PURCHASE What is the minimum down payment for conventional loans? As a general rule, conventional loans are available with a minimum down payment of 5%. Our Alt-97 loans are available with as little as 3-5% down. After completing the application, a Loan Officer will contact you regarding specific down payment requirements and programs. If you prefer, you may consult with a Loan Officer now at 1-800-850-8690. Can I apply for a purchase loan before I've found my property? Yes. In fact, we recommend that you get pre-approved prior to home shopping. Being pre-approved gives you additional leverage when negotiating a purchase price. What documents will typically be requested after I complete an application? Typically, we will request: two years W-2s, most recent pay stubs, bank statements, and the purchase contract on the home you are buying. Documentation requests will vary according to different loan programs. How quickly can California Bank and Trust close my home loan? To determine the current turn time for mortgage processing, please call 1-800-850-8690 and speak with a Loan Officer today. It is important to consider that when purchasing a home or refinancing an existing mortgage, there are outside factors that will impact the processing time of each mortgage loan, i.e. contract negotiations, property appraisals, demand payoffs, etc. On a purchase loan, is there someone who will work with my Realtor? Yes. Since each loan is assigned to a Loan Officer who works with you until you close, he or she will be able to assist you or your Realtor at any time. Will California Bank and Trust include my closing costs in the loan amount? On a purchase transaction, you typically cannot finance your closing costs into the loan amount. If you have a down payment, but do not have enough to cover closing costs--go ahead and complete the loan application and a Loan Officer can assist you in trying to find a loan program to meet your needs. Also, if you are refinancing, you may be able to refinance a significant portion, if not all, of your closing costs. Does California Bank and Trust require a homeowner's inspection? No. Homeowner’s inspections are generally requested by a buyer as a condition to the purchase of the home. Many home buyers make the purchase of their home contingent upon a homeowner's inspection. A homeowner’s inspection should not be confused with an appraisal, which is required in order to support the valuation of the mortgage security. Do I need good credit to purchase a home? Yes, before lending you money, lenders want to see a history of debt owed and repaid on time. Lenders order credit reports as part of the mortgage process to verify your debts, the amount of your monthly payments and how many months or years remain on each loan. Another key piece of this record is how regularly these debts are paid. REFINANCE What are the advantages of Refinancing? Savings - Consolidate debt and reduce your overall monthly payments. Stability - Convert your adjustable rate to a fixed rate. Tax Deduction - Take cash out for debt consolidation and your new payments may be tax deductible (consult your accountant). Increased Value - Take cash out and complete home improvements or additions. Enjoy your home's enhanced and increased value. Can I refinance without paying points or closing costs? Typically, yes. California Bank and Trust offers programs without points and little or no closing costs. Paying closing costs to refinance typically makes sense when you plan to stay in your home for at least 2½ to 3 years. What documents will typically be requested after I complete an application for a mortgage loan? Typically, we will request: 2 years W-2s, most recent pay stubs, and bank statements. In addition we will obtain an appraisal and a property title report. Documentation requests will vary based on the loan program selected. How quickly will California Bank and Trust close my loan? To determine the current turn time for mortgage processing, please call 1-800-850-8690 and speak with a Loan Officer today. It is important to consider that when purchasing a home or refinancing an existing mortgage, there are outside factors that will impact the processing time of each mortgage loan, i.e. contract negotiations, property appraisals, demand payoffs, etc. If I refinance my loan with my existing lender, will I have to pay all the closing costs again? Typically, yes, as there are costs associated with processing any new loan application. This cost may include fees paid to third parties, such as the appraisal provider and the title and closing providers. Is it worth refinancing if I will only save a ¼ of a percentage in interest? It might be, especially if you can refinance with few or no closing costs or are going to hold that loan for 2½ to 3 years or more. Will California Bank and Trust include my closing costs in the loan amount? If you are refinancing you very often can include most, if not all, of your closing costs into the loan amount. If you are purchasing a new home, the closing costs are due at the time loan documents are signed. LOAN PROGRAMS What is the difference between a Fixed Rate loan and an Adjustable Rate mortgage? The interest rate of a Fixed Rate loan is set for the life of the loan. The interest rate of an Adjustable Rate loan fluctuates with the market according to the parameters set within the loan. Is a Fixed Rate mortgage better than an Adjustable Rate mortgage? The answer to this question depends on your situation. Many people prefer fixed rate mortgages with the low rates available today. If you are going to stay in your home for a short time, an adjustable rate may make more sense. Very popular options offered exclusively through California Bank and Trust are ARMs. These loans provide the security of a fixed rate loan and the lower rate benefits of an ARM. When you select your loan preferences, we will discuss the options that might be available to you in order for you to identify the loan best suited for your needs. What is an Interest Only loan? The interest payment is only required, however you may pre-pay principal as much as you desire. These loans may be a good choice if you are disciplined with your finances and understand the potential risks. How do I know what loan program is best for me? Choosing your loan program can be difficult. After selecting your loan preferences during the application process, your Loan Officer will be happy to provide you a personal consultation to select the loan best suited to your needs. What is a Teaser Rate? A teaser rate is the low start rate on an adjustable rate mortgage. The low start rate looks attractive, but you need to be careful and make sure you understand the details of the loan. What are Points? Points are a method of buying down the interest rate. One point is equal to 1% of the loan amount. For example, 2 points on $100,000 equal $2,000. Are discount points tax deductible? In many cases they are. Contact your tax preparer or the IRS to obtain a qualified opinion and the best expert advice. May I pay additional points to reduce my interest rate? Yes, you may pay additional points to lower your interest rate. During the application process, you will select what rate and fees you would like. How are rates determined? Rates are determined by the bond market and other financial indicators. These rates can change daily or more frequently. The changes are based on many different economic indicators in the financial markets. To obtain current interest rates, view "Today’s Rate" on the front page or enter your desired loan amount into "Custom Rate Search" on the left hand column of the front page. What is the difference between the Annual Percentage Rate (APR) and the interest rate? The rate reflected on the APR shows the cost of the credit as a yearly rate. This rate is generally higher than the rate stated on your mortgage note because, in addition to the interest rate, APR includes other costs such as origination fee, loan discount points, pre-paid interest, and mortgage insurance. The APR allows you to compare, in addition to the interest rate, the total cost of financing your loan, between various lenders. The interest rate, however, aka note rate, is the rate that your monthly payments are based on. Is it a good idea to shop for a loan using the APR? Yes. Comparing the APR is typically the best way to compare loans. When shopping for a loan it is always best to compare apples to apples--try to compare the same rate with the applicable points and closing costs. What is prepaid interest? This is the interim interest that accrues on the mortgage loan from the date of the loan closing to the beginning of the period covered by the first monthly payment. For example, if your closing date is scheduled for April 15, the first mortgage payment is due June 1. The lender will calculate a per-day interest amount that is collected at the time of closing. This amount covers the interest accrued from April 15 to May 1 and then your June 1 payment covers interest from May 1 to June 1. What is a Non-Conforming loan? A Non-Conforming loan is any loan amount that is higher than the conforming loan limits set by Fannie Mae and Freddie Mac--typically a $417,001 loan amount or higher for a single family residence. Does California Bank and Trust charge any fees to apply? No, we do not charge any application fees. LOAN PROCESS How do I apply for a mortgage? You can apply online, by telephone, or by visiting your local branch. When applying online, select the statement that best describes your situation on the front page. You will walk through the four steps of the application process. This whole process takes about 15-20 minutes. What happens after I complete the application? Upon receipt of your loan application, we will run your credit report and review this info to run through Automated Underwriting (AU). We can often provide a Credit Approval within 24 hours. Part of completing the application is informing us how you prefer we get back in touch with you (by telephone, e-mail, etc.). A Credit Approval is based upon the information you put on your application and your credit report. How long does it take to obtain a Conditional Loan Approval? Many lenders take 7-10 days to issue a loan approval. We have significantly streamlined the process so that once you complete the loan application and submit the requested income and asset documentation, we can offer a conditional approval within 2-3 days. You specify in your loan application how you would like us to contact you to deliver your Conditional Loan Approval (by telephone, e-mail, etc.). When will an appraisal be done on my house? After your loan has been credit approved and we have reviewed the loan and any additional needed items with you, we will order the appraisal from a local appraiser. You will pay the appraiser directly for their services. How can I determine what mortgage amount I will qualify for? Based on your income, your current debts and estimated down payment, we can help you determine what amount you qualify for. Use the "Get Qualified" tool on the website. You can also enter a desired loan amount on the left side of the front page and find out if you qualify for that amount, or what you do qualify for. What is an Interest Rate Lock? A lock is an obligation by us that your loan application will be locked in for a certain period of time to the interest rate and corresponding points at the time you choose to lock in your loan. A lock does not represent in any way an approval of your loan application. What is the difference between "locking in" an interest rate and "floating"? If you are concerned that interest rates may rise during the time your loan is being processed, you can "lock in" the current days interest rate. When you "lock in" an interest rate, you are guaranteed that rate for the agreed upon length of time. The benefit is the security of knowing your interest rate is fixed if interest rates should rise. What is the Lock Policy? The interest rate market is dynamic and subject to movements without advance notice. To protect you from interest rate fluctuations, California Bank and Trust allows you to lock in the interest rate and corresponding points quoted to you when you apply for a loan with us. This locked-in rate is good for a certain period of time, regardless of whether rates go up or down. Please note that California Bank and Trust is not responsible for any rates that may change prior to when you lock in your rate. This policy is subject to change without advance notice by us. When can I lock in my loan? You may request to lock in your loan anytime after your loan application is submitted. Your rate is not locked until you receive written confirmation that your rate has been locked. Interest rates fluctuate daily, so the rates available when you apply may be different than the rates available when you decide to lock your interest rate. By locking, you protect your selected rate for a stated period of time regardless of market fluctuation. Once your rate is locked, you may request a lock confirmation stating the rate and terms that you have protected. Are there any fees for a Lock? California Bank and Trust does not charge a fee for the initial rate lock. The rates posted reflect 30 day pricing and there is no fee to lock in the posted pricing. If you choose to lock an ARM with an extended lock (90 days), your lock will carry a Non Delivery Fee. If your loan does not close for any reason, you will be charged the Non Delivery Fee, which is based upon your chosen lock-in period and loan amount. GENERAL Is my personal information safe? Absolutely. Your privacy and security is of the utmost importance to us. After logging into this system, your information is encrypted so your personal information cannot be accessed or viewed by anyone without the proper privileges. We maintain the highest level of security and data encryption available throughout your loan process. What is an escrow account? An escrow account is typically established at the time that you close your mortgage loan. This account is held by the lender for the future payments of recurring items relating to the mortgaged property, such as real estate taxes and insurance premiums. Lenders usually require you to pay an initial amount for each of those items to start the reserve account at the time of closing and then the lender coordinates those payments as they become due. What is an assumption? An assumption is the process of a borrower transferring their property ownership to someone else. There are two different types of assumptions, simple and qualifying. The transaction you are trying to accomplish determines which type of assumption is applicable to your loan. Also, your Deed of Trust may prohibit a qualifying assumption. A simple assumption is a transfer of mortgaged property from one or more persons to another. It is called "simple" because this type of an assumption requires the signing of only a few documents to transfer "ownership" of the property to someone else. An example of a simple assumption is the death or divorce of a co-borrower where the borrower wants the co-borrower's name removed from the loan. In the case of a simple assumption, the "liability" of the mortgage (debt) is not transferred. The remaining borrower is still responsible for repaying the balance of the loan. A qualifying assumption involves the sale of the property and requires the buyer to qualify for the mortgage, just like if they were applying for a new loan. A qualifying assumption transfers ownership and the "liability" for the repayment of the loan to the buyer of the property. Most loans today, if assumable, are qualifying assumptions. What is Loan-to-Value? The loan-to-value is your loan amount divided by your property value. For example, the loan-to-value on a $100,000 house with a $75,000 loan amount is 75%. What are credit scores? Your credit score is an indication of your payment habits. There can be mistakes on your credit report. You should make an effort to correct these mistakes. You can review your credit record by ordering a copy of your credit report. What is a good faith estimate? Required by federal law, the Good Faith Estimate (GFE) is a written list of the estimated closing costs associated with your mortgage transaction, including the lender's charges along with the local closing agent's charges and fees. It also includes estimated amounts for real estate property taxes and homeowner's insurance. What is a Truth In Lending statement? Required by federal law, the Truth In Lending statement (TIL) shows the total of payments over the term of a loan and discloses the APR. Who are "Fannie Mae" and "Freddie Mac"? Fannie Mae, also known as the Federal National Mortgage Association (FNMA) and Freddie Mac, also known as the Federal Home Loan Mortgage Corporation (FHLMC), are government-sponsored enterprises (GSE) that buy mortgages from lending institutions in the secondary market; both operate as publicly traded corporations. Does California Bank and Trust offer mortgage loans for mobile homes? California Bank and Trust will finance double-wide homes that have been permanently affixed to a foundation, were built after June 1976, and meet other certain criteria. Check with a Loan Officer for further qualifying details. What is title insurance? Title insurance provides the lender and the buyer (if you purchase owner’s coverage) with coverage for losses resulting from specific title defects listed in the policy. In cases where land and property have changed hands over time, there is always the possibility an error has occurred. If an error has occurred, someone else may have an interest in the property, improvements may encroach on property lines or other similar problems may exist. In these scenarios, if you do not have title insurance you could lose your investment in your home. Lenders require "lender's coverage" to protect their investment and it only protects the lender. Owner’s coverage is optional and provides separate coverage for the borrower. What is PMI and why is it required? Private mortgage insurance (PMI) is insurance written by a private company that protects the lender from losses in the event the borrower defaults on the mortgage. Borrowers are required to pay the premium for private mortgage insurance. Private mortgage insurance limits a lender’s exposure to financial loss resulting from loan default. If you make a down payment of less than 20%, you are generally required to pay private mortgage insurance. What is the minimum down payment required in order to eliminate PMI? Typically, on a primary residence, the minimum that you need to put down to eliminate PMI is 20%. If you are putting less than this down, but wish to avoid PMI, we may have alternative products and pricing options. How long will I be required to have PMI on my loan? The Homeowner’s Protection Act of 1998 allows borrowers whose loans originated after July 29, 1999, to request cancellation of PMI at 80% loan to value (LTV) based on amortization or actual payments if the borrower has a good payment history, if the borrower provides evidence the property value has not decreased, and certifies there are no subordinate liens on the property. Borrower paid PMI will be terminated at 78% LTV based on the amortization schedule if the loan is current. If none of the above is done, PMI will terminate automatically at the midpoint of the loan term. How much does mortgage insurance cost? Your PMI will be based on your down payment, loan amount, and the program type. The larger your down payment, the less PMI will cost. This is paid monthly with your mortgage payment.
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