Lately we've received quite a few emails asking about the mortgage programs. First
let me say thanks for bringing up such good questions. Hope the following helps
answer some of the easier questions, and of course, you will have to consult
with your mortgage lender for a complete list of available mortgage programs. I
thought I would post it here for everyone to read. You can always ask one of
our real estate experts for more
assistance, they will be happy to help you become a home owner!
How much down payment will I need?
The minimum down payment required depends on the mortgage program you select.
Usually at least 3% is required. If you put down less than 20% on your monthly
payment may be subject to Private Mortgage Insurance (PMI). If you are
concerned about having enough money to purchase a home you may want to consider
our options for rolling your closing costs into either your interest rate or
your loan amount. You will still need to come up with money for your down
payment but this will help reduce the amount of additional money that you will
need to bring to close.
When should I start shopping for a mortgage and how do I know what I can
The best time to look for a mortgage is before you look for a house. This way
you'll know exactly the amount of money you can borrow. You can use the
calculators on this site to help you determine these numbers as well as your
estimated monthly payments.
Get approved for a mortgage before shopping for a home and you'll maximize your
negotiating power. It's free and will take only a matter of minutes to get a
decision, and there's no obligation until you want to reserve your funds.
Do I need to sell my existing home before I apply for a new mortgage loan?
Absolutely not! You can apply for a new mortgage loan before you sell your
current home. However, depending on your income and debt levels, you may need
to sell your current home before you can close on your new home.
Why is the Annual Percentage Rate (APR) different from the interest rate?
The annual percentage rate is intended to reflect the total cost of your
mortgage loan. To calculate the APR, lenders consider the interest rate on your
mortgage loan, the term of the loan, and other loan fees such as closing costs,
points, etc. Your monthly payment is calculated based on the mortgage note
rate, not the APR. The APR will be higher than your interest rate, especially
if you are paying any points.
Don't just look at the mortgage interest rate
close look at all the terms of the mortgage program. Check with several
lenders, either directly or through a mortgage broker. You also can do some
comparison shopping yourself on the Web.
Below are 10 key questions to ask the mortgage lender or
broker. You can use the information gathered as a basis for comparing loans. In
the end, you'll see which loan adds up to the best deal for your circumstances.
1. How long
will it take to process my mortgage loan application?
Usually it takes about 45 to 60 days, although it can take as few as 30 days
and as long as 90 days for some transactions. The actual time depends on how
quickly the lender can get an appraisal of the property, a credit report and verification
of employment and bank accounts.
documents do I have to provide?
You will need to provide proof of income and assets in order to get a mortgage
loan. Different lenders may require more or less of these documents.
3. What are
the qualifying guidelines for the particular loan?
The qualifying guidelines can relate to your income, employment, assets and
liabilities, and credit history. Remember some first-time home buyer programs
and government-sponsored loans have easier qualifying guidelines.
It's a good idea to know what type of mortgage you want, such as fixed or
adjustable rate, when you start loan shopping. For more, see the section on
ARMs can be tempting, but uncertain.
4. What is
the minimum down payment?
Depending on the amount of the down payment, you can get different interest
rates, loan terms, and avoid private mortgage insurance. Some loans require the
standard 20 percent down payment; others are special low down payment programs
5. What is
the annual percentage rate of the mortgage interest?
To effectively compare different lenders' programs, ask for the annual
percentage rate, or APR, of the mortgage interest, which is generally higher
than the initial quoted rate because it includes all lenders' fees.
6. What are
the points or origination fees on the loan, if any?
Points are prepaid mortgage interest, and you may have to pay points at closing
in order to get a lower interest rate on your mortgage loan.
7. Can I
lock in the interest rate?
The interest rate of the mortgage you're applying for may go up or down before
you close on the home. That's why it may be wise to lock in the rate for a
specified period of time, rather than let the rate float until the closing. Be
sure to ask the lender if there is any fee for locking in the rate and whether
you also can lock in points. To keep up with the daily changes in rates, check
out bankrate.com's nationwide survey of mortgage rates.
8. What is
the 'good faith estimate' of closing costs?
Mortgages come with a list of fees. Ask for a list of estimated closing costs before
applying for the loan. Also, remember that some fees must be paid upfront such
as the credit report, property appraisal and loan application fee.
Find out if you can get a refund of the loan application fee if you change your
mind. Some lenders may only refund the fee if they turn down your application.
9. Is there
a prepayment penalty on the loan?
The prepayment question is for all loan shoppers. Find out the duration of any
penalty period and how the fee would be calculated. Some penalties are 1
percent of the loan amount: others are more complicated. Knowing how much the
prepayment penalty would be is important if you think you will sell the home
before the mortgage is paid off, which most homeowners do.
10. What can
delay the approval of my loan?
If you provide the lender with complete, accurate information, everything
should go smoothly. However, there could be a delay if the lender discovers
credit problems, which is why it is critical to get your credit in order.
Notify your lender if your personal or financial status changes between the
time you submit an application and the time the loan is funded. If you change
jobs, get an increase or decrease in salary, incur additional debt or change
your marital status, you must let the lender know.
Hope this is
helpful - Call Us If You Would Like Assistance 508-759-2121