We've gathered resources you may find helpful during your home financing journey, including answers to frequently asked questions and definitions of commonly used terms.
FAQ
Discover answers to frequently asked questions about the mortgage process. Please contact us if you have more questions or need more information.
Questions to Ask Before Applying for a Loan
We will thoroughly review your financial situation before recommending specific loan options. Once you've provided the appropriate information regarding employment, income, assets, credit, and any other details, we will work with you to decide which mortgage programs might best suit your needs.
Setting expectations up front about your preferred style of communication—emails, texts, or phone calls—and how frequently you want to touch base can help make the process run smoothly. Use your Toll Brothers account to stay informed and in contact with your mortgage team throughout the process.
Interest rates are based on a few factors, such as current market conditions, your down payment, and your credit score. We can work with you on how to improve your credit if needed, as well as offer insight on paying down outstanding debt or saving for a larger down payment while you are building your beautiful new Toll Brothers home.
Our LockSolid® Rate Protection offers long-term rate protection for up to 345 days on many loan programs to secure your interest rate during the process of building a new home. In general, it is advised that you wait to lock your rate until your loan application is approved and you have a good indication of your estimated settlement date. By locking in your rate, you'll gain peace of mind about your mortgage payment and protect yourself from fluctuations in the market.
Questions to Ask During the Application Process
One discount point is equal to one percent of your mortgage amount. For example, one point on a $100,000 loan would equal $1,000. By paying points up front, you're effectively prepaying some of the interest associated with the loan at closing and lowering the rate you'll pay over the rest of the term, which in turn lowers your monthly payment. Talk to your mortgage team about your specific loan and possible advantages of paying points.
The type and amount of information requested to obtain your up-front loan approval may depend on your credit, employment, and financial situation. Mortgage underwriting guidelines have changed in recent years, so be prepared to gather documents including tax returns, bank statements, and proof of income. You should also be prepared to provide updated documents prior to closing, as the original documents may expire.
Buyers with down payments of less than 20% for conventional loans will need to pay for private mortgage insurance, as these loans may be perceived as higher risk. FHA loans are required to have up-front and annual mortgage insurance and VA borrowers may have to pay an up-front funding fee. Please ask your mortgage team for additional details.
Within three business days of receiving a mortgage application, all lenders must provide you with a standardized form known as a loan estimate. This form provides a breakdown of the proposed loan, including your proposed payment and estimated closing costs. These figures may change prior to closing, so you may receive updated loan estimates during your loan process. As new construction financing experts and an affiliate of Toll Brothers, you can rely on Toll Brothers Mortgage to provide you with the most accurate information available so there are no surprises. If you have any questions about these costs, review them with your mortgage team.
Questions to Ask After Loan Approval
You will need to provide updated financial information if the original documents you submitted at application have expired. We will explain all the information you'll need to update your loan file to ensure a seamless closing. If you intend to transfer or liquidate funds to cover your final settlement costs, it's important to leave enough time to carry out the transaction before settlement.
You will receive an initial closing disclosure with the estimated final cost estimate at least three business days before closing. Review this document carefully and ask any additional questions you may have. You will also receive a closing disclosure at settlement that provides a breakdown of the final closing costs and funds required for settlement.
Your settlement date will be scheduled once the completion date of your new home is determined. On the day of settlement, you will sign all the loan documents and receive the keys to your new home. Congratulations!
Glossary
Discover definitions to terms you may encounter during your home financing journey.
An adjustable-rate mortgage (ARM) is a type of loan for which the interest rate can change after an introductory period, usually in relation to an index plus margin. Your monthly payment may go up or down depending on the loan's introductory period, rate caps, and the new rate. With an ARM, the interest rate and monthly payment may start out lower than for a fixed-rate mortgage, but both can change substantially later.
An annual percentage rate (APR) is a broader measure of disclosing the cost of borrowing money than the interest rate, but it does not reflect the actual interest rate on your loan. The APR reflects the interest rate, any points, and other finance charges that you pay to get the loan. For that reason, your APR is usually higher than your actual interest rate.
Closing costs include charges from your lender to obtain your loan, such as origination charges, appraisal fees, and credit report. There will also be settlement provider costs including closing fees, title searches, document preparation fees, and title insurance premiums. You may also have a required deposit for an escrow account and possibly up-front costs for the community homeowners association. Lenders are required to provide a summary of these costs to you in the loan estimate.
A closing disclosure includes final details about the mortgage loan you have selected. It breaks down the loan terms, your projected monthly payments, and how much you will pay in fees and other costs at settlement. It also provides other important terms and conditions of your loan transaction.
A conventional loan is any mortgage that is not insured or guaranteed by the government (such as Federal Housing Administration, Department of Veterans Affairs, or Department of Agriculture loan programs).
A co-signer or co-borrower is someone who agrees to take full responsibility to pay back a mortgage loan with you. This person is obligated to pay any missed payments and even the full amount of the loan if you don't pay. Some mortgage programs distinguish a co-signer as someone who is not on the title and does not have any ownership interest in the mortgaged home. Having a co-signer or co-borrower on your mortgage loan gives your lender additional assurance that the loan will be repaid.
Your debt-to-income ratio is all your projected monthly housing payment plus your monthly debt payments divided by your gross monthly income. This number is an important measure that lenders use to assess your ability to manage the monthly payments to repay the money you plan to borrow.
An escrow account is set up by your mortgage lender to pay certain property-related expenses, like property taxes and homeowners insurance. A portion of your monthly payment goes into the account. If your mortgage doesn't have an escrow account, you pay the property-related expenses directly.
Federal Housing Administration (FHA) loans are regulated and insured by the Federal Housing Administration. FHA loans differ from conventional loans because they allow for lower credit scores and down payments as low as 3.5% of the loan amount. Maximum loan amounts vary by county. They require an up-front mortgage insurance premium that may be financed with the loan, and annual mortgage insurance premiums. The loans are only available for a primary residence.
A fixed-rate mortgage is a type of home loan for which the interest rate is set when you take out the loan and it will not change during the term of the loan. Terms generally range from 10 to 30 years.
Each year Fannie Mae, Freddie Mac, and their regulator, the Federal Housing Finance Agency (FHFA), set a maximum amount for loans that they will buy from lenders. This amount varies based on the property county. Any loan that exceeds this limit is known as a Jumbo.
A loan estimate is a three-page form that you receive after applying for a mortgage that summarizes your loan terms, projected payments, and estimated closing costs.
The LTV ratio compares the amount of your mortgage with your purchase price or the appraised value of the property. The higher your down payment, the lower your LTV ratio. Mortgage lenders use the LTV ratio to determine if you qualify for the loan, calculate your interest rate, and decide whether your loan will require private mortgage insurance.
Mortgage insurance protects the lender if you fall behind on your payments or default on the loan. Mortgage insurance is typically required on conventional loans if your down payment is less than 20% of the property value. Mortgage insurance is also required on FHA loans and a funding fee may be required as a guarantee on VA loans.
An origination fee is what the lender may charge the borrower for completing the mortgage loan. The origination fee may be in addition to other fees charged by the lender, including application fees, processing fees, underwriting fees, and other administrative fees.
Private mortgage insurance (PMI) is a type of insurance that protects your lender. See “See definition for mortgage insurance.”
A VA loan is a loan program offered by the Department of Veterans Affairs (VA) to help servicemembers, veterans, and eligible surviving spouses buy homes. The VA does not make the loans but sets the rules for who may qualify and the mortgage terms. The VA guarantees a portion of the loan to reduce the risk of loss to the lender. VA loans are generally only available for a primary residence.