Frequently Asked Questions

Q: Where do I even begin?

A: The best first step is getting a clear picture of your financial health. This involves knowing your credit score, calculating your monthly income, and listing your recurring debts (car loans, student loans, credit cards). The next, and most important, step is to speak with one of our loan officers. We can provide a free, no-obligation consultation to help you understand your options and create a roadmap.

Q: How much home can I realistically afford?

A: What you can afford depends on several factors, including your income, existing debt (your debt-to-income ratio, or DTI), credit score, and the amount you have for a down payment. A general guideline is the "28/36 rule," which suggests your total housing payment shouldn't exceed 28% of your gross monthly income, and your total debt payments shouldn't exceed 36%. However, the best way to know for sure is to get pre-approved.

Q: What is the difference between being pre-qualified and pre-approved?

A: This is a great question.

  • Pre-qualification is a quick estimate of how much you might be able to borrow, based on self-reported financial information. It's a good starting point.

  • Pre-approval is a much more powerful tool. It's a conditional commitment from us to lend you a specific amount. We verify your income, assets, and credit. A pre-approval letter shows sellers and real estate agents that you are a serious, qualified buyer.

The Loan Process & Key Terms

Q: What documents will I need to apply for a mortgage?

A: Being prepared can speed up the process significantly. While every situation is unique, you should generally be ready to provide:

  • Proof of Income (W-2s, recent pay stubs, tax returns for the last two years)

  • Proof of Assets (bank statements, investment account statements)

  • Personal Identification (Driver's license, Social Security number)

  • Information on your debts and other financial obligations.

Q: What is a down payment, and how much do I need?

A: A down payment is the portion of the home's purchase price you pay upfront. While the traditional advice was 20%, many loan programs today allow for much less. FHA loans can require as little as 3.5% down, and some conventional loans start at just 3% down. Eligible veterans and service members may even qualify for a VA loan with 0% down. We can help you find the program that best fits your savings.

Q: What are closing costs?

A: Closing costs are fees paid at the end of the transaction to finalize the mortgage. They typically range from 2% to 5% of the loan amount and cover services like the appraisal, title search, attorney fees, and loan origination fees. We will provide you with a detailed Loan Estimate upfront so you know what to expect.

Q: What is the difference between an interest rate and an APR?

A:

  • The Interest Rate is the percentage charged on the money you borrow. It's used to calculate your monthly principal and interest payment.

  • The Annual Percentage Rate (APR) is a broader measure of the cost of your loan. It includes the interest rate plus other charges and fees, like broker fees and closing costs. The APR is typically higher than the interest rate and gives you a more complete picture of the loan's yearly cost.

Q: What is PMI? Do I have to pay it?

A: Private Mortgage Insurance (PMI) is a type of insurance that protects the lender if you are unable to make your payments. It is typically required on conventional loans when your down payment is less than 20% of the home's purchase price. The good news is that PMI doesn't last forever. Once you reach 20% equity in your home, you can request to have it removed. We can also discuss loan options that don't require PMI.

Loan Types & Making a Choice

Q: What are the main types of mortgages?

A: The most common options for first-time buyers are:

  • Fixed-Rate Mortgage: Your interest rate is locked in for the entire term of the loan (e.g., 15 or 30 years). Your principal and interest payment will never change, providing predictability.

  • Adjustable-Rate Mortgage (ARM): These loans typically start with a lower, fixed interest rate for an initial period (e.g., 5 or 7 years) and then the rate adjusts periodically based on market conditions.

  • FHA Loan: Insured by the Federal Housing Administration, these loans are popular with first-time buyers due to their lower down payment requirements and more flexible credit criteria.

  • VA Loan: An exclusive benefit for active-duty military, veterans, and eligible surviving spouses. They often require no down payment and have no PMI.

Q: Why should I work with a mortgage company like yours instead of just going to my bank?

A: Your bank can only offer you its own limited selection of loan products. As a dedicated mortgage company, we work with a wide network of different lenders. This means we can shop around on your behalf to find the most competitive rates and the best loan program for your specific financial situation. Our loan officers are specialists who guide you through every step, providing personalized service that a large bank often can't match.