Frequently Asked Questions

General Questions about Mortgages and Loans

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Using a Certified Mortgage Planning Specialist provides you with substantial advantages that traditional bank loan officers simply cannot offer. While most loan officers have access to similar products, pricing, and terms, CMPSs have additional training that enables us to provide much more holistic financial guidance along with second-to-none product knowledge and customer service, as well as a profound understanding of the lending marketplace.

Cash Flow Planning: We understand how to structure your loan so that it can help you achieve your personal goals, reduce your debt, improve cash flow, maximize your investment, and plan for significant life events such as college, marriage, and retirement.

Market Knowledge: Our training and ongoing educational opportunities enable us to not only understand, but explain in terms you can easily understand, the housing, financial, and mortgage markets.

Teamwork: Rather than operate in a vacuum, we work as a team with financial advisors, CPAs, and attorneys, all of whom bring a unique perspective to the table. We not only understand and value their expertise, we welcome it! Together, we can provide you with a complete, objective picture of the tax implications related to your loan and devise a strategy that will work best for YOU.

In addition to our specialized CMPS training, all mortgage brokers are required by the Federal government to take a 20-hour class and pass a federal and state exam as well as a criminal background check. This certification can be found on the National Mortgage Licensing System website: http://mortgage.nationwidelicensingsystem.org

Points are fees that you might consider paying in order to receive a lower interest rate on a loan. It doesn’t always make sense to pay points fees now to save money over time, and it’s important to weigh many factors in this kind of decision. This is an example of a situation in which the expertise of a Certified Mortgage Planning Specialist can provide guidance and direction in helping you determine what would create the most advantageous financial outcome.

A fixed-rate mortgage has an interest rate that will not change over the life of the loan. It will remain the same until or unless you refinance your mortgage loan.

An ARM, adjustable-rate mortgage, is fixed for a pre-specified time (usually five or seven years) and then may adjust once per year, going either up or down depending on the current market. One important feature of an ARM is its rate cap—no matter what the state of the market is, the rate will not increase beyond this predetermined cap. ARMs usually have a lower rate of interest (during the initial “fixed” time period) than fixed-rate loans. As with every mortgage-related decision, it’s important to consider many factors and consult with a CMPS when choosing a loan type.

A pre-qualification is performed by the mortgage specialist by obtaining relatively basic information from you, such as your current credit obligations, all income, and any assets. From that information, a debt to income ratio is calculated to loosely evaluate if you’re eligible to receive a mortgage loan, and how much you might be qualified to borrow. While the actual loan approval process is much more involved, a pre-qualification is helpful in guiding you toward properties you can afford. Also, a loan pre-qualification is virtually required in order to be taken seriously by a seller when making an offer to purchase a property.

As you probably know, the scoring models used to create your scores evaluate your credit history, and take into account the number of credit lines you have, how long you’ve had them, how much of that credit you’re actually using, and whether you have any late payments, collections, or judgements.

For the most part, the FICO score is the most important factor for the lenders to consider, but there are actually often multiple FICO scoring models, meaning one person can have different scores that are used to evaluate different lending situations. Confused yet? This is often one of the most complex areas for borrowers to understand, and because it’s constantly changing, we highly recommend you speak to us to understand your specific credit scores and how they impact your borrowing power. Unfortunately, the scores you obtain from credit scoring sites are, more and more, considered to be only for “educational” use, meaning you can’t rely on these scores alone to determine your own creditworthiness.

A refinance is the paying off of an existing loan with a new loan. People usually refinance to get a lower rate and lower their monthly payment. You might also consider a refinance in order to consolidate debt or acquire capital for a significant home renovation or life event.

The process for refinancing is similar to the regular mortgage loan process,, requiring an approval from the lender based on your current income, debt, and assets as well as the current value of your home. The only difference is that no transfer of property ownership takes place.

Title insurance is a form of insurance that is designed to protect lenders and property owners from any potential hidden claims against a property. For example, if you purchase a home, and months or years later, someone contends the sale was invalid for one reason or another, title insurance protects you against any possible resulting losses.

The two main types of title insurance

The first is the type that lenders require you to take out when you receive a mortgage loan. This type of insurance protects the lender against any potential losses against the loan that may occur as a result of title issues. This insurance expires when the loan is paid off.
The second type is personal title insurance that is designed to protect you, the buyer, against any such losses. While optional, it is highly advisable, as it protects your own investment interest and helps you avoid incurring potential catastrophic losses should a problem occur. Personal title insurance is paid by a one-time fee at closing and remains in place the entire time you own your property.

Why it’s important

Whenever property is bought or sold, a title search is conducted to ensure that the person making the sale is the legal owner and that no problems exist that are tied to the property, such as liens, forged deeds, mistakes in legal documentation, etc. While title searches are generally thorough and will uncover any issues prior to closing, oversights can occur. Perhaps the owner has unpaid property taxes and the local county has put a lien on the property. Or maybe the property is co-owned by a seller’s ex-spouse and he or she neglects to have this person sign the title transfer. In cases such as these, if a dispute occurs because a title search was faulty, title insurance covers the cost of settlement and any ensuing legal fees.

Commercial or Business Loans

Most banks require collateral in the form of real property (e.g., an owner-occupied home), but it can also be represented by your business’s inventory, cash savings or deposits, and/or equipment. In order to structure a loan that benefits both you and your business, it’s critical that the collateral offered up be carefully and strategically considered.. It’s also important to be realistic when considering the risks of defaulting on a loan, which could have harsh consequences for not only your business, but also for you personally.

There are two types: assets that are owned outright, and assets that still have loans attached to them. If a loan is still attached to an asset (e. (e.g., a mortgage attached to a house) the business lender will recoup the loss from a defaulted loan by refinancing your home loan and claiming the title to the property.

Assets that can be used as collateral must have a title of ownership, as banks will only lend if they can claim ownership of the title if needed. Homes and cars are the most common forms of collateral, but watercraft, motorcycles, as well as titled pieces of equipment, can also be used.

Commonly, we see:

  • Real property
  • Business inventory
  • Accounts receivable
  • Cash savings or deposits

Too often, business owners believe that if they purchase a piece of equipment for $100,000, they should be able to borrow $100,000 by pledging the equipment as collateral. Unfortunately, banks don’t usually agree. It’s likely the lender will not value your item as highly as you would, and even then, you’ll only get a loan for certain percentage of the value of the asset. Typically, banks will lend up to 70 percent of the value of a new piece of equipment, and perhaps only 60 percent for a used piece of equipment.

Our in-depth consultative process will involve a review of your financial projections for the business, and we’ll make certain to include debt repayment plan in those projections. Typically, you’ll need to  show available cash flow that is three times greater than your debt payment requirements. This is due to the inherent uncertainty of cash flow: Consider this: if your monthly cash flow is not significantly higher than your monthly payment, and you lose one customer, that could dramatically impact your cash flow and hinder your ability to make your loan payment. If your projections show that you have very little extra cash coming in, you may need to reconsider how much to apply for, or whether now is the right time to take on new debt.

Time for a reality check: if you’re borrowing $500,000 so you can meet payroll or other routine operating expenses, that money won’t allow you to generate more revenue, meaning you  could find yourself in the same situation a few months from now. Instead, use those funds purchase new equipment so that you can increase production or invest in a sales/marketing campaign that will grow top-line revenue. In this way, you’ll increase your cash flow and reduce your future borrowing needs, turning your loaned funds into an investment in your company’s sound financial future.

Did you know that if you have a large life insurance policy, the bank may attempt to recoup their losses through the death benefits you leave behind? There are a myriad of factors to consider when taking out a loan that will best serve and protect your business, yourself, and your family. We take the time to explore each and every aspect of a potential lender’s policies and how they might impact you. We can also guide you through personal property and casualty insurance coverage, which in the event of your death, takes business debt into consideration.

Did you know that if you leave a large life insurance policy, the bank may come after that? Our consultative approach will spell out all of the options in the various lender’s policies, to best determine how to protect your family and meet your goals. We can also guide you through personal property and casualty insurance coverage, which in the event of your death, takes business debt into consideration.

When it comes to small-business funding options, the advisors at Villa Nova Financing Group have the experience and knowledge to guide you. We are familiar with virtually every federal, state, and municipal loan program, and have relationships with a diverse group of lending institutions. Some business loan types include secured and unsecured loans and lines of credit, equipment financing, business acquisition loans, startup loans, working capital loans, cash advances, SBA loans, hard money loans, and more. Each of these loans has specific uses, advantages, and drawbacks, and we carefully consider each option as we guide you in making these critical financial decisions for your business. Worried about the fine print? Don’t be—we go over all terms and conditions of your loan to ensure you know exactly what you’re taking on.

Even when your business is running smoothly, it is important to schedule monthly or quarterly  financial “checkups,” the same way you see your doctor and dentist for wellness visits on a regular basis.. Our approach is holistic and looks at your entire financial picture, and we can help you continue to improve your financing situation.

There are several stages of a loan application and approval process. The most important steps are outlined below:

  • Preparation and submission of the completed loan package
  • Review by the lender’s credit committee
  • If deemed favorable, obtaining the rate sheet would follow
  • If approved, a closing date would be scheduled

With our custom approach, every client timeline will be different. Once we fully understand your goals and identify the right product to fit your needs, we’ll be able to provide you with a projected timeline and action plan. When time is of the essence, we’ll work quickly but carefully to ensure your loan is not only timely, but also the best fit for your situation.

Simply stated, key man (also known as key person) insurance is a life insurance policy, attached to someone in the company whose contribution is vital to the success of the business. Typically, key man insurance is designated for owners, partners, or significant employees of a business.

To obtain the protection of this benefit, a company purchases a life insurance policy on the key employee, pays the premiums, and is the beneficiary of the policy. If that person unexpectedly dies, the company receives the death benefits. The company can use the insurance proceeds for expenses until it can find a replacement person, or, if necessary, pay off debts, distribute money to investors, pay severance to employees, and close the business down in an orderly manner.

Key man insurance is essential for most small to medium-sized businesses, as well as many corporations. We can help guide you determining how much key man insurance you need after your loan package is completed. Generally, the amount will depend on your business’s size, structure, finances, etc., but we usually suggest getting as much as you can afford, as it is relatively inexpensive and provides a significant safety net.

Get answers to YOUR questions.

Our process is all about you. We want to understand your goals as well as your financial situation. Scheduling a complimentary consultation with one of our financing and loan experts is the ideal first step. There is never any obligation, and we promise you’ll get real-world answers to your questions.

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