Researching your questions online can often lead to far more confusion that answers. To help sort through all that confusion, we’ve answered some of the most often asked questions here.
We Have Answers.
Our team has more than 100 years combined experience in almost every area of the mortgage industry. From loan officer, to bank manager to underwriter.
What this means to you is that we have the knowledge, expertise and experience you can trust to help guide you through the maze of loan programs and the many options available so that you can make the right decision for your individual situation.
Who We Are.
We are a group of highly trained mortgage professionals who aren’t your typical bankers. Ron has been in the mortgage business for 25 years, has taught locally, nationally and at the college level on multiple topics surrounding mortgages.
“Mortgage People You Actually Like.”
Frequently Asked Questions
Q. Do I really need a 20% down payment to purchase a home?
A. No. There are several other loan options available that allow you to put as little as 5%, 3%, or even 0% down. With so many no-money down options available, the lack of a down payment is no longer a barrier to buying a home.
Q. How long does my pre-approval last?
A. Pre-approvals on average are good from 30 to 90 days. This doesn’t mean you have to start all over though. Often, it’s just a matter of verifying that your income and other documents haven’t changed.
Q. What, exactly, are closing costs, and how much should I expect to pay?
A. When you decide to buy a home, you’ll spend more than just your down payment. You’ll also pay for things like recording fees, wire fees, or escrow account, origination fees, upfront insurance premiums and any “points” you buy to lower your interest rate. These expenses are collectively called closing costs, and you can expect them to run you anywhere from 2% to 5% of the purchase price of your home.
Q. What type of mortgage should I choose?
A. This is entirely unique to your financial situation, what you want to buy, how long you plan to live in the home, and more. There are many types of loans such as Conventional, FHA, VA, USDA, Jumbo as well ad down payment assistant program, first time buyers and a host of other financing options. Then you must decide on 30-year, 20 year, 15 year or even a 10 year loan. Other options would be fixed-rate compared to an adjustable-rate mortgage. This is why you need to talk with someone on my team who will spend time with you to understand your needs and goals, and then guide you through the maze of options to ensure you make the smartest decision for your situation.
Q. When should I lock in my interest rate?
A. This answer differs depending on whether you’re purchasing or refinancing a home. But of course, either way, you want to obtain the lowest rate possible on such a large amount of money. If you’re refinancing you can lock your interest rate any time you choose.
If you’re buying a home, you must have an accepted your offer because your interest rate is locked no only to you but also to the property address.
You will need to decide if you want to lock in today’s rate or keep an eye on rates in the days that follow. Just like stocks, interest rates can adjust on a daily basis or sometimes can even change throughout the day. If rates rise and you aren’t locked, we can’t go back and give you a previous day’s rate.
Q. What will my mortgage rate be?
A. Knowing what you interest rate will be is almost always at the tip of the list of questions asked. The answer will depend on a lot of factors.
One factor is your credit. The better your credit, the better your interest rate. Also, a very low-down payment may also affect your interest rate. National statistics show that people with better credit and a higher down payment have a lower default rate. Because of this, they usually can expect a little better rate.
The property itself can also affect mortgage rate pricing – if it’s a condo or multi-unit property, you can usually expect a higher rate
Another factor may be the type of loan as discussed in the question “what type of mortgage should I choose?” Which kind of loan you ultimately choose may also affect your interest rate.
Q. What documentation should I gather?
A. Your lender may ask for many different items, but in general, be prepared to show all of the following:
- Income verification (Last two years’ tax returns, W-2s, 1099s, and your last few pay stubs)
- Drivers’ license and/or Social Security card (or alternative ID)
- Most recent two bank statements
- Proof of funds to close (and an explanation of where they came from, if it’s not obvious)
- If some or all of your down payment is coming from a gift, you will need a gift letter from the source of the funds that confirm they are gift, not a loan, but we can help walk you through this.
Q. What is an escrow account?
A. When you obtain a mortgage, you’ll probably be asked to put money into an escrow account to guarantee the lender that the ongoing expenses of owning the property will be handled — specifically taxes and insurance. You’ll pay a lump sum into the escrow account at closing (also known as your “prepaids”), which normally pays for a year of homeowner’s insurance so that the insurance company will cover your house now as well as a cushion for property taxes. You will then add to it further with each of your monthly mortgage payments.
Q. What is the biggest mistake people make during the mortgage process?
A. There are many but probably one of the one of the biggest mistakes while in the process of purchasing a home is opening a new line of credit. Getting excited for the new home and buying new furniture for the home, a new car or even just opening a store credit card for their “discount” can put you at risk for a loan denial. Mortgage companies will monitor your credit during the process so they will know when you apply for new credit. If you obtain new credit, those payments now will be factored into your debt ratio. If it puts you over the limit, you can lose out on the home.
Once you’ve submitted your paperwork for preapproval, stop spending money on any of your credit cards. Don’t make any large purchases until after you have the keys to the home. Even if the expense doesn’t push you over the debt range, it could delay the approval process, which could cost you your dream home, especially in a competitive market.
Ronald Pippin NMLS #218333
Cardinal Financial Company, Limited Partnership
NMLS #66247, Equal Housing Lender