FAQs

What is the difference between pre qualification and pre approval?

Pre qualification is when a prospective buyer discloses, either verbally or by providing documentation of, their income, assets and credit so that a lender can determine how much a borrower will be likely to afford in loan payments. A pre approval involves an underwriter and is a more formal review of your credit and income. A prequalification will commonly only provide you with an idea of what you can afford while a pre approval will actually guarantee you a loan of a certain amount.

What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage?

A fixed-rate mortgage is a loan in which the interest rate never changes and your payments remain stable throughout the life of your loan. An adjustable-rate mortgage (ARM) is a loan in which the interest rate changes at regular intervals, usually once every year, which is based on the current interest rate. For most ARMs rate adjustments begin after an initial period, usually between three months and five years, during which the rate is fixed. A fixed rate is usually best if you plan to stay in your home for the long term and are buying at a time when rates are relatively low. An ARM is usually best if you plan to move before the rate adjustments begin, or if you are buying when rates are relatively high.

What is the advantage of weekly payments over monthly payments?

By making weekly payments you will make one extra payment per year. Though the amount of money you will be paying will not be severe doing this will lower the period in which your mortgage is paid off

What is a good faith estimate?

A Good Faith Estimate is an estimate that outlines the costs you will incur during the mortgage process. This is provided to you when you apply for your loan.

What is a home equity loan?

A home equity loan is a loan that allows you to borrow a large amount of money, using your home as collateral. Your home equity loan will be a set amount of money at a fixed interest rate. It is a great option when you need a large amount of money for home improvement, debt consolidation or other major expenses.

When is refinancing a good option?

There are a number of reasons why someone would refinance. You can refinance if the interest rate has gone down, which will lower your monthly payment. Some people refinance when they have built equity in their home and would like to take some of that money out. Many people also refinance their loan when the initial period of their adjustable rate mortgage is coming to an end and they want to switch to a fixed rate mortgage.

Will an appraisal be required for the property?

The simple answer to this question is yes. Whether you are buying a new home, selling your home, or refinancing your current mortgage lenders will almost always require an appraisal.

How much money do I need for a down payment?

Traditionally, homebuyers needed a 20% down payment in order to buy there home. In reality there is no minimum down payment required for buying a home. Real estate prices are so high that mortgage lenders have created many financing options to meet homebuyer’s needs. There are many different loan options now available that include little or no down payment, making it easy to find a loan program that is right for you.

Can funds be borrowed to pay for a down payment?

Yes it is possible to borrow the money for your down payment. You could borrow money from your 401 K, or even another home that you may own. If you are borrowing the money for your down payment even if it is from your friends or family you should disclose this information to your lender. There are some cases were keeping this information private has been considered a breach of the loan agreement.

What will a lender look at when I apply for a mortgage?

Lenders consider many factors in evaluating your loan application. Lenders will look at your income and debt to determine how much money you can put towards a mortgage payment each month. They will look at your credit score to see if you have been financial responsible in the past. They will also look at the property you are planning to buy to see if it is worth the amount of money you are planning to pay for it.