Frequently Asked Questions

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A mortgage is a type of loan specifically used to purchase real estate, such as a home. The borrower agrees to pay the lender over time and the property serves as collateral to secure the loan. 

The down payment required for a mortgage can vary depending on several factors, including the loan program and what type of property you are looking to purchase. Down payments typically range from 3%-25%. There are also programs that allow borrowers to purchase a home with no money down, such as a VA loan. 

A credit score is a three digit number designed to represent the likelihood loans will be paid on time. Mortgage companies use this to determine if you are eligible for a loan. Higher credit scores generally result in lower rates and payments.

Yes, it is always best to ensure the financing piece of the puzzle is taken care of before falling in love with a home. This will also help to budget with correct cash to close expectations as well as payment breakdowns. This process is known as being Pre-Approved, which results in a Pre-Approval letter that is used to make offers on homes.

Closing Costs are the fees and expenses that are incurred during the process of purchasing or refinancing a home loan. These costs can include origination fees, title fees, escrow fees, government fees and more. Closing costs are paid for at the end of the process at settlement. 

Mortgage points, also known as discount points, are fees paid in exchange for a lower interest rate and payment. Points are tax-deductible and are not paid out of pocket. They’re simply added to closing costs and paid at closing.

An escrow account is like a bank account for property taxes and homeowners insurance. This account is used to collect, hold and pay for property taxes and homeowners insurance. On a new home purchase, a lump sum is deposited into the escrow account at closing and a monthly amount is collected included with the mortgage payment. 

Mortgage payments generally include principal, interest, property taxes and homeowners insurance. Private mortgage insurance or PMI can also be included, if applicable. 

A debt-to-income ratio or DTI is all monthly debt payments divided by monthly income. Lenders use this to determine how well monthly debts are managed and if one is able to afford to repay a loan. 

A pre-approval letter is a document from a lender stating how much money they are willing to lend you to purchase a home. This is a crucial step in the home buying process to ensure financing is approved and elevates negotiating and home buying power. 

PMI stands for Private Mortgage Insurance. PMI is a type of mortgage insurance that protects the lender and is typically required with a down payment of less than 20% of the purchase price. 

The three most common types of properties that people buy with a mortgage are usually a single-family home, a condo, or a townhouse. A mortgage can also be used to buy a vacation home or an investment property. 

The best type of mortgage loan for you depends on your individual financial situation, goals and preferences. The common types include Conventional, FHA, VA, and USDA loans. These can all vary with their rates, terms and qualifications. Reach out to see what option is best for you!