Answers to common questions about mortgages, the loan process, and real estate.
Pre-qualification is an estimate of what you might be able to borrow based on self-reported information. Pre-approval is a more formal process where the lender verifies your financial information (income, credit, assets) and commits to lending you a specific amount, subject to property appraisal.
It's a myth that you need 20% down. Conventional loans can be as low as 3% for first-time buyers. FHA loans require 3.5%. VA and USDA loans often require 0% down payment for qualified borrowers.
Private Mortgage Insurance (PMI) protects the lender if you default. It's typically required if you put down less than 20% on a conventional loan. You can avoid it by putting 20% down, or remove it later once you have 20% equity in your home.
On average, it takes about 30 days from application to closing. However, this can vary depending on the complexity of the file and how quickly you can provide requested documentation. Some loans can close in as little as 14-21 days.
Standard documents include:
Closing costs are fees paid at the closing of a real estate transaction. They typically range from 2% to 5% of the loan amount and include things like appraisal fees, title insurance, origination fees, and prepaid taxes/insurance.
A rate lock guarantees your interest rate for a specific period (typically 30-60 days) while your loan is being processed. This protects you if market rates rise before you close.
Yes! An appraisal is for the lender to determine the home's value. A home inspection is for you to check the home's condition (roof, plumbing, electrical, etc.). We highly recommend getting a professional inspection to avoid costly surprises.
Minimum credit score requirements vary by loan type:
Absolutely! We have specific programs for self-employed borrowers, including Bank Statement loans where we use your business deposits to calculate income instead of tax returns.
Yes, most loan programs (Conventional, FHA, VA) allow you to use gift funds from a family member for your down payment and closing costs. You will just need a signed "gift letter" confirming the money is not a loan.
You can still buy a home! There are waiting periods after a significant credit event (typically 2-4 years for bankruptcy, 3-7 years for foreclosure) depending on the loan program. We can help you determine when you'll be eligible again.
An escrow account is a savings account managed by your lender. A portion of your monthly mortgage payment goes into this account to pay for your property taxes and homeowners insurance when they are due.
A Fixed-Rate Mortgage offers stability with the same interest rate and principal/interest payment for the life of the loan. An ARM usually starts with a lower rate for a set period (e.g., 5 or 7 years) but can adjust up or down afterwards. ARMs can be good if you plan to move or refinance before the fixed period ends.