Frequently Asked Questions
What is private mortgage insurance (PMI) and do I have to pay it?
Private mortgage insurance acts as a security insurance for the lender. If a borrower does not have 20%down on a purchase or 20% equity for a refinance, private mortgage insurance is charged to the loan to protect the lender against default. Either you pay p.m.i. in a monthly payment or with a higher interest rate.
How much house can I afford?
This is a typical question a new home buyer asks. The only correct answer should be whatever type of payment you feel comfortable making each and every month. This is more of a budget question than anything. Our loan officers can certainly determine how much we can qualify a home buyer for, but ultimately the decision should be made by understanding what type of payments a buyer feels comfortable with. Too many people allow others to determine what they can afford and this is how they get into trouble!
How much down payment will I need to buy a home?
There are many lending programs that do not require you to have any money down at all. This will also be determined by what type of credit situation the buyer is in. This should be determined between the loan officer and the buyer based on which type of loan program best fits the buyer.
What is an adjustable rate mortgage?
An adjustable rate mortgage (ARM's) is a mortgage that has a rate that does not stay the same for the life of the loan. It is usually fixed for a certain period of time and then can fluctuate based on the terms of the loan. Adjustable rate mortgages are usually used to keep payments as low as possible while either improving credit or because of the uncertainty of how long a borrower might be in a property.
What is an interest only loan? Are they smart loans?
Interest only loans are mortgages in which a borrower only pays off the interest and does not pay any principle off of the loan. They are again used to keep payments as low as possible. These loans are becoming more and more popular and can definitely be used to a borrowers' advantage. It is important, however, that the borrower fully understands how the interest only loan works and has a plan or reason for the interest only loan.
How can I improve my credit score?
The first move is to contact one of our mortgage professionals and find out what you have on your credit. Once this is done, a program can be put together to get the credit improved.
How long does the loan process take?
The loan process usually takes between 1 - 2 weeks. The loan program being used might also determine how long the loan takes. Depending on the difficulty of the loan, it could take up to 3-4 weeks. In certain circumstances, a loan can also be done in a day or two.
What is an appraisal and how long are they good for?
An appraisal is what the lender uses to determine the value of your home for the loan. This is based on similar properties that have sold in and around your neighborhood within the last year. Appraisals are usually good for 6 months depending on the lender being used.
How much are closing costs?
Closing costs are determined by the loan program being used. Some loan programs are more costly than others and are mostly based on credit scores.
What is all included in my mortgage payment?
Depending on what type of loan program is done, your payment usually is principle and interest. Most lending institutions will also allow you to include your taxes and insurance (escrow) into your payment. Whether or not a borrower should escrow should be discussed with your loan officer.
