Frequently Asked Questions (FAQ)
What determines how large a mortgage I qualify for?
There are a number of factors the help determine what you may qualify for like credit scores, down payment, equity, income, debts, type of home, assets, debt-to-income ratios, and more. It is best to consult with your mortgage professional to review financial scenario and how much of a loan you may qualify for.
What is APR?
Annual Percentage Rate (APR) represents the total cost of credit including interest and a portion of your closing costs. When reviewing your Truth-In-Lending statement (TIL), many borrowers confuse the APR with the Note Rate… the Note Rate is the interest rates your payments are based off of.
What is Mortgage Insurance?
Mortgage Insurance may be required if your down payment is less than 20% of the purchase price. This insurance protects the lender, in case a borrower fails to pay the loan.
What are closing costs?
Closing costs are expenses for financing your home loan. you may negotiate with the seller regarding who will pay some of all of them. Closing costs ay include, but are not limited to: Loan origination fee, title fee, discount points, underwriting fee, credit report, appraisal fee & processing fee.
What is prepaid interest?
This is interest on the loan charge to the borrower at closing to pay for the cost of borrowing for a partial month. For example, if a loan closes on the 15th of the month and the first payment is due 45 days later, the lender will charge 15 days of prepaid interest.
What are escrows?
Escrows are funds that your lender collects to pay your property taxes, hazard/flood insurance and PMI (if applicable). They are in addition to your monthly principal and interest payments and are used by the lender to pay your property taxes and insurance premiums.
When does it make sense to refinance?
It may make sense to refinance in order to obtain a lower interest rate, reduce the term of your mortgage, consolidate debts, convert from an adjustable rate loan to a fixed rate loan, or simply remove mortgage insurance from your payments. Since every situation is different, it is best to discuss your scenario with Dustin in order to determine what your “break even” time may be and/or if there are any other benefits or risks to refinancing.
Can I lock in a rate?
Interest rates can be as volatile as the stock market. They may change throughout the day. In order to lock in an interest rate, we must have a complete loan application from a borrower and property a identified.
What is a conforming loan?
A loan eligible for purchase by the two major Federal agencies that buy mortgages, Fannie Mae and Freddie Mac. The maximum loan amount for conforming loans is $417,000 (may vary in high cost areas of the country).
What are points?
It is an upfront cash payment required by the lender as part of the charge for the loan, expressed as a percent of the loan amount; e.g., “2 points” means a charge equal to 2% of the loan balance.
Should I work with a real estate agent?
In short… ABSOLUTELY. To elaborate, if you are a homebuyer, your buyer’s agent will assist you in finding a home, negotiating the terms of your offer, and overseeing the process through the closing. If you are selling your home, a listing agent will help list your home in the RMLS, market the home, help negotiate the terms of offers and manage the process for you. If you need a quality real estate agent, let me know, I work with many of the best agents in the area.
