Lic 10845, Independently Owned & Operated
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FAQ
FAQ
A mortgage is a loan used to purchase a home or property, with the property itself serving as collateral.
A lender provides funds to buy a home, and you repay the loan over a specified period with interest.
The amount you can borrow depends on your income, credit score, debts, and the value of the property.
The mortgage term is the length of time you have to repay the loan, typically 15, 20, or 30 years.
A down payment is the upfront cash you pay toward the home’s purchase price, usually a percentage of the total price.
PMI is insurance that protects the lender if you default on the loan. It is strictly required if your down payment is less than 20%.
A mortgage pre-approval is a lender’s conditional approval for a loan amount based on your financial situation.
Closing costs are fees associated with finalizing the mortgage, including appraisal fees, title insurance, and attorney fees.
A conventional mortgage is a home loan not insured by the federal government.
A fixed-rate mortgage has an interest rate that remains constant for the life of the loan.
An ARM has an interest rate that changes periodically, typically starting with a lower rate.
An interest-only mortgage allows you to pay only the interest for a set period, after which you start paying both principal and interest.
A reverse mortgage allows homeowners 62 or older to convert home equity into cash without selling their home.
A balloon mortgage has lower monthly payments for a set period, followed by a large lump-sum payment at the end of the term.
Documents include proof of income, tax returns, credit report, bank statements, and identification.
Improve your credit score, reduce debt, save for a larger down payment, and provide a stable employment history.
es, but you’ll need to provide additional documentation, such as tax returns and profit-and-loss statements.
The approval process can take 30-45 days, depending on your financial situation and the lender.
The debt-to-income (DTI) ratio compares your monthly debt payments to your gross monthly income, and it’s a key factor in mortgage approval.
Underwriting is the process where the lender evaluates your financial situation to determine if you qualify for a mortgage.
Yes, you can get pre-approved for a mortgage, which helps you understand your budget and strengthens your offer.
A co-signer agrees to take responsibility for the mortgage if you default. They can help you qualify if your credit or income is insufficient.
Factors include your credit score, loan amount, loan type, down payment, and current market conditions.
Compare rates from multiple lenders, maintain a high credit score, and consider a larger down payment.
Amortization is the process of paying off a loan with regular payments, where part goes to interest and part to principal.
Yes, but some loans have prepayment penalties. Paying off early can save on interest.
Refinancing replaces your current mortgage with a new one, usually to get a lower interest rate or change the loan term.
Consider refinancing if you can secure a significantly lower interest rate or need to change your loan term.
An interest rate lock guarantees your mortgage rate for a specified period, protecting you from rate increases.
Use an online mortgage calculator, which factors in loan amount, interest rate, term, taxes, and insurance.
Missing a payment can lead to late fees, affect your credit score, and eventually lead to foreclosure if not addressed.
With bi-weekly payments, you pay half of your monthly mortgage payment every two weeks, which can reduce the loan term and interest paid.
A mortgage modification is a change in the loan terms, such as extending the term or lowering the interest rate, to make payments more affordable.
When you sell your home, the mortgage is paid off at closing from the sale proceeds.
A home equity loan is a second mortgage that lets you borrow against your home’s equity, with the home as collateral.
A HELOC is a revolving line of credit secured by your home’s equity, allowing you to borrow as needed up to a limit.
Some mortgages are assumable, meaning a qualified buyer can take over your loan, but most require lender approval.