.

Q: What is the difference between a front-end ratio and back end ratio?

The front-end ratio is the sum of your monthly mortgage payment including taxes and insurance (Principal, interest, taxes and insurance or PITI) as a percentage of your gross monthly income.

If you make $10,000 gross income per month and your PITI payment is $2,000 then your front-end ratio is 20%.$2,000/$10,000=.8 or 80%

The back-end ratio takes the sum of your PITI and the minimum monthly payments on your credit cards, your car payments, your student loans and any other monthly debt that shows on your credit report divided by your gross monthly income.

If in the above example you have two $500 car payments and $500 per month in credit card and student loan payments, your back-end ratio is now 35% …

$500+$500+$500+$2,000=$3,500/$10,000=.35 or 35%

Q: Can I schedule automatic payments from my bank account, or make biweekly payments?

A: Shortly after closing, you will receive a welcome package in the mail with your new account number, first payment statement and the information you need to set up custom payment arrangements, including automatic or biweekly payments and automatic payments.  However, at this point in time, Intercap is not set up to offer biweekly payments.

Q: Who will be my new lender?

A: Intercap Lending is a direct lender and we service most the loans we originate.  In some situations, it may be best to use a different servicer.  If that happens, we will work with you to ensure a smooth transition.  Your loan will be serviced by a reputable servicing company that will be able to work with you to make sure payments are quick and easy.

Q: When is the appraisal ordered and who pays for it?

A: The appraisal is an important step in buying a home but shouldn’t be rushed. Intercap Lending will order your appraisal through a third-party system once we have received your completed online application and credit card information. Unfortunately, since the appraiser is a third party the appraisal is one of the very few expenses you will responsible to pay before closing.  

Q: How long does an appraisal take to get back?

A: Once ordered the third-party appraisal company selects an appraiser then allows him/her 7 days to perform the appraisal. Often appraisals are completed before the deadline. However, Intercap Lending cannot control the speed of the appraisal’s completion.

Q: What does the Underwriter do?

A: The underwriter’s responsibility is to review all aspects of your scenario to ensure it meets Conventional, Federal, and State guidelines. More specifically the underwriter will require items to be collected from you and third parties. Once delivered an underwriter will almost always have follow up questions or additional items that will be required to close. These additional items are referred to as conditions. It’s extremely common and shouldn’t be interpreted as a setback.

Q: If my spouse will not be on the loan will they need to be present at closing? Will they need to sign any documents?

A: Depending on your state’s requirements your spouse may need to be present at closing. If so, they will be required to sign a few documents even if they won’t be listed as borrower on the loan. These few documents won’t add them to your loan. The loan officer or assistant can inform you who will need to attend your closing.

Q: When will my first payment be?

A: Traditionally your first mortgage payment is due on the first day of the month two calendar months after you close. In other words, the month after next. For example, if you close your loan in January your first payment will be due March 1st. This is the case if you close on January 1st or 31st. On rare occasions your first payment will be due the month after you close, however, in that case you would receive a per diem credit toward your closing.

Q: When will I receive the keys to my new home?

A: The delivery of the house keys from the seller to the buyer is typically handled through your real estate agents. Each state and even each city may have a common practice to deliver house keys. Traditionally, once the loan has closed and funded the keys are yours!

Q: Why am I asked to gather and send documents more than once?

A: Collection and review of qualification documents is absolutely critical to ensure a smooth transaction. However, we want to be considerate of your time and will only ask for the items necessary. Throughout the loan process there are two significant milestones: submission to processing and submission to underwriting. Beyond the initial documentation the loan officer and assistant require each milestones also present the chance for additional required items.