Finance FAQ

  • How do I compare lenders?

    There are three items to consider when comparing lenders: the interest rate, points and/or origination fees, and closing costs. When you compare these items between lenders make sure that you are comparing for comparable loan programs. You should also consider the length of time the interest rate is guaranteed when locking it in.

  • What are points?

    Points are a method of reducing the interest rate you would pay on a loan. One point is equivalent to 1% of the loan amount. For example, 2 points on a loan amount of $200,000 would be $4,000. In general, a loan requiring 2 points has a lower interest rate than a loan with 1 point or 0 points, but you would pay a higher amount in fees from the increased point(s) in your closing costs. Paying points may be a more attractive option for those planning to stay in their home for a long time.

  • What is a good faith estimate?

    A good faith estimate is an estimate that lists all fees paid before closing, all closing costs, and any escrow costs you will encounter when purchasing a home. Some of these fees are from surveyors, credit bureaus, title insurance companies, government entities, mortgage fees, mortgage insurance, prepaid taxes, attorney’s fees, etc. Your lender must supply a good faith estimate within three days of your application so that you can make accurate judgments when shopping for a loan.

  • How much money will I need at closing?

    Your closing costs will depend upon the sale price, the amount of your down payment and the various fees connected with the purchase of your home (see good faith estimate). Generally, conventional loans require a minimum of 10% of the sales price in down payment and FHA loans require at least 3.5% down.

  • How can I avoid delays in my loan process?

    It is important that you submit all required conditions to your lender as soon as possible as your loan cannot close without this information, and be sure to make copies of all documents for your records. Your loan process may also be set back due to any significant changes such as changing your job, increase your debt, or even changing bank accounts. It is important to let your lender know as soon as possible if any changes occur during your mortgage application.

  • What are the tax benefits of home ownership?

    The interest on your home mortgage as well as certain real estate taxes and mortgage closings costs are often tax deductible. Please consult a personal financial advisor or an accountant for the specific tax advantages you will receive from purchasing a home.

  • What factors do lenders consider when approving a loan?

    Most lenders base their decision on three factors: credit, collateral and capacity. Credit refers to the quality of your current credit rating. Capacity is your ability to repay the loan based on job stability, current income and other factors. Collateral is the amount of equity in your home, and the likelihood of appreciation. Once all these items are confirmed, you may be approved.

  • What is the maximum monthly payment for which I qualify?

    A good rule of thumb is that up to 33% of your gross monthly income may be used for the payment of your mortgage, and up to 38% of your gross monthly income may be used for your total monthly debts (including your mortgage).

  • What documentation will I need to provide in order to get my loan? When should I send it in?

    The documentation you may need to submit depends on the type of loan you are obtaining. Your Lender will inform you of any documentation that is needed and when you should send it in. We recommend having the following documentation available to help you accurately complete your application.

    • Two months of most current and consecutive bank/investment/retirement statements on all accounts
    • Most recent paycheck stubs covering a 30-day period for each borrower
    • Most recent two years' W-2s and/or 1099s for each borrower
    • Most recent two years' Federal tax returns for each borrower (all schedules)
    • Proof of any other income
    • Complete divorce decree(s) with all attachments (if applicable)
    • Complete bankruptcy papers with all schedules and discharge papers for bankruptcies within the last seven years (if applicable)
    • Information on long-term debts
    • Complete sales contract on house being sold (if applicable)
    • Address and description of the home you wish to buy
    • Sales contract of home you wish to buy

  • How can I find out information about my credit history?

    There are three major credit reporting companies: Equifax, Experian, and Trans Union. Obtaining your credit report is as easy as calling and requesting one. Once you receive the report, it's important to verify its accuracy. Double check the high credit limit, total loan, and past due columns. It's a good idea to get copies from all three companies to assure there are no mistakes since any of the three could be providing a report to your lender. Fees ranging from $10-$30 are usually charged to issue credit reports, but some states permit citizens to acquire a free one. To acquire your credit report, contact the reporting companies at the numbers listed below or order credit reports online via the reporting companies' websites.

  • Can non-citizens qualify to buy a home?

    Each loan type has different guidelines for citizens of other countries. FHA requires that the home you are buying in this country is your primary residence. You must have a Social Security card, as well as all of the other documentation required for FHA buyers. Fannie Mae requires that you have permanent resident alien status - a green card. If you are a nonpermanent resident alien, an additional down payment, as well as permission to work in the United States for extended periods through a work visa is required, and you must occupy the property. Freddie Mac underwrites loans for permanent and nonpermanent residents alike, with no special requirements for the latter. It is important that you make an appointment with your lender before you select a home so that you will be aware of the financing available for your particular situation. The great news is that homeownership is encouraged for everyone in this country.

  • What do all these words mean?

    See our home buyer glossary

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