Save As Template button, if application criteria changes, should the changes also be saved on Save As Template click?

Usability Issue I am running into with team:

When in the middle of an application, there is a Save as Template button that, when clicked, opens a modal to name the template, then once template is saved, returns you back to the previous application you were working on, not the one you just created.

My question is, if you change the criteria in Step 1 without hitting the Save button below on that page, and click "Save as Template", should the edited areas be saved with that template creation? Or should there be a modal telling the User they need to save first? Do you see the button being named incorrectly?

_{(source: bakerdesign.ca)}