Whether you are considering purchasing a home for the first time
or an old hand at refinancing a mortgage, the process can be a bit confusing to the lay individual. We have compiled
a list of the most frequently asked questions to help you along the path to gaining a favorable mortgage.
Q. Do I
need to have good credit to get a loan?
A. No. Our Loan
Officers will help prospective borrowers with all types of credit find a mortgage that will work with their credit rating.
Q. I really
want to own my own home, but I am not sure I can afford one. How can I find out?
A. A lot of people don't
even consider buying a home because they are afraid they can not afford one. For most people, homeownership is within
their grasp - especially with some of the programs for first time home buyers. For many, owning a home is just
as affordable as renting and in some cases even more affordable than renting. Contact us and let's discuss
your personal needs.
Q. How do I know how much
house I can afford?
A. As a general rule, you
can purchase a home with a value of two or three times your annual household income, depending on your assets and debts.
You may be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value.
Contact us and we will discuss your personal needs.
Q. What
is the difference between a thrift, a mortgage banker and a mortgage broker?
A. A thrift is your typical
neighborhood bank offering savings accounts, mortgages and other financial products and services. Mortgage bankers are
in the sole business of lending money. Mortgage brokers are middlemen who, by state law, work on behalf of borrowers.
Brokers research a number of lending sources to find appropriate loans to meet the specific needs of the borrowers they represent.
Q. Can a mortgage broker
find me the best interest rate?
A. Possibly, because mortgage
brokers work with many different lenders. They may also have access to lenders that do not have an office in your state,
but are licensed to lend money there. However, while mortgage brokers research many lending sources, it would be nearly
impossible for them to access every single lender and every mortgage product, simply because there are thousands out there.
Q. Will
I pay more for my loan if I get it through a broker?
A. Not necessarily, though
the broker does perform a service for which he or she receives a fee. When a broker processes the paperwork on a loan,
it costs less for the lender to make the loan. Therefore, lenders often discount loans to brokers.
Q. Should I
focus on the lenders advertising the lowest rates rather than the type of institution I borrow from?
A. You can, but remember,
there is no guarantee you will lock in at the advertised rate. Those rates may only be available for a 30 or 60 day
period or persons with a specified credit score. Interest rates can change daily.
Q. What documents will I
need to provide when I apply for a loan?
A. Be prepared
to provide verifications of income, including your pay stub and W2's or tax returns for the previous two years. You
will also need to provide bank account numbers and details about your long-term debt, including credit cards, auto loans,
child support, etc. If you are self-employed, you may need to provide financial statements for your business.
Lenders want detailed information. Be sure to inform your lender of any changes in your employment, salary, debt or
marital status between the time you submit your application and the time you close.
Q. Does
it make sense to pre-pay my mortgage or should I invest that money elsewhere?
A. Pre-paying your mortgage
shortens the term of your loan which will save you thousands of dollars in interest. As a general rule, on a 30 year
mortgage, you save $3 for every $1 you pre-pay. On an after-tax basis, you get back $2 for every $1 you pre-pay.
Pre-paying your mortgage is an easy, risk-free investment. Even if you round your monthly payment up to the nearest
$100, it will save you money over the long term.
Consider the pros and cons of pre-paying your mortgage
against paying off debt. If your credit card interest rate is 18%, it makes more sense to pay off this higher-interest
debt than to pre-pay an 8% mortgage.
