Frequently Asked Questions

 What is the process for obtaining a loan?
1. The loan application is completed and all pre-approval checklist items are collected.
2. The credit report is ordered and missing documents are gathered.
3. The completed loan file is submitted to the lender for pre-approval.
4. The appraisal, title and payoffs are ordered.
5. The lender reviews all the remaining conditions prior to final loan approval.
6. The loan documents are prepared and delivered to the title company.
7. The loan documents are signed and reviewed by the lender.

What are the steps for a successful closing?                                                                         1. The Title Company will contact you to arrange a convenient appointment to sign the loan documents.                                                                                                   2. The Title Company will prepare your closing statement and tell you how much to bring to the closing.                                                                                                      3. Select a Homeowners Insurance Company. Ask your insurance agent to contact HomeStar Lending ten days prior to closing.                                                               4. Please make arrangements to wire funds or bring a cashier’s check to the Title Company.                                                                                                            5. The loan closing may be delayed if the closing documents are signed incorrectly or if the final conditions are not satisfied.

Why is the annual percentage rate (APR) higher than the interest rate?

The Annual Percentage Rate (APR) is the cost of credit expressed as an annual rate. Because you may be paying discount “points” and other “prepaid” finance charges at closing, the APR disclosed is often higher than the interest rate on your loan. This APR can be compared to the APR on other loan programs to give you a consistent means of comparing rates and programs.

The APR is computed from the amount financed and based on what your proposed payments will be on the actual loan amount credited to you at settlement. On a $100,000 loan with $3,000 Prepaid Charges, a 30 year term and a fixed interest rate of 7%, the payment would be $665.30 (principal & interest). Since the APR is based on the amount financed ($97,000) while the payment is based on the actual loan amount given ($100,000) the APR (7.304%) is higher than the actual interest rate.

The APR is also increased if the loan has Private Mortgage Insurance (PMI). PMI is required on most loans that exceed 80% of the value of the house. The PMI is considered a “prepaid” finance charge when calculating the APR.