Frequently Asked Questions

The obvious trigger for a cash-out refinance is borrowing more than your existing loan balance; however, consolidating debt that was not obtained as part of the original purchase is also considered a cash-out refinance. This includes second mortgages or Home Equity Line of Credits opened after you purchased the property.

There is not a “most effective” loan program that will be a perfect fit for everyone. In determining which loan program is right for you there are several key factors you should consider. Please review the following questions and ask yourself how they apply to you. Your answers will help us help you determine how to proceed. The questions are as follows:

• How long do you plan on owning the property? If you have a long term outlook, then you may want to consider a more secure loan such as a 30, 20 or 15 year fixed program.
• Are you currently able to maximize your retirement contributions and do you have enough emergency reserves in case something unexpected occurs? If you did not answer yes to both of these questions, then you should consider staying away from a 15 year fixed loan. You would be better off taking a lower payment with a longer amortization period and putting your monthly savings into your retirement account or building up your emergency fund. You do not want to pay off the majority of your loan and have a lot of equity only to risk having a financial setback that puts you at risk of the bank taking over your property.
• Do you expect your income to increase significantly over the next few years? If so, you may want to look at loan options that offer lower initial monthly payments. This does not mean assuming a risky mortgage that can cause future problems down the line, such as balloon loans or pay option ARMs.

There are many other questions to consider. If you are unsure of which program is right for you, one of our loan specialists will be able to assist you in making your decision.

Yes. Sammamish Mortgage license NMLS# 118653. We are currently licensed in WA, OR, ID, CO & CA

Since 1992 Sammamish Mortgage has offered excellent service at very competitive rates and fees. Over this time, our proven track record and quality loans have helped us build exceptional relationships with the lenders that provide you with home loans. These relationships have been built on trust, integrity, and most of all, exceptional business practices. Our long standing business partnerships allow us the ability to offer unrivaled pricing on home mortgages. This pricing, in addition to utilizing top of the line technology and low overhead, enables us to pass the savings on to you, our clients.

We do not have a large team of loan officers. Instead we have a small team of highly experienced and trained professionals to handle your home loans.

There are several key points that can affect your rate. Below is a detailed breakdown of some attributing factors that may apply:

• Credit Score: Your credit score is one of the most important factors that will determine your rate.
  Loan to Value: Your down payment in a purchase transaction or your equity in a refinance transaction also plays a key role in determining your rate. The lower your loan to value (LTV), the better your rate may be.
  Rate/term refinance vs. Cash out refinance: A rate/term refinance has a loan amount that is just enough to repay the balance of your existing mortgage. You may include all third party fees, taxes, insurance and interest into the loan amount. A cash-out refinance, on the other hand, has a loan amount that exceeds your current mortgage balance.
  Purchase vs. Refinance: There are times when lenders offer purchase specials, which allow us to offer even lower rates than we already do.
  Property type: Often times there can be pricing adjustments for condos and multi-family properties.
  Escrow Reserve: Paying your property taxes and homeowners insurance on your own rather than having them included in your house payment may cost you an additional fee. Most lenders charge a onetime fee for the impound waiver.
• Loan amount: Your loan amount can affect your pricing. If you have a large loan amount (over $417,000) there will be pricing adjustments. If your loan amount is low, there can also be pricing adjustments generally starting at $165,000 and lower.
• Subordinate financing: Having a second mortgage or Home Equity Line of Credit tied to the property can impact the terms of the first mortgage even if no money is owed on the equity line. The line is still considered a lien against your property and impacts your Combined Loan to Value.

When deciding to pay points for a lower interest rate you need to take into consideration a few key factors and ask yourself the following questions:

• How long you plan on owning in the property?
• How much cash will it cost to buy down the rate?
• How much money will you save per month?
• What are the tax implications of paying points? You may want to discuss this with your tax accountant.

The longer you plan on owning the property and the more cash you have on hand, the more sense it makes to buy down the interest rate. To calculate your break even point, take the cost of the points and divide your monthly savings into the net cost.

For example, if you are paying one point costing $2,500 and your monthly savings from the lower interest rate is $50, then your break even point would be 50 months or a little over four years. ($2,500 divided by $50 equals 50 months, which divided by 12 months equals 4.167 years.)

If rates are at extremely low levels, it can also make sense to buy down your rate, as the likelihood that the rate will drop in the near future is decreased. Most of our clients decide not to pay points and go with the no points, additional fee and no mortgage broker fee option. If you are uncertain as to which option is good for you, one of our loan specialists can assist you in making a decision.

Prepaid interest is paid at closing to cover the interest that will accrue on your new loan for the remaining days of the month in which it is funded. You will make no payments in the month immediately following the month in which your loan funds. You will thereafter begin making payments on the first of each month for the prior month’s interest.

The interest rate is used to calculate your interest payment each month. The APR is NOT your interest rate. The APR is designed to show you the consumer, the effective rate you will pay after all of the costs have been considered in the loan. The Annual Percentage Rate (APR) is the cost of the loan in percentage terms taking into account various loan charges of which interest is only one such charge. Other charges which are used in calculation of the APR are Private Mortgage Insurance (PMI) or FHA Mortgage Insurance Premium (when applicable) and Prepaid Finance Charges (loan discount, points, origination fees, mortgage broker fees, prepaid interest and other credit costs). The APR is calculated by spreading these charges over the life of the loan which results in a rate higher than the interest rate shown on your Mortgage/Deed of Trust Note. If interest was the only Finance Charge, then the interest rate and the Annual Percentage Rate would be the same.

An adjustable rate mortgage (ARM) is a loan that offers a lower initial interest rate than most fixed rate loans. The interest rate has a set fixed rate period that is generally lower than that of a 30 year fixed. After the fixed rate period expires the rate converts to an adjustable rate based on a specific index. The benefit of the lower introductory payment should be weighed against the risk that your rate may increase after your initial fixed rate period ends. An ARM may be the right mortgage choice only if you plan on being in the home for less than three to five years.

• The Adjustment Period: This is the length of time that the interest rate or loan period on an ARM is scheduled to remain unchanged. The rate is reset at the end of this period, and the monthly loan payment is recalculated.
• The Index: ARM interest rate changes are tied to changes in an index rate. Using an index to determine future rate adjustments provides you with assurance that rate adjustments will be based on actual market conditions at the time of the adjustment. Common indexes include the 1 year London Interbank Offered Rate (LIBOR) and the 12-month Treasury Average Index (MTA).
• The Margin: This is the percentage that lenders add to the index rate to determine the ARM’s interest rate in the future.
• Interest Rate Caps: Caps place a limit on the amount your interest rate can increase or decrease at each adjustment. ARM’s have two types of caps: periodic caps, which limit the interest rate increase or decrease from one adjustment period to the next; and lifetime caps, which limit the interest rate increase over the life of the loan.

The APR is designed to help consumers realize that there is a cost to getting credit that is not readily seen. The APR on an ARM loan is based on an assumption of what market conditions will be in the future, which will affect future rate adjustments. We recommend that you use the same loan program and loan amount when comparing the rates and fees of different lenders. We also feel it’s important to note that rates change daily; so same-day comparisons are key.
The Federal Truth in Lending (TIL) law requires that lenders disclose the APR when they advertise a rate. The APR is an attempt to identify the cost of consumer credit as a percentage rate. However, since most people do not keep the mortgage for the entire loan term, it may be misleading to spread the effect of some of these up front costs over the entire loan term.

We do not charge a fee to lock in an interest rate; however, when you decide to lock in an interest rate we will require a credit card to order an appraisal.

If you decide for any reason to cancel your loan after your rate has been locked and the appraisal inspection has been completed you will not be obligated to pay anything beyond the cost of the appraisal. You will receive a copy of the appraisal which is yours to keep.

If your loan is not closed on time due to a delay caused by us or the lender we selected, your lock will be extended at no cost to you. If your loan was not closed on time due to a delay caused by you, any applicable extension fees will be at your cost. Some examples of delays that would cause extension fees to be charged to you are as follows:

• Client does not provide us with their documentation within the required 3 days
• When scheduling the appraisal, we strongly advise that the first opportunity for an appointment should be taken as the new appraisal process is the main cause for delays in today’s lending environment.
• Client delays the signing of final closing documents. Please plan for this in advance.
• Subordination of second mortgages may cause a delay if your service provider does not get us the agreement before your scheduled closing.
• Improvements to your home that are in process and will not be completed by closing will delay your loan from closing. Your loan cannot close unless all work has been completed. An appraiser will have to certify (at a cost to you) that all work has been done according to specifications.

We make every effort to ensure that your loan closes on time and it is very rare that our clients ever have to pay an extension fee. We stress open communication, so please notify us of anything that may cause potential delays, such as travel for business or pleasure and/or home improvements.

If rates are better when your rate lock expires, we will be able to extend your lock for free. If rates are higher at the time your rate lock expires, an example of extension costs are as follows:

7 days = .125 Pts
15 days = .250 Pts
30 days = .500 Pts

The extension policies may vary depending on the lender we select for your loan, but the majority of the lenders follow the guidelines listed above.

If rates drop significantly during your transaction we will work diligently to get your rate renegotiated with the investor. All of our investors have different renegotiation policies; however, generally if the rate drops more than at least .25%-.375% you will be eligible for a renegotiation. The lender may charge a renegotiation fee ranging between .375-.625 points or .125-.25% in rate. The application must be fully approved and the appraisal complete before a renegotiation will be considered. You can discuss your specific lender’s policy with your loan specialist when you make the decision to lock.

There’s no cost for completing an application and getting your loan pre-approved. Upon receiving your preapproval, you will be given an opportunity to lock your rate. When you decide to lock in an interest rate, we will require a credit card to order an appraisal. The cost of the appraisal is generally between $675 and $800 depending on your area, loan size and specifics of your particular property.

You do not always have to pay off your existing second mortgage when refinancing your first mortgage, although it may take longer for the loan process. There may be a fee charged by your 2nd lien holder and there may be overnight fees incurred. In order to refinance your first mortgage we would need to get a subordination agreement, which is an approval from your second lien holder, to allow the refinance of your first mortgage to go through. Maintaining a second mortgage does have an impact on the rates and costs associated with the new first mortgage. Your Loan Officer can go over the implications of maintaining a 2nd mortgage or HELOC.

Your closing agent will coordinate with you how your funds are to be disbursed. You can have a check mailed to you or set up a wire transfer.

Our lenders currently require full documentation on all of our loan programs.

After your application has been submitted, one of our loan specialists will review your file and process your preapproval. This will include pulling your credit report and running your loan through an automated underwriting engine. Once we receive your preapproval, you will be notified and have the opportunity to lock in an interest rate. If you are applying for a purchase transaction, a fully accepted Purchase and Sale Agreement is required to lock in a rate.

If at any time during the processing of your application, questions come up or we need something clarified, we will contact you. When you are ready to lock and you need assistance in determining which loan program and pricing option suits your needs, your assigned loan specialist will walk you through all the loan scenarios and help you choose the program that is right for you.

Once a program has been chosen and your rate has been locked, we will get your credit card information for your appraisal order. We will also send you a package via email that will have a list of all required documentation as well as all the federal and state disclosures that can be electronically signed. In order to maintain a smooth loan process and ensure that your loan closes within the lock period, we request that our package and all documentation be returned to us through our Secure Inbox, via email or fax within 3 days. Originals will not be required for the majority of loan programs.

An appraiser will also be contacting you during this time to set up an appointment for your home inspection. It is good to have the appointment scheduled within 3 days of being contacted to ensure your loan closes within the lock period.
Once your complete file has been reviewed and verified by an underwriter assigned by the lender, we will receive your final loan approval. Upon final approval, your loan amount will be verified and final loan documents will be ordered. You will be called by the escrow company to sign the final loan documents.

We expect to close your loan within our standard lock period of 30 days. If your required loan documents and appraisal were returned and scheduled as advised, we are very confident your loan will close on time. In a normal market, purchase transactions can be closed in as little as three weeks if necessary; however, we strongly advise against waiting this long to start the process as appraisal turn times and unknown issues out of our control may arise. Since we have a great working relationship with our investors and because of our loan quality and volume, your loan will get priority status, which allows us to close loans faster than many companies.

We will need to verify your income with the following supporting documentation:

• Your most recent W-2.
• Your most recent 30 day pay documentation.
• Your most recent two months bank statements of a savings, investment or retirement account with all pages in order to verify any cash required at closing as well as emergency reserves. How much is needed will be determined by your approval and particular situation.
• If you are self-employed, have commission income, rental income or earn interest and dividend income, you will be required to provide your most recent one or two years tax returns including all schedules depending on approval requirements.

You will not have a prepayment penalty on any of the loans we offer. You can pay off all or part of your loan and refinance at anytime without penalty.

Due to a lack of quality providers in the current market, we currently do not offer construction, lot or land loans.

You should submit an application and get pre-approved before you begin your property search. This will give you a clear idea of what price range you qualify for and what type of loan you will be able to obtain. It will also give you a clear idea of whether you qualify for the great rates available. Since we do not charge for a pre-approval there is no risk to you. By being proactive, you will have plenty of time to research all available loan options without being rushed into making a last minute decision.

An escrow/reserve and/or impound account is an account set up at closing for the future payment of your property taxes and homeowners insurance. Once your account is set up, you will make 1/12th of your yearly tax and insurance payment with your regular mortgage payment. Your lender will then pay your yearly insurance premium and annual or semi-annual tax payment. Generally, three months reserves are collected at closing to set up the account. This protects your lender in the event you stop paying your mortgage as they will have reserves to keep your property taxes and homeowner’s insurance current.

On refinance transactions, Federal Law mandates that you have three days, after signing your loan documents, in which to cancel your loan. This three day period includes Saturdays, but excludes Sundays and holidays. Your loan will not be funded until this period has expired.

1. What happens during the closing process?

Once we have received a final approval for your loan from the lender, your loan documents will be ordered and upon completion, sent to your escrow agent. Your escrow agent can be an attorney, title company or escrow company depending on your state. The escrow agent will then contact you to schedule an appointment to sign the final documents. At this time, they will let you know the exact amount of funds required to close as well as go over your payment options. If you have any questions during this time, your loan processor or loan specialist can go through your settlement statement with you.

Once you have signed your final papers you will have three days right of rescission on a refinance in which you can cancel your transaction. On a purchase transaction, your signed papers will be sent to the lender for final review and your loan will be scheduled to close the following business day.

Once we have received a final approval for your loan from the lender, your loan documents will be ordered and upon completion, sent to your escrow agent. Your escrow agent can be an attorney, title company or escrow company depending on your state. The escrow agent will then contact you to schedule an appointment to sign the final documents. At this time, they will let you know the exact amount of funds required to close as well as go over your payment options. If you have any questions during this time, your loan processor or loan specialist can go through your settlement statement with you.

Once you have signed your final papers you will have three days right of rescission on a refinance in which you can cancel your transaction. On a purchase transaction, your signed papers will be sent to the lender for final review and your loan will be scheduled to close the following business day.

Technology has made the loan process seamless when working with out of town clients. All documents during the transaction can be uploaded through the Secure Inbox on our website, faxed, or emailed. For the majority of our clients, face to face meetings are not necessary; however, if you would like to meet us in person, you can schedule an appointment to visit us at our office in Bellevue, WA. We recommend that office meetings take place after the application and preapproval have been completed. At this time, most questions can be answered since the loan specialist helping you obtain a home loan will be familiar with your specific scenario.

You may be able to set up automatic payments after closing with your new loan servicer.

You may be able to schedule bi-weekly payments with your new lender if this service is offered; however, there may be additional fees to do so. If you would like to avoid the additional fees, you can also make a 1/12th additional payment every month or make one extra payment per year and have a similar result. Not all lenders offer this service.

If you won’t be available at closing and you let us know ahead of time, we can set up a specific Power of Attorney for the transaction. You will want to make sure you choose someone you trust, preferably a spouse or immediate family member. If this is not possible, escrow may be able to express the paperwork to you for a fee. You will then be required to have the documents notarized and sent back to escrow. If signing will be an issue, please notify your loan specialist as soon as possible so that there is sufficient time to coordinate the process.

In order to dispute an inaccuracy on your credit report, we suggest that you contact the company that is reporting erroneous information directly. Request that they provide you with written verification stating the error so that you can provide documentation of your dispute when you file your claim with the credit bureaus. You can also dispute your claim directly with the credit bureaus below:

Trans Union
PO Box 34012
Fullerton, CA 92834
800-916-8800
www.transunion.com

Equifax Information SVCS
PO Box 740241
Atlanta, GA 30374
800-685-1111
www.equifax.com

Experian
PO Box 2002
Allen, TX 75013
888-397-3742
www.experian.com

We can also assist with providing a rapid rescore if you have written documentation from the company reporting the inaccuracies stating that they were reported in error. This rapid rescore may enable you to correct your information before the loan transaction is complete, which may help you obtain better financing.

You will get a copy of your appraisal as soon as the report is completed.

Unfortunately, we cannot use a previous appraisal as new guidelines require that we order the appraisal through a third party management company specific to every lender. The appraisal must also be completed in the name of Sammamish Mortgage or the designated lender.

You have the option of contesting the value with the third party management company if the appraisal comes in lower than expected. We will handle this for you. An AVM (Automated Valuation Model) will be ordered. A search of all comparable sales will be completed to verify that no mistakes were made on the part of the appraiser. Any mistakes found will be submitted as part of a complaint. The new increased value will be used if our dispute is successful. Should the original value stand despite our efforts, you have the option of getting another appraisal (at a cost to you) or adjusting your loan amount to complete the transaction. Any changes to your loan amount or loan to value may change your pricing. You also have the option of canceling the transaction, but will not be able to recover the cost of the appraisal.

No. Unfortunately, all of our lenders require that the lower of the appraised value or purchase price be used in calculating the loan to value.

Appraisals range in cost between $475-$600 depending on the price and location of your home. Some more complex properties including, but not limited to waterfront and multi-family units may have higher costs. The appraisal is paid by credit card once you decide to proceed with the transaction. Once your loan has been preapproved, we take your credit card information and give it to the third party appraisal management company at the time your order is placed. Sammamish Mortgage does not receive any portion of the fee collected for your appraisal.

Choosing a loan with 0 points/origination fees generally benefits the borrower for the first 4 to 7 years of the loan. This is because you exchange lower up front closing costs for a slightly higher interest rate and monthly payment. This is a great option for people that do not have excess liquid cash or emergency funds and people that are not sure how long they are planning on keeping the loan. Since most people either refinance or sell their home every 3 to 5 years, this plan can be of great value. When determining whether a no point, and/or no mortgage broker fee loan would work for you, you have to carefully consider the following:

• How long you plan on staying in the property?
• Do you think that you might refinance in the near future?
• Do you have enough emergency funds saved to warrant paying higher up front costs?
• If you are uncertain as to which is right for you, one of our loan specialists can assist you in making the decision that suits your needs.

Yes. At Sammamish Mortgage you will find that anytime we offer or advertise no points, it assumes no additional fees. Many banks, credit unions and mortgage companies will advertise and offer no point loans on their website only to disclose later in the loan process or in fine print that there is a minimum 1% origination fee added to the loan. We feel that this is a deceptive practice and although it is legal, we feel strongly that it should not be allowed.

You legally have the right to choose any licensed provider you want for theses services. Please let us know in the beginning of the loan process which companies you would like to use. You would be required to pay the fees those service providers charge. On a purchase the providers are specified on the Purchase and Sale Agreement.

In some circumstances your loan can be closed in the name of a trust. Please notify us as soon as possible and provide us with a copy of the trust so that we can send it to the lender for review and approval. We cannot close a loan in the name of an LLC.

If your lender goes out of business after the loan closes, you will be notified that a new lender has assumed the servicing of your loan. Your loan terms will remain the same and you will have to continue making your mortgage payment to the new company. The new company that assumes your loan must abide by the terms of your note.

We do offer financing on investment properties; however, there will be risk based pricing adjustments associated with the loan. The minimum down payment requirement on an investment property purchase is generally 20%.

Private Mortgage Insurance is required if you purchase a home with less than a 20% down payment. PMI is an additional premium that is required to offset the lender’s risk for lending on a property with low equity. Your PMI premium will depend on your loan type and loan to value. The higher your loan to value, the higher your PMI premium will be.

On a primary residence or second home, federal regulations require that PMI be automatically cancelled when your loan balance reaches 78% of the original property value at the time the loan was secured.

Depending on the loan program, you may be able to request in writing that PMI be removed sooner based on an increase in the property value or a principal pay down of your loan. See the PMI page of our website for more information.

The function of title insurance is as follows: to ensure your rights and interests to the property are clear; and that transfer of title takes place efficiently and correctly, and that your interests as a homebuyer/homeowner are fully protected.

Title companies issue two types of title policies:

• Owner’s Policy, which covers the homebuyer/homeowner. This policy is only applicable on a purchase transaction and is generally a cost paid by the seller.
• Lender’s Policy, which covers the lending institution over the life of the loan. If the loan is for a home purchase, both types of policies are issued at the time of closing for a one-time premium. The lender’s policy is a cost paid by the borrower. If the loan is a refinance, you already have an owner’s policy that was issued when you purchased the property, so only a lender’s policy will be issued.

After a thorough examination of the records, any title problems are usually found and can be cleared up prior to your purchase of the property. If any claim covered under your policy is ever filed against your property once a title policy is issued, the title company will pay the legal fees involved in the defense of your rights. They are also responsible to cover losses that may arise from a valid claim. This protection remains in effect as long as you or your heirs own the property.

Yes. At the time of your pre-approval, we can guarantee all lender and 3rd party costs associated with your loan. Your costs may change if there is a valid change in circumstance such as a lower than expected appraised value, or if you decide to change your loan amount as your loan to value is a key factor in pricing your loan. Your loan specialist can go over all the different scenarios with you if you are unsure of your value on a refinance. We rarely have issues with the value on a purchase.