The ‘APR’, is short for the ‘Annual Percentage Rate’ and represents the combined rate that you are paying in overall cost of money with fees and interest. Generally, a lower APR will also reflect lower monthly payments over a higher APR. One way to use the APR can be for comparing one loan to another for which you may have applied and give you a consistent method of comparing price; additional loan costs may vary.

A Finance Charge represents the actual ‘cost’ of using credit. It represents the total ‘interest’ you will pay at a specific interest rate over the life of the loan, plus all prepaid finance charges and, if needed, any mortgage insurance charges over the life of the loan. Canyons Mortgage always discloses your finance charges and will provide an initial loan disclosure CD (Closing Disclosure) identifying charges and costs prior to closing.

You are charged interest only for the period of time in which you used the loaned funds. Some charges, such as prepaid finance charges and interest which has already been paid, are not refundable. HOWEVER, when you pay a loan off early, you should not have to pay the total amount of finance charges shown on your Closing Disclosure. The total represented on your CD is an estimate of how much interest you would be paying if you made minimum required payments for the entire life of the loan.

A Pre-Qualification is an informal way to see how much you may be able to borrow. When you identify your general financial picture to Canyons Mortgage (income, assets, debt, etc.) your loan officer can quickly give you an idea of what size mortgage you may qualify for. A Pre-Qualification is not a guarantee of loan approval, rather it just a quick guide to identify the amount of mortgage loan you might expect to be approved for. A Pre-Qualification is generally the first step in a mortgage loan approval and does not carry as much weight as a Pre-Approval.

Getting a Pre-Approval is more involved and provides a written lender commitment to loan you money. You will provide an actual loan application to a lender along with supporting documents (proof of income, debts, assets, etc.). The lender will provide you with a commitment, in writing, for a specific loan amount you will qualify for as long as you meet any listed conditions (such as remaining employed and not incurring further debt prior to closing your home loan). A Pre-Approval shows a potential Seller that you are a serious Buyer and have gone further down the approval path toward getting your mortgage loan completed.

Canyons Mortgage will contact you, most often via your preferred contact method (email. text, etc.), to answer any questions prior to, or during, the completion of your application and, we will contact you with an update after the application has been originated with a mortgage lender. Along the way, we will stay in contact with you, typically once or twice a week, regarding any pertinent information all the way through the disclosure period for confirmation of details and 3-5 days as well as before closing to go over final figures.

Closing costs are those costs that include the loan origination fee, title costs & fees, discount points, appraisal costs, and any other charges associated with the legal transfer of property. Typically, these costs will range between 2% – 3% of the mortgage amount depending upon the type of loan desired. HOWEVER, costs can be lowered to $ ZERO on certain loan types and loan terms.

Each county may have slightly different customs, fees or regulations but, in general you can expect ‘Closing Costs’ to include some, if not most, of the following:

– Escrow fees (or attorney fees), both yours and the lender’s, if applicable)

– Property taxes (prorated to match your Closing Date for accuracy)

– Interest (paid from date of Closing to 30 days before first monthly payment)

– Loan Origination fee (covers lenders administrative cost)

– Recording fees

– Survey fee
- First premium of mortgage Insurance (if applicable)

– Title Insurance (yours and/or lender’s, as applicable)

– Loan discount points (if any)

– First payment held in escrow account for future real estate taxes and insurance

– Paid receipt for homeowner’s insurance policy (and fire, flood, etc. insurance, if applicable)

– Any documentation preparation fees

Private Mortgage Insurance (PMI) is required on conventional loans and may allow you to purchase a home for as little as 3.5% down, depending on the loan type desired. This coverage requires a monthly insurance fee to be paid which is used to protect the lender against a potential default on the mortgage. PMI is only required if your loan-to-value is 80% or above.

We also offer programs with as little as 5% down payment or equity, which do not require monthly payments.

Canyons Mortgage offer many, many mortgage options, some of which require no down – and, in some cases, VA Loans for example may be 0% down. Keep in mind, the larger the down payment, the less you have to borrow, and the more equity you’ll have. Mortgages with less than a 20% down payment generally require a PMI policy to secure the loan. When considering the size of your down payment, please consider that you’ll also likely need money for closing costs, moving expenses, decorating and possibly even repairs. Typically, mortgage loans require 3.5% – 5% down payment.

Yes. By sending your mortgage lender extra money each month, or by making an extra payment at the end of the year, you can accelerate the process of paying off your loan. When you do send extra money, be sure to indicate that the payment is specifically to be applied to the principal. Although most lenders will allow loan prepayment, check with us first to verify that a lender ‘prepayment penalty’ does not exist.

The amount you finance is actually lower than the amount you applied for because it represents a ‘net’ amount after a variety of deductions. If you applied for a mortgage of $100,000 and your prepaid finance charges totaled $4,000, the amount you actually finance would actually be $96,000 ($100,000 – $4,000. At this point, your APR would be computed based on the lower amount and identify what your proposed payments would be. In a $100,000 loan with $4,000 in prepaid finance charges, and an interest rate of 4%, the payments would be approximately $1,200.44 (principal and interest) on a loan with a typical 30-year term. Since the APR is actually based on the net amount you financed, instead of on the actual mortgage amount (your mortgage payment did not change), the APR produces a higher ‘rate’ than the interest rate will. Using the APR is often widely used for loan comparison purposes for this reason.

Earnest Money is money put down to demonstrate to a Seller your seriousness about buying their home. It must be substantial enough to demonstrate good faith and is usually between
1-3% of the purchase price in today’s market. Generally, your Earnest Money is held in a trust account at your representing real estate brokerage, not by the Seller. If your offer is accepted, the Earnest Money becomes part of your down payment, or closing costs, and will be applied to the purchase price, as per contract. On the other hand, if your offer falls through and the sale ‘fails to close’, your Earnest Money can be returned to you based on the terms of your negotiated purchase contract. If you back out of a deal, or default on the terms of the contract, you may forfeit the entire amount.

Absolutely! In particular, these special ‘First-Time Homeowner’ and ‘HERO Mortgages’ are very popular today! Canyons Mortgage has many lenders who now offer quite a wide choice of very affordable mortgage options which can help (especially) First-Time homebuyers overcome obstacles which previously made purchasing a home more difficult. Canyons Mortgage loan officers are experts at connecting Buyers to the best Lenders to help borrowers who may not have a lot of money saved for the down payment, have little or a poor credit history, have some debt issues or even have some income challenges (self-employed, inconsistent income, etc.). Call us directly, we will provide you with a wealth of knowledge!

The Loan-to-Value ratio, LTV, is the amount of money you borrow compared with the eventual purchase price of the home you are purchasing (appraisal value if you are refinancing). Each loan type offers a specific LTV limit. For example, a loan with a 80% LTV loan on a home priced at $200,000 would allow you to borrow up to $160,000 (80% of $200,000). This ‘LTV Ratio’ directly reflects the amount of ‘equity’ a borrower would have in their property. The higher the specific loan LTV, the less cash a potential borrower would need to pay out of their own funds. To protect mortgage lenders against potential defaults, mortgage loans with higher values (generally 80% or higher) usually require a PMI (private mortgage insurance policy).

Your DTI, Debt-to-Income Ratio, expresses in percentage form how much of your gross monthly income is spent on paying your larger liabilities: auto loans, credit cards, mortgage payments (or rent), homeowners insurance, property taxes (mortgage insurance & HOA fees, if any), credit lines, etc. Your usual living expenses are not considered part of your DTI (cable, gas, electricity, groceries, etc.). It varies among specific mortgage lenders, but generally, if your DTI is high, it means you have tight finances (highly leveraged) and you may be considered a risky investment in a lender’s view. However, if your DTI is low, you may be considered a low-to-moderate risk since the lender can tell that have plenty of cushion in your monthly budget to handle emergencies or unexpected expenses and still make your required mortgage payments to the lender.

Yes – If you finance a property then a paid (for a new policy) or a currently up-to-date homeowner’s insurance policy will be required at closing, so plan ahead to get the best rates and coverage on a policy which starts by your Closing date. If you are buying a property for all cash, it is not against the law to not have homeowners insurance but, you may find it a very wise decision to protect yourself from a variety of liabilities; check with your attorney for specifics in your state or region. Canyons Mortgage also offers very competitive programs for all your insurance needs.

The first step in securing a loan is to contact us directly at Canyons Mortgage via phone, or email, to discuss any questions you may have (there are no dumb questions in this business, please ask whatever you may be thinking…) then you may receive a ‘Pre-Qualification’ from us – this will give you an idea of what loan amounts you may be able to obtain. The next step, which can be done at the same time, is to fill out our secure and private ‘loan application’ to receive an actual loan ‘Pre-Approval’ from us so you’ll know with some certainty how much house you can purchase. The typical information you will need to complete the loan application will include the following:

– Pay stubs for the past 2-3 months

– W-2 forms for the past 2 years

– Information on any long-term debts you may have

– Recent bank statements
- Tax returns for the past 2 years

– Proof of any other income

and, if you’ve already been out house-shopping, you may also have info on:

– The address and description of the property you wish to buy and/or

– A copy of the Purchase Contract

During the application process, Canyons Mortgage will order a ‘credit report’ on your credit and payment history – an ‘appraisal’ will be ordered later in the process specifically on the property you wish to purchase.