Yield spread premiums and lender kickbacks
Frequently Asked Questions
Straight answers to the questions we hear most.
The underwriting process itself typically takes a few days to a week. However, the entire period from when you submit your full application to when you receive “clear to close” can take several weeks, as it includes the time needed for you to fulfill conditions, the appraisal, and the title search.
Discount points paid on a purchase mortgage are generally tax-deductible in the year you pay them, as they are considered prepaid interest. For a refinance, points are usually deducted over the life of the loan. We recommend consulting a tax advisor for your specific situation.
A recast and a refinance are fundamentally different. A recast keeps your existing loan intact—same lender, interest rate, and loan term—and only lowers your monthly payment by re-amortizing the principal. A refinance replaces your old loan with an entirely new one, which can change your interest rate, term, and monthly payment, but it involves credit checks, closing costs, and fees, unlike a simple recast.
Your DTI ratio is a key factor lenders use to assess your ability to manage monthly payments. Most lenders prefer a DTI below 43%, though some may allow up to 50% with strong compensating factors. To calculate it, divide your total monthly debt payments by your gross monthly income.
While requirements can vary, a general guideline is:
≤ 36% DTI: Excellent. You are in a strong financial position.
36% - 43% DTI: Acceptable to many lenders, though you may need to meet other compensating factors.
43% - 50% DTI: This is often the maximum limit for Qualified Mortgages, and approval may be more challenging.
> 50% DTI: It can be very difficult to get approved, as it indicates a high debt burden.
≤ 36% DTI: Excellent. You are in a strong financial position.
36% - 43% DTI: Acceptable to many lenders, though you may need to meet other compensating factors.
43% - 50% DTI: This is often the maximum limit for Qualified Mortgages, and approval may be more challenging.
> 50% DTI: It can be very difficult to get approved, as it indicates a high debt burden.
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