We know that buying a home and securing a mortgage can be both confusing and stressful. We take care of all the hard work in that process for you. Here below are a some FAQs that are a helpful place to start if you are just starting the process.
How much I can borrow?
We look at a lot of factors to determine how much you qualify to borrow. Some key factors are your credit history, the property value and your debt-to-income ratio (DTI). What’s DTI? It’s the percentage of your monthly gross income that goes towards paying debt. This helps us to determine a monthly mortgage payment you can afford.
How much do I need for a down payment?
Your down payment depends on the type of loan you’re looking for and your credit. We have lots of options – for an owner occupied property, as little as 3.5% down for FHA loans, and 5% down for conventional loans.
What is an impound account?
This is an amount that’s included in your monthly mortgage payment to cover your taxes and homeowner’s insurance. Your lender keeps this amount in an account to make the payments on your behalf.
What’s a prequalification?
It’s the letter we provide to use to make an offer on a house so the seller knows you can afford the property.
What do I need to send you to process my loan?
We try to make things simple by limiting the amount of information we need from you. Here’s a list of some things we may need. Everyone’s situation is different, so don’t be intimidated by this list. We’ll tell you exactly what you need to give us when you apply.
- Most recent paycheck stub
- 2 years of W-2 forms and tax returns
- Most recent retirement account statement, 401(k), Pension, IRA, bank statement, etc.
- Proof of homeowner’s insurance
- Copy of Driver’s License and Social Security Card.
What are closing costs?
They’re a compilation of fees charged by the lender you choose and third parties used in the transaction. Among these costs are Escrow, Title, Lender, Recording and pre-paid items like Taxes, Interest and Insurance. We will provide you with an estimate of these costs once we start the application process.
Why do I pay pre-paid interest?
When you close your loan, interest accrues in between the closing date and the last day of that calendar month. This amount is added to the closing costs for your loan rather than making your first monthly payment larger in order to absorb the extra that would be due.
Which amounts are included in my monthly payments?
If you have a fully amortizing mortgage, portions of your monthly mortgage payment go toward loan principal and interest. Interest-only mortgage payments include only the interest that is due on the outstanding principal balance. If your mortgage carries mortgage insurance, a portion of your monthly mortgage payment will pay this also, unless the lender has paid your mortgage insurance or you have paid your mortgage insurance upfront. If you have set up an escrow account for your first lien mortgage, then portions also go toward your property taxes and homeowners insurance.
What is PMI?
Private Mortgage Insurance (PMI) protects lenders against losses that can occur when a borrower defaults on a mortgage. PMI is required on first mortgage purchase transactions when the borrower has less than a 20% down payment. Likewise, it is required on first mortgage refinance transactions when the borrower has less than 20% equity in the property being refinanced. The cost of the mortgage insurance is typically added to the monthly mortgage payment.
Why should I refinance?
There a numerous reasons customers refinance the loans they already have. Some of these are:
- To lower the monthly payment
- To lower the interest rate
- To switch from an adjustable rate to a fixed rate or vice-versa
- To refinance for a higher amount in order to pay off other debts or get cash
- To change the remaining term of the loan
Whatever your needs, we can help you decide what makes the most sense for you
What is LTV and why does it matter?
LTV stands for loan-to value. It is the total amount of liens on the property divided by its fair market value. If the subject property is a purchase transaction, fair market value will be based on the lower of purchase price or estimated market value as established by the appraisal.
Why should I use my equity?
Using the equity in your home is a great way to improve your property, consolidate high-interest debt, finance important life events, or even cover unexpected emergencies. The interest you pay is usually tax deductible. (Consult a tax advisor for more information.)
How do I find out my home’s value?
When you first apply for a loan, we use a home value estimator to determine home’s value. The bank will determine the value during your application process by appointing an appraiser to evaluate the value of your property.
Is my interest tax deductible?
Interest you pay on a loan which is secured by your primary residence may very well be tax deductible. You should consult with a tax advisor to determine whether this applies to your situation.
