Frequently Asked Questions

Refinancing is the process of paying off one mortgage loan with the money from a new loan, using the same property as security. The decision to refinance will depend upon your personal objectives – but here are some of the most common reasons you might choose to do so:

• To reduce monthly mortgage payments: When a lower interest rate on your loan is available – typically 1% or more – refinancing can help you save money every month.
• To cash out a portion of the equity in your home: You can get extra cash by obtaining a new loan for a balance larger than the one on your existing loan. You can then use the cash for anything from home improvements to college tuition.
• To obtain a stable interest rate: You may be able to switch from the uncertainty of a variable interest rate to a more stable (and possibly even lower) fixed rate.
• To consolidate debt: Similar to a cash out refinance, debt consolidation allows you to take out a new loan for a larger balance than your existing mortgage. You can then use the cash difference to pay off any higher interest debts you may have. Essentially you are using your home as collateral for the consolidated debts.
• To pay off your mortgage sooner: You can switch to a shorter repayment term, which can help you save thousands of dollars in interest payments.

Unless you currently have an interest-only mortgage, as you continue to make monthly payments on your mortgage, you’re building equity in your home. You can cash out by taking out a new, larger mortgage against that equity. Many people use the money obtained from a cash-out for, among other things, home improvements, college tuition, major life events or to pay off credit card debt.

The amount of equity available to you is based on subtracting what you currently owe from the value of your home. In some cases, you can use up to 90% of the appraised value of your home to consolidate debt or make major purchases.

We’ll be glad to help you determine how much of your home equity you can use to refinance.

In some cases, yes. The amount you can refinance depends upon your loan program. With some loan programs, you can refinance up to 90% of the appraised value of your home. We'll help you discover a refinance or alternative loan program that will work for you.

A refinance closing is similar to your original closing on the property. After your loan is approved, your loan officer will provide you with the list of documents you'll need to bring to the closing, and you'll receive an estimate that outlines approximate closing costs. Bring a cashier's check with you to the closing that covers the estimated amount. You will also be required to outline how the refinance funds will be used.

If you are refinancing your primary residence, the loan proceeds won't be issued until three business days after you sign the loan documents. This is known as the borrower's right of rescission period. The rescission period is not required on second homes and investment properties.

Unless you currently have an interest-only mortgage, as you continue to make monthly payments on your mortgage, you’re building equity in your home. You can cash out by taking out a new, larger mortgage against that equity. Many people use the money obtained from a cash-out for, among other things, home improvements, college tuition, major life events or to pay off credit card debt.

Yes. Bring either certified funds or a cashier's check made payable to yourself, which you can endorse and hand over to the attorney or closing agent. If the amount is higher than what is needed, the excess will be refunded. Bring a blank personal check just in case any additional smaller funds are required. You may also wire funds into the closing agent's account. To obtain wiring instructions or for more information, contact the closing agent in advance or an experienced loan officer anytime at 1-877-319-0577.

The closing agent or attorney will provide the final figure prior to closing. You can also ask your loan officer for an estimate at any time.

You have a few choices. First, you can sign a Power of Attorney (POA). A POA is a legal, notarized document that allows someone else to sign and act on an absent person's behalf. A POA must specifically state that the document is to be used to finance the purchase or refinance of real estate, and it must indicate the property address (for VA loans, it must also be specific to the use of your VA Entitlement). The closing agent or attorney will coordinate and obtain the POA in advance of the closing date, as it will have to be recorded along with the other mortgage documents.

The second option, though not available in all jurisdictions, is to do a mail-away closing. In this case, the closing agent will mail the closing documents to you. You would then sign all the necessary documents and mail them back. The closing agent will release the funds and record the transaction at the county office before mailing the package back to the lender. Check with your loan officer at 1-877-319-0577 to learn if a mail-away closing is available for you.

The rescission period, also known as a “right to cancel” period, allows you to reconsider – and even cancel – a refinancing loan secured by your primary residence. The length of the rescission period is three business days after you have signed the loan documents. As required by federal law, the loan proceeds will not be disbursed until the rescission period has ended.

Yes, we offer mortgage loan options to customers who may not have perfect credit. If you are concerned about your credit, or have other questions about credit, visit our article All About Your Credit or contact an experienced loan officer who can help you find a mortgage loan that fits your unique financial needs.

No, but depending on your income and debt levels, you may need to sell your home before you can close on the new one. Ask one of our experienced loan officers for more information.

Once you have applied for a mortgage, the lender will schedule a property appraisal for the home or property you are considering. You must designate a contact, usually your real estate agent, to give the appraiser access to the property. The appraiser then comes and evaluates the condition of the home – including its structure, electrical wiring, plumbing and more – and sends the results to your lender.

For more information about your appraisal or any other steps in the home-buying process, contact an experienced loan officer at 1-877-319-0577.

The minimum required down payment depends on the mortgage program you qualify for. In general, at least 3.5% of the sale price is required for an FHA or VA mortgage. If you put down less than 20% on a conventional loan, you may need private mortgage insurance (PMI).

Unlike primary homes, however, second homes do not qualify for FHA or VA mortgage financing. Buyers of second homes may be required to contribute a higher down payment for a second home – so be prepared if you are financing a vacation home or investment property.

You may be eligible to incorporate closing costs into your loan, added into either your interest rate or your loan amount. You will still need money for your down payment, but this will help reduce the amount of money you need to bring to the closing. An experienced PHH Mortgage loan officer can help you find the loan that fits your needs, including the amount of the down payment. To discuss down payment options, call 1-877-319-0577.

You can find this information out from the home’s seller or your real estate agent and confirm it with the recording office in the county where the property is located. Property taxes are reassessed from time to time, so this amount may change.

You should look for a mortgage before you start looking for a new home. Once you examine financing options and get a pre-approval decision, you'll know how much money you can borrow and what level of home you can afford.

Before you begin looking for your home or property, real estate agents may ask you to get pre-approved. Having a pre-approval letter in-hand can give you an advantage over other buyers who may be interested in the same home – it shows the seller and real estate agent that you're financially ready to buy the home.

Appraisals compare the current market value of your home to other properties in your area that have recently sold. A current appraisal is necessary for the lender to justify the loan amount that you've requested. Note that the appraised value of your home differs from the value used for property taxes, and then be aware that the appraisal is not a guarantee of the home’s value.

Yes, as long as you meet the criteria for the new loan amount or new program you've selected. If you have not locked in a rate, you can make changes to your information and resubmit it online for a new loan pre-approval decision.
To make a change or get more information, call a PHH loan officer at 1-877-319-0577.

You can apply for a loan pre-approval decision by calling us at 1-877-319-0577 or get started online. In most cases, you can receive a pre-approval decision.

Requirements for documentation vary by state and depend on a variety of factors. Here is a list of some of the common documents you’ll need:

• A fully executed agreement of sale for the property being purchased.
• Financial statements for your bank and brokerage accounts.
• A HUD-1 settlement statement on the property you are selling, if applicable.
• A copy of your most recent pay stub.
• Previous W-2s.
• Statements for your primary residence or a copy of a rental lease.
• A homeowners’ insurance policy.
• A flood insurance policy, if applicable.

• Income and assets (including your primary residence and your potential for rental income) to determine your ability to repay the loan.
• Debts and credit history to determine your total financial obligations and your history of repayment.
• Property information, such as that needed for a home appraisal.

Interest rates change based on fluctuations in the market; however, some lending products allow you to “lock in” on a specific rate. With a rate lock, your rate will not change regardless of what happens in the interest rate market, as long as you close on or before the rate lock expiration date.

Yes. There are a number of options that may help you if you do not have much cash to purchase a home.

• Consider one of our low down payment programs, which may require as little as 3% for a down payment.
• If you meet the criteria, you will be offered the option to add your closing costs in to either the loan amount or the interest rate.
• If you choose the loan amount option, closing costs will be added to your loan amount. The amount due over the life of the loan will increase, but the amount you need to bring to closing will decrease.
• If you choose the interest rate option, the rate for the life of the loan will increase, as will your monthly payment, but the amount of cash you need to bring to closing will decrease.
• You can also consider negative points. This means that in exchange for a higher rate, we will contribute funds toward your closing costs.

To discuss strategies and options, call an experienced loan officer at 1-877-319-0577.

You will be presented with rate options that apply to your loan type and closing date, which may include:

Rate Lock: Committing to an interest rate. A rate lock can be done only one time. Your rate will not change regardless of what happens in the interest rate market, as long as you close on or before the rate lock expiration date.

Contact a PHH loan officer, who will help you decide which option is right for you.

Discount points can be paid by the buyer at closing to reduce the interest rate, while “negative points” can be paid by the lender to offset closing costs, resulting in a higher interest rate. Points are determined as a percentage of your loan amount. For instance, on a $90,000 loan amount, one point equals 1%, or $900. In many cases, discount points are tax deductible, consult your accountant or tax advisor for advice.

Rates are influenced by current market conditions. In addition, your credit history will be evaluated – and good credit is typically rewarded with a lower rate. To learn about credit and its importance in obtaining a mortgage loan, see our article All About Your Credit. Also taken into account are factors such as your loan-to-value ratio, your income, your assets and the purpose of the loan.

When you lock your interest rate, you are guaranteed to receive that rate as long as you close your loan by the specified expiration date. If your loan closes after this date, you are no longer guaranteed your locked interest rate. Instead, you will receive the higher of the current market rate or your locked rate. Please note that you cannot receive a lower rate by allowing your lock to expire.
Contact an experienced loan officer for more information about interest rates or options for locking in or protecting the interest rate on your mortgage: 1-877-319-0577.

• The annual percentage rate (APR) of the loan.
• The amount of interest you will pay.
• The amount financed by the loan and schedule of payments.
• Your total number of payments.
• Rules about late payment charges.

Once you lock the rate, it cannot be changed.

The annual percentage rate (APR) is the total annual cost of your mortgage loan, including the interest rate (the fee to borrow money calculated as a percentage of the amount borrowed), loan fees, points and any other charges. APR is required by the Truth-in Lending Act and gives you a tool for comparing the mortgage rates of different loan programs.

If you have a contract on a property and are within 90 days of closing, you can lock your rate. If you have selected the rate protection option, you can lock between 60 and 5 days of closing. With all programs, you must lock your rate at least 5 days prior to closing.

If you are refinancing, you can lock within 60 days of closing. If you have selected the rate protection option, you can lock between 35 and 5 days of closing. With all programs, you must lock your rate at least 5 days prior to closing.

In most cases, you will need to attend the closing on a home or property purchase. However, in some cases you can grant power of attorney to a friend or family member to represent you or take the steps to complete a mail-away closing. Your loan officer can help evaluate your options.

If you have questions about closing or any aspect of purchasing a home, we can provide answers. Simply call a loan officer at 1-877-319-0577.

It depends on your loan program and state requirements. If your monthly mortgage payment includes money for property taxes, those funds are held in escrow by the lender, who pays your property taxes as they come due. If your mortgage payment does not include property taxes, you are responsible for paying them by the due date.

For more information about property taxes, insurance or any aspect of buying a home, contact an experienced loan officer at 1-877-319-0577.

We will perform a flood hazard determination for your property and let you know if your home is located in a Special Flood Hazard Area. If it is, flood insurance is required by federal law. Note, however, that most standard homeowners’ insurance policies do not cover loss due to flood, and you can also obtain flood insurance coverage even if you are not required to do so by law.

Flood insurance is an important consideration for vacation homes especially, as they are often located near oceans or lakes, or in other areas prone to flooding.

A homeowners’ insurance policy, as required by the lender, needs to cover the cost to rebuild the home. The insured amount may be higher or lower than the actual purchase price, and your insurance company can give you an estimate based on specific property information.

For more information about homeowners’ insurance, or any element of a closing, contact an experienced loan officer at 1-877-319-0577.

The amount of title insurance you need is based on the value of your home and the amount of your mortgage. Your closing agent or closing attorney will advise you on the proper coverage.

You will need a cashier's check or certified check for your closing costs and fees. It is also a good idea to bring a few blank personal checks in case any last-minute costs arise.

Title insurance protects the lender (and you, if you purchase a separate, additional policy) against losses from disputes over a property’s title, such as unknown liens or other discrepancies in ownership. You also pay a one-time fee for the policy at the closing.

For more information about title insurance or any aspect of a closing, contact an experienced loan officer at 1-877-319-0577.

Certain inspections may be required under your particular loan program. Based on the home and its location, there are various inspections you may want to consider even if they are not required, such as:

• Termite inspection
• Water test (for well water)
• Septic tank inspection
• Radon test

Lenders may accept other sources of credit, such as a documented history of bills you've paid on time for rent, utility or cable services. For more information, contact an experienced PHH loan officer at 1-877-319-0577.

Effective ways to improve your credit score in one to two years include making payments on time and reducing your credit card balances. For more ideas, read our FAQ, “How can I improve my credit score?” or talk to an experienced PHH loan officer at 1-877-319-0577.

Credit is an agreement to borrow money with the promise that you will pay it back later through scheduled payments. It usually includes interest, which is additional money charged for the privilege and convenience of borrowing.

• To reduce monthly mortgage payments: When a lower interest rate on your loan is available – typically 1% or more – refinancing can help you save money every month.
• To cash out a portion of the equity in your home: You can get extra cash by obtaining a new loan for a balance larger than the one on your existing loan. You can then use the cash for anything from home improvements to college tuition.
• To obtain a stable interest rate: You may be able to switch from the uncertainty of a variable interest rate to a more stable (and possibly even lower) fixed rate.
• To consolidate debt: Similar to a cash out refinance, debt consolidation allows you to take out a new loan for a larger balance than your existing mortgage. You can then use the cash difference to pay off any higher interest debts you may have. Essentially you are using your home as collateral for the consolidated debts.
• To pay off your mortgage sooner: You can switch to a shorter repayment term, which can help you save thousands of dollars in interest payments.

To help decide if it makes good sense to refinance, start by speaking with an experienced loan officer, call 1-877-319-0577.

Good credit shows mortgage lenders that you make payments on time and are willing to repay any money borrowed. In general, people with good credit are often offered the lowest available interest rate.

One of the best ways to establish good credit is by making all of your credit payments on time. For more about the benefits of good credit, and strategies for establishing, building and maintaining it, talk with a credit advisor.

If you make a payment after the stated due date, you may be charged penalties or late fees. A pattern of late credit payments may lead to poor credit and could negatively affect future loans. For instance, lenders may evaluate you as a high risk and offer a loan with a higher-than-usual interest rate.

In general, a mortgage payment is considered late, or delinquent, if it is received 15 days beyond the due date. A payment is considered to be in serious delinquency when it is 60 to 90 days late. Consequences may include costly penalty charges, default on the loan and possibly foreclosure on the property.

Before you submit a dispute to a credit-reporting agency, contact the creditor, who may be able to correct the error. Companies that provide credit-clearing services can be costly. If you do decide to contact the reporting agency:

• Check to see if you can submit your dispute online. If you don’t see a link for disputing items on your online credit reports, write to the reporting agency at the address given on the report and request a correction.

• Make a copy of the report and circle entries you believe are incorrect.
  • Describe the entries you dispute, and include copies of any material you have that supports your dispute.
  • If the dispute involves personal information, include a copy of your driver's license or a utility bill.
  • Send the package certified mail with return receipt requested.
  • Send a copy of your letter to the creditor’s address provided on the billing statement.

If the reporting agency determines that the item was in error, request that the corrected report be sent to your potential mortgage lender.

For more information about correcting errors on your credit report, or any aspect of credit, contact an experienced loan officer at 1-877-319-0577.

Here's a straightforward technique for boosting your credit score. It generally takes one to two years:

• Establish a healthy pattern of timely payments.
• Reduce your credit card balances.
• Pay off outstanding loans.

“Credit repair” or “credit consolidation” companies may offer to “fix” your credit history for a fee. Only you can repair your credit score, however. To discuss strategies for improving your credit score, talk to an experienced loan officer at 1-877-319-0577.

Under the federal Fair Credit Reporting Act, you are entitled to receive one free credit report per year from each of the three major reporting agencies: Equifax, Experian and TransUnion. You can request these at www.annualcreditreport.com.

Consider getting reports from all three agencies, because not all creditors report information to each agency and there could be slight variations. Surprisingly, many credit reports contain at least one error, so examine yours closely for anything that may misrepresent you to lenders (see "how can I correct errors on my credit report" below).

Look for credit cards or accounts you no longer use, and verify all account numbers to make sure they match those in your records. Also, make a note of any late payments, which you may need to explain to your mortgage lender.

A not-for-profit credit counseling organization may be able to work with you and your creditors – usually at little or no cost – to set up repayment plans.

Your credit report displays your credit history and credit rating from credit bureaus. Lenders access and review your credit report to help them decide whether or not to approve you for a loan, what type of loan you qualify for and the interest rate for your loan.

A typical credit report includes five types of information:

• Personal information such as your name, current and previous addresses, telephone number, Social Security number, date of birth and current and previous employers.
• Credit information, including the date credit is opened, credit limit or loan amount and balance and monthly payment for each loan and line of credit you carry. Your payment history during the past several years is also included, as well as the names of anyone else responsible for paying on an account, such as a spouse or a co-signer.
• Public record information, such as bankruptcy records, foreclosures, tax liens for unpaid taxes, lawsuits and other monetary court judgments.
• Inquiries, which includes a list of all the times someone has obtained a copy of your credit report, and all the times you have applied for credit in the past two years. The number of inquiries on your report is important to your potential lender, particularly if you have had several recent inquiries, which might indicate a danger of becoming overextended on your credit.
• Credit score (also called a credit rating, or FICO score), which is a summary of your overall credit used to predict how likely you are to repay the loan. For more information, see "what is a credit score?" below.

A credit score is a summary of your overall credit, based on a statistical comparison to millions of other consumers. This score predicts how likely you are to repay a loan and provides lenders with a fast, objective way to evaluate your credit worthiness, determine whether to approve you for a loan and decide for which interest rate you qualify.

Credit scores typically range from 300 to 900, with most scores falling between 600 and 700. Your score will be higher (which is better) if you have had established credit for a long period of time, have always made payments on time and are not close to reaching limits on open credit accounts, such as credit cards.

Make credit and loan payments on time; collection notices and judgments against you for repayment of debt can negatively affect your credit score and loan applications. Be realistic in your borrowing practices and try to avoid overextending your credit by borrowing more than you can pay back.

A bankruptcy will be documented in a credit report for up to 10 years and will likely have a major, negative effect on securing a loan.

Information about a foreclosure or repossession can stay on a credit report for seven years and negatively affect your ability to secure a loan.

Bankruptcy is a legal process that may relieve you of your obligation to pay outstanding debts. Part of the bankruptcy proceedings may include distribution of your property to creditors as payment for the debt.

Foreclosure legally entitles your lender to sell a property if you are not able to pay your mortgage loan.

If you are unable to repay the loan on an item, the lender has the right to repossess, or take back, the item.