First, let’s talk about lender specific closing costs.

Nearly all mortgage products have become standardized. This means banks and lenders no longer individually decide what is required for loan approval.

The same is true for mortgage rates, which are now consolidated into a few centralized markets that determine rates nationwide based on what is known as “conforming guidelines”.

Conforming loans are packaged into Fannie Mae or Freddie Mac securities (UMBS), and in the case of VA loans, Ginnie Mae securities (GNMA).

In fact, mortgage rates do not rise or fall, it is the price of rates that change in relation to the price of mortgage bonds, which fluctuate daily.

Therefore, lenders are not choosing mortgage rates, they merely charge fees on top of what the bond market has already determined is the price of a given mortgage rate.

This is why understanding closing costs is so important when choosing a lender, the only difference between companies are the TOTAL fees charged on top.

This is also why mortgage automation is so important. It is not only about ease of use; automation reduces operating costs by eliminating sales and support staff, which means less closing costs for you.

Just remember, you are not shopping for rate, but instead the least expensive lender when comparing the same rate on the same day.

Because the price of mortgage rates change constantly, comparing loan estimates from different days, or with different rates, makes it nearly impossible for you to determine which lender has the lowest closing costs.

Unfortunately, requesting new loan estimates every day is cumbersome and can result in high pressure sales tactics. This is yet another area LendZen excels.

LendZen.com gives you access to their rates in real-time without any signup or human interaction, so you get full transparency of costs at your fingertips.

Third-party closing costs will be the same regardless of the lender, which is why we outlined how to choose a lender in such great detail above.

These other costs might include things like appraisal fees, title insurance, escrow services, and prepaid items like property taxes and homeowner’s insurance.

Some of these services you can shop for, others are chosen on your behalf, such as the appraisal.

On a purchase transaction, the buyer and seller share certain costs, but the split is negotiable and is determined on the purchase agreement.

Getting pre-approved is an important step when buying a property.

Whereas a pre-qualification is based on unverified data, such as estimated income, the pre-approval process is a more thorough review of your creditworthiness (credit history)and ability to pay (debt-to-income ratio).

Pre-Approvals involve submitting an application and all required documentation for an underwriter to review.

As we outlined in the “closing costs” section of this FAQ, nearly all mortgage products have become standardized.

Banks and lenders no longer individually decide what is required for loan approval.

Instead, Automated Underwriting Software (AUS) qualifies a borrower based on a proprietary algorithm that enforces conforming loan guidelines.

The job of the underwriter is to make sure all of the information submitted to the AUS accurately reflects the supporting documentation, including paystubs, tax returns, bank statements, etc.

LendZen.com has a unique pre-approval dashboard that sets them apart from other lenders, and another factor for why they received the Top Choice Award.

Once pre-approved with LendZen, homebuyers can create their own pre-approval letters up to their approved limit.

This gives you greater autonomy over making offers and negotiating quickly to secure a property you want.

Sellers and their agents can verify the authenticity of your letter by clicking a verification link that is unique to each letter. Letters can also be verified directly on LendZen’s pre-approval dashboard with a verification code that is also located on the letter.

Both your ability to create your own letters, and the instant verification process, are only offered with a LendZen pre-approval.

The amount you can borrow with a mortgage loan depends on several factors, includingyour credit history, debt-to-income ratio, down payment amount, and the type of loanyou choose.

The most important factor in determining the maximum loan amount is your DTI (debt-to-income ratio). This calculation compares your monthly income versus your total monthly debt obligations.

Most conforming loan programs are capped at a 50% ratio; this means you need at least twice as much monthly income as your monthly expenses.

Credit history impacts the cost of each rate. Poor credit history will result in lower creditscores.

To offset the potential credit risk of a lower credit score borrower, the cost of each rate increases compared to what a good credit score borrower would pay.

This means lower rates will cost more for a low credit score borrower, which can limit how much they can borrow as a higher, less expensive rate, will result in a higher DTI calculation.

LendZen.com instantly calculates your maximum qualified loan amount without the need for documentation.

Yet, another reason LendZen received our Top Choice Award.

Yes, many types of mortgage loans allow for early repayment without prepayment penalties. This is especially true of all conforming loans, where no prepayment penalties exist.

However, VA and Ginnie Mae mortgage securities have established a 210-day seasoning requirement from the first payment date before a loan can be refinanced, but this does not restrict making extra payments or paying off the entire balance.

Keep in mind that fully amortized mortgages have a fixed payment schedule. Although making extra payments, or applying a large lump sum to your balance, will reduce the interest portion of your payment and shorten the length of your loan term the payment amount due each month will not change.

In some cases, after a significant reduction in your principal balance has been made, you can request a “recast” of your payment schedule.

This will reduce the monthlypayment to reflect the lower outstanding balance.

A fixed-rate mortgage keeps the same interest rate for the life of the loan, giving you stable and predictable monthly payments.

An adjustable-rate mortgage (ARM), on the other hand, starts with a fixed rate for a set period, then adjusts periodically based on market trends—causing your payments to go up or down over time.