 FAQs
Is the information I provide to you secure?
Your information is secure when you apply with Lawson & Associates. The entire application is stored on a
secure server and will not be shared with anyone not directly involved with your loan transaction.
What are your interest rates?
Interest rates vary depending on the type of loan program you choose and the terms. In addition, each client’s
individual interest rate will be based on their credit score, income, down payment or equity position, and several
other factors. Please call one of our Lawson & Associates Mortgage Planners for a free customized rate quote.
Please note that interest rates are very volatile and can change several times a day. If you are comparing rates from
several sources, make sure you gather information at the same time on the same day.
What are points?
A point is equal to 1% of your loan amount. For example, if your loan amount is $400,000, one point equals $4,000.
If you are obtaining a second loan or a Home Equity Line of Credit, it is not included in the calculation. Points are
prepaid interest that is paid to the lender to buy down the interest rate and thus lower your monthly payment. A breakeven
analysis will help you determine whether it makes sense for you to pay points to buy down your interest rate. See
“Should I pay points?”
What is a rate lock?
You cannot close a mortgage loan without locking in an interest rate. There are several factors which determine
which rate you will be able to lock.
One factor is the loan program. The longer the amount of time your rate will be fixed for (i.e. 5 years, 7 years,
30 years,) the higher the points or interest rate will be.
Another factor is the length of the lock. The longer the amount of time you lock your interest rate (30 days, 45
days, 60 days,) the higher the points or the interest rate. You have until the end of that lock period to complete
your loan transaction. If your rate expires and rates have gone up, you are subject to the new higher interest rate.
If your rate expires and rates have come down, you will get the rate you locked in plus a penalty charge. Therefore,
it is in your best interest to help your mortgage planner complete your transaction on time by turning in all necessary
paperwork as soon as possible. If you have locked your rate and rates drop significantly, many lenders will work with
you to lower your rate.
Should I pay points?
A breakeven analysis will help you determine whether it makes sense for you to pay points to buy down your interest
rate. Your Lawson & Associates Mortgage Planner will provide you with a breakeven analysis for when you decide to lock
your interest rate.
If you would like to do your own breakeven analysis, divide the dollar amount you are paying in points by the dollar
amount you will be saving each month with the lower interest rate. This will give you the minimum number of months you
will need to keep the loan to make it worth paying points. Everything after that point will be savings. If you plan to
refinance or move before that time, it does not make sense to pay points.
Doing your own breakeven analysis does not take into account the tax advantages of paying points as they are
tax-deductible. The amount you will be able to write off each year depends on whether it is a purchase or refinance
transaction. Call your Lawson & Associates Mortgage Planner for clarification.
Why doesn’t everyone get a zero point/ zero fee loan?
Many homeowners have refinanced using a zero-point/zero-fee loan. Some have refinanced several times, riding rates
down as they continue to drop. This loan is a good option if the borrowers think they might want to refinance again
or sell their home in the near future. That way they can enjoy a lower interest rate and/or payment and not have to
pay the costs of the transaction.
If the points and fees were really being paid by the bank, then everyone would be choosing this loan. With a
no-point, no fee loan, you receive a higher interest rate and monthly payment rather than paying your costs up front.
The points and fees are paid by the bank, but the interest rate is higher to cover those costs.
If you plan to keep your home for a while or you do not plan to refinance in the near future, it might make sense for
you to pay your fees up front and enjoy a lower interest rate and/or payment. Ask your Mortgage Planner which choice
might be better for your situation.
What happens if my loan is sold?
Your loan can be sold at any time, and it is very common. There is a secondary mortgage market in which lenders
frequently buy and sell groups of mortgages. This secondary mortgage market results in lower rates for consumers.
A lender buying your loan assumes all terms and conditions of the original loan. The only detail that changes when
a loan is sold is where you mail your payment. Your existing lender will notify you in writing that your loan has
been sold, inform you who your new lender is, and tell you where your future payments should be sent. If your lender
goes out of business, their loans are sold to another lender. You are still obligated to make payments. The lender
purchasing your loan is obligated to honor the terms and conditions of the original loan. Continue to make payments
to your old lender until you are asked to make payments to your new lender. If you are still unsure, contact your
Mortgage Planner for clarification.
How are we compensated?
We have an employee/employer-type relationship with many different lending institutions. The bank pays us a commission
for writing a loan for them. For that reason, we do not need to charge the client to find them the best deal for their
circumstances. In addition, we receive very competitive pricing from our lending partners since working with us does not
create any overhead or training expenses for them.
Our 18 year alliance with top lending institutions gives us a significant advantage over our competitors. Our
lending partners enjoy working with us because of our reputation for executing clean and efficient transactions.
What is the difference between pre-qualification and pre-approval?
A pre-qualification is when a loan officer determines the home purchase price for which you will likely get
approved after asking you some basic preliminary questions. Since loan officers do not make the final approval,
a pre-qualification is not a commitment to lend. For that reason, most Realtors will only take a buyer seriously
when they have been pre-approved.
Pre-approval means that your credit, down payment funds, employment history, etc. have all been verified and
approved by an underwriter. A pre-approval puts you in a better negotiating position with the seller and their
Realtor because being pre-approved is a commitment to lend from the bank.
Ask your Lawson & Associates Mortgage Planner how to obtain a pre-approval letter so you are in a good negotiation
position when you find the house that you would like to purchase.
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