How do I begin the home-buying process?

We recommend you start by selecting a loan officer. As you go through the loan process, you’ll gain a clearer understanding of all the factors affecting your home-buying budget, and ensure you’re setting realistic expectations about what you can afford. That way you won’t waste time shopping for homes that are out of your price range.

When should I refinance?

There are multiple reasons you may consider refinancing your current loan. Some include:

  • Lowering your monthly payment.
  • Lowering your interest rate.
  • Switching your loan type (adjustable to/from fixed).
  • Finance a larger amount to take cash out to pay for improvements or other debt.
  • Change the term of your current loan.

Your loan officer can help you decide if it’s the right time to refinance.

What’s the difference between loan prequalification and loan preapproval?

Prequalification requires minimal information, may include a credit check, and is an informal way to see how much you may be able to borrow so you can begin your home search. This is only an estimate and does not guarantee your final approval amount.
Preapproval requires specific financial documents, including W-2 statements, paycheck stubs and bank account statements, along with a formal credit check. This can be more beneficial when home shopping because preapproval often makes your bid more attractive to buyers, especially in multiple offer situations.

What’s the difference between interest rate and APR?

Interest rate is the monthly cost you pay on the unpaid balance of your home loan. An Annual Percentage Rate (APR) includes both your interest rate and any additional cost or prepaid finance charges such as the origination fee, points, private mortgage insurance, underwriting, and processing fees.

What is a Loan to Value (LTV) and how does it determine the size of my loan?

The loan to value (LTV) ratio is the amount of money you borrow compared with the price or appraised value of the home you’re purchasing. Each loan has a specific LTV limit.
For example, with a 95% LTV loan on a home priced at $200,000, you could borrow up to $190,000 (95% of $200,000) and would have to pay a $10,000 down payment.

How much can I afford to borrow?

In general, the loan amount you can afford depends on four factors:

  1. Your debt-to-income ratio (or your total monthly payments as a percentage of your gross monthly income).
  2. The amount of cash you have on hand for a down payment and closing costs.
  3. Your credit history.
  4. The value of the property you’re purchasing.

Note: Your personal financial situation and comfort level should be considered as well.

How much do I need for a down payment?

Down payment requirements usually range from 3%-20% of the home’s purchase price and depend on several factors like the loan program, lender, property type, amount borrowed, and credit history. A dedicated loan officer will help determine all your available options.

What is Private Mortgage Insurance (PMI)?

Mortgage insurance is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults on their loan. Most lenders generally require PMI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.

What is RESPA?

Real Estate Settlement Procedures Act (RESPA) is a consumer protection law that requires lenders to give borrowers advance notice of closing costs. RESPA mandates that lenders fully inform borrowers about closing costs, lender servicing and escrow account practices, and business relationships between closing service providers and other parties in the transaction.