Mortgage Basics
Mortgage FAQ
Mortgage FAQ – Here are some of the common frequently asked questions from homebuyers.
Hire the Right Agent
Personalities and experience levels range greatly, just as with any profession. Consider interviewing several local agents before deciding on which one to hire. Do you want a new agent who is sweet, patient, and ready to answer lots of questions? Or would you prefer a seasoned agent who gets you the best deal, but has less than stellar people skills? The choice is entirely yours, neither one being better than the other, but will make a big difference on how you feel about the process.
What is private mortgage insurance (PMI) and do I need it?
Fixed-rate mortgages make sense for buyers when the current mortgage rate is low. This allows you to lock in the current rate and be protected from increases that are likely to take place over the next 30 years. If the current rate is high, an adjustable-rate mortgage may be better because rates can drop. It is good to remember that you will have the option to refinance in the future to take advantage of rate changes as well.
Is a fixed-rate or adjustable-rate mortgage better?
If the bank or mortgage company determines that your loan is a risk, they may require private mortgage insurance. This insurance serves to insulate the lender in the event that you default on your loan. It is possible that the fair market value of your house will not cover the full amount of money owed to the bank or mortgage company if you default. In such cases, private mortgage insurance reimburses the lender for the difference. Private mortgage insurance is usually required for borrowers that make a down payment of less than 20% or with poor credit scores.
Can I speed up the approval process?
Yes, it may be possible to speed up the process. Consider these tips below:
- Become pre-qualified or pre-approved for a loan to help the process move faster. A pre-qualification is a better indication that you are a solid buyer, but only a loan commitment from the lender is a guarantee that you will be approved.
- Obtain a loan commitment, which is guaranteed under pre-set conditions.
- Prepare your paperwork ahead of time.
- Check your credit history and resolve any issues. Be able to explain any other questions about your credit that arise.
- Make sure you have all the documents you need before applying, including personal identification, income verification and tax returns, employment history, and insurance commitments.
- Respond promptly to any requests from the loan officer to eliminate unnecessary delays.
Should I check my credit before applying?
Since your mortgage lender will get your credit report before deciding to approve your application it is smart to check it on your own ahead of time. Doing so allows you to clean up any issues and improve your credit before applying for a loan.
Since your mortgage lender will get your credit report before deciding to approve your application, it is smart to check it on your own ahead of time. Doing so allows you to clean up any issues and improve your credit before applying for a loan. You can get a free copy by going to: Annual Credit Report.