We know you have questions, hopefully these FAQs can help!
We’re happy to walk you through it, give us a call!
FAQs
How Much Can I Borrow?
When determining how much you can borrow, lenders will consider your income level compared with debt, your employment status, and your credit history. Call us today about getting prequalified for a mortgage before you start shopping for your new home. This will make the whole experience stress-free and much less time-consuming. Military veterans and first-time homebuyers may be eligible for special government-sponsored mortgage programs. Ask your lender what you might qualify for.
How Much Is Needed For Down Payment?
The commonly accepted answer to this question is 20%, but that’s not always mandatory. If you’re well-qualified, you might can pay as little as 3% with some types of loans, but there are pros and cons to this, so ask about all your options. One downside is that you’ll most likely have to pay for private mortgage insurance if you put less than 20% down. This can mean more closing costs and an increased monthly payment until you reach the magic 80% loan-to-value ratio. Lenders tend to offer the lowest interest rates when you have at least 20% equity in your home.
Can I Pay Off My Loan Early?
Prepayment penalties are no longer allowed in some states, so it’s important to ask about this. These penalties let the lender collect an additional six months of unearned interest if you pay your loan off early—either through a refinance or sale of the property. Some penalties are only in effect during the first 2–5 years of the loan, so get clarification. Ask about the terms of the prepayment, and if the prepayment penalty would apply if you refinanced through the same lender at a later date.
How Much Time Is Needed for Funding?
The average loan processing time is around 43 days. You must include a closing date to write a purchase contract properly, so you’ll have to coordinate this date with your lender. Ask about the anticipated turnaround time. Find out if any anticipated obstacles could hold up closing, and how long after final application approval will the loan fund.
What is an Interest Rate Lock?
Mortgage rates can change from the day you apply for a loan to the day you close the transaction. If interest rates rise sharply during the application process it can increase the borrower’s mortgage payment unexpectedly. Therefore, a lender can allow the borrower to “lock-in” the loan’s interest rate guaranteeing that rate for a specified time period, often 30-60 days, sometimes for a fee
What Happens At Closing?
The property is officially transferred from the seller to you at “Closing” or “Funding”.
At closing, the ownership of the property is officially transferred from the seller to you. This may involve you, the seller, real estate agents, your attorney, the lender’s attorney, title or escrow firm representatives, clerks, secretaries, and other staff. You can have an attorney represent you if you can’t attend the closing meeting, i.e., if you’re out-of-state. Closing can take anywhere from 1-hour to several depending on contingency clauses in the purchase offer, or any escrow accounts needing to be set up.
Most paperwork in closing or settlement is done by attorneys and real estate professionals. You may or may not be involved in some of the closing activities; it depends on who you are working with.
Prior to closing you should have a final inspection, or “walk-through” to insure requested repairs were performed, and items agreed to remain with the house are there such as drapes, lighting fixtures, etc.
In most states the settlement is completed by a title or escrow firm in which you forward all materials and information plus the appropriate cashier’s checks so the firm can make the necessary disbursement. Your representative will deliver the check to the seller, and then give the keys to you.