Caprock Lending - Frequently Asked Questions

Caprock Lending does not charge any application fees, but generally, an appraisal will be required to determine the market value of the property. Appraisers charge from $225-$375, and can collect payment at the time of the appraisal, or at closing.

2. What determines my interest rate?

Residential interest rates are tied most closely to the 10 year U.S. Treasury Bond prices. When bond prices rise, the corresponding rate of return on those bonds fall, improving the rate for a borrower. We set our rates according to the prices of the 10 year U.S. Treasury Bond. Rates vary among borrowers on the based on an assessment of risk of borrower default.

For instance, someone that has a low credit score, and is purchasing an investment property with 0% down is considered to be at more risk of default than someone with good credit, purchasing a home they plan to live in, and putting 10% down.

3. How long does the entire loan process take?

You can expect the loan to take 21 days from the day we take the application until you close on your new loan. If we are able to get your documentation quickly, and don’t experience problems in underwriting, we can complete your loan in as little as 5 days.

4. What sort of documentation do you need to complete a loan?

Generally, we will need documents to support the amount of income a borrower says he/she makes. For instance, we would request the last two check stubs from the pay checks for an employed borrower.

For a self-employed borrower, we would request the last two years of income tax returns.

Many times, if a borrower’s credit score is average or above, we don’t have to verify income. We can simply use the amount the borrower “states” that he/she makes.

In addition to documents that support income, we may need documentation that shows where your down payment will come from, such as bank statements.

We will also need you to sign the loan application, and disclosures required by State and Federal law.

5. How can I improve my credit?

If you don’t have much credit, a great way to quickly improve your credit is to become an authorized signer on someone’s account that makes their payments on time every month. Also, by having a low balance on your credit card(s) in relation to your available balance will improve you score.

For the purposes of improving your score, it is best NOT to pay off any old collection accounts that you may have. The credit evaluating engines used by the credit reporting agencies will show that collection account to have current trade activity, and your score will be penalized.

We can introduce you to credit repair counselors to help get you on track and improve your score.

6. Are ARMs (adjustable rate mortgages) risky for a borrower?

Adjustable rate mortgages are loans that are fixed for a period of time, and then begin to adjust according to an index. A common index is LIBOR, or London Interbank Offertory Rate. This is the rate that International Banks loan money to each other.

The risk of an ARM is that once it begins to adjust, and interest rates climb, it may make the monthly payment uncomfortable for the borrower. However, there are caps on the amount a rate can increase after its first adjustment.

For example, let’s say your loan has a 6% cap above initial rate, and the initial rate is 5%. If prevailing interest rates shot up to 15%, the principal and interest on a $100,000 loan would go from $536 to $952/ month.

To protect against interest rate risk, a borrower can lock the rate for a period of time that would extend past the time the borrower expects to be in the property.

7. How long does it take to get the loan process started?

We will briefly discuss your situation with you, evaluate your situation and provide you with some financing options. Once we have agreed on a program, monthly payment, and cash you need to bring to close, we will take a loan application from you. This entire process will take about 20-45 minutes.