What is a pre-qualification?
A pre-qualification is a basic review of your finances to determine if you would qualify for a mortgage. In general, a pre-qualification is based on unverified information you provide and does not include a credit check or any documentation. Thus, this is not a firm guarantee of a loan.
What are discount points, and should I pay them?
Discount points are money that you pay up front on your mortgage in exchange for a lower interest rate. For example, one point is equal to 1% of the loan amount, so on a $400,000 mortgage, one discount point would be $4,000. Discount points generally are tax-deductible but check with the IRS guidelines at www.irs.gov regarding tax updates. If the interest savings over the life of the loan is greater than the points paid, it can be worth it. Using the mortgage calculator and do the math can help you determine whether discount points are a good idea by comparing the effect of various interest rates on your mortgage.
Should I lock my interest rate?
Locking your rate means that you are guaranteed today’s mortgage interest rate for some predetermined period, generally between 30 to 60 days. If interest rates have been trending upward, it’s typically a good idea to lock in your rate. While the prevailing mortgage rate does not usually make a big move in a month or two, it’s certainly possible.
What are closing costs, and how much should I expect them to be?
Closing costs include charges you will need to pay before your loan is completed. This can include origination fees, title insurance, prepaid escrows, and more. The costs can vary significantly, but generally, expect to pay around 2% to 3% of the purchase price in closing costs.
How do you know which home mortgage option is right for you?
There are a number of mortgage types you can choose from. It can be hard to know how each would impact you in the long run, but the common ones include Adjustable-Rate Mortgage (ARM), Federal Housing Administration (FHA) Loan, Department of Veterans Affairs (VA) Loan, and Fixed-Rate Conventional Loan.
Do you need to find a home before applying for a home?
No, you do not need to find a house before applying. Getting started before you find a home may be the best thing you could do. If you get started before you have a property to purchase, we will work with you to get a pre-qualification subject to you finding the perfect home. You can use it to assure real estate brokers and sellers that you are a qualified buyer. Getting pre-qualified for a mortgage will even give more weight to any purchase offer you make.