How do I know what type of mortgage is best for me?
This is a complex question, but one that our mortgage specialists can help you arrive at the best answer for you. Here are some of the questions you’ll need to consider:
Our mortgage specialists will sit down and walk you through your financial situation and help you determine which mortgage solution is right for you.
What is pre-qualification?
- What is your current financial picture?
- How long you intend to keep your house? This is one of the most important aspects of your decision making process. Our experts will help you understand why.
- Do you expect your finances to change?
Pre-qualification for a mortgage is simply the range in which lenders believe you have the capacity of repaying. It is based on your assets, debts, income, and the selected loan program(s).
The lender will calculate two ratios to determine your capacity of repaying the loan:
What are closing costs?
- Housing Ratio – Your monthly housing expenses divided by your gross monthly income. Items included in your monthly housing expenses include loan payment (both principal and interest), real estate taxes, hazard insurance, flood insurance, mortgage insurance, homeowners’ association dues, ground rent (leasehold), special assessments, and subordinate financing.
- Debt Ratio – Your monthly fixed expenses divided by your gross monthly income. Items included in your monthly fixed expenses include monthly housing expenses (and all the items within that listed above), installment credit balances with more than 10 months remaining, revolving credit with more than 10 months remaining, real estate loan payments on non-income-producing property or negative cash flow on non-owner-occupied property, alimony, child support, or maintenance.
Closing costs are costs payable by both the seller and the buyer at the time of the loan settlement (close of escrow), when the purchase or refinance of a property is finalized. These costs usually include but are not limited to:
What is an escrow account – or – an impound account?
When borrowers maker their monthly mortgage payments, they usually also make a payment towards the anticipated annual amount needed to pay taxes and insurance premiums. These funds are placed in an escrow account (also known as impound account), until the lender pays the taxes and insurance as they come due.
What is the APR?
APR is an acronym for Annual Percentage Rate. It is the actual interest rate, taking into account points and other finance charges, for the projected life of a mortgage. Disclosure of the APR is required by law and allows borrowers to compare the actual costs of different mortgage loans.
What does "lock in" mean?
Lock in is a guarantee of a specific interest rate for a specific period of time. An interest rate can be “locked in” for a set amount of time- the shorter length of time for the lock in, the lower the cost in points. Our loan specialists can help you determine the optimal amount of time based on your needs and goals.
How long does the loan process take?
Once you apply, we will begin to verify all of the information you provided. It can take anywhere from a week or longer, depending on your specific situation. Factors like self-employment and title clearance can cause delays, as well as the timeliness of documentation delivery, from both you and outside sources. Be sure to respond promptly to requests for information while your loan application is being reviewed to help expedite the process.
What is a conventional or conforming loan?
A conventional loan is one that conforms to Fannie Mae or Freddie Mac lending guidelines. It is a loan that is not insured, guaranteed or funded by the Veterans Administration (VA), the Federal Housing Administration (FHA) or the Rural Economic Community (RECD) – formerly known as the Farmers Home Administration. Loans guaranteed by any of these three agencies are referred to as “government loans.”
What is a jumbo loan?
A jumbo loan is one that is larger than the conventional/ conforming limits set by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines. It is also referred to as a nonconforming loan.
What is PITI?
It’s simply an abbreviation that stands for principal, interest (on the mortgage loan), property taxes and insurance. The total amount of those items is your PITI.
What is hazard insurance?
Hazard insurance protects the insured property against physical damage such as fire. Mortgage lenders often require a borrower to maintain an amount of hazard insurance on the property that is equal to at least the amount of the mortgage loan.
- Title search and insurance, escrow fees
- Sales commissions (realtor)
- Origination fee
- Discount points
- Recording fees
- Courier charges
- Processing and document preparation fees