Asking the right questions is very important. It helps you uncover some of the challenges you’re facing and generate better solutions to solve those problems. We're all spending too much time and energy solving the first iteration of a challenge with the first idea we have. That's both limiting and counterproductive. As a result, we have included answers to some of your most frequently asked questions, below.
If you don’t find answers to your questions here, don’t hesitate to contact Danny by filling in the form to your left or by selecting one of our convenient contact methods. Danny will respond to your inquiry as soon as possible and ensure your question is added to our FAQ’s list for future reference.
Your credit score is a three-digit number that comes from the information in your credit report. It shows how well you manage credit and how risky it would be for a Lender to lend you money. Your credit score is calculated using a formula based on your credit report.
Note that you:
Your credit score will change over time as your credit report is updated.
No! When applying for a mortgage, having a good credit score is important. Ideally, you want to make sure your credit score is over 680. If it isn't, it doesn't mean that you won't qualify, but you might not be able to access the top lenders, the lowest mortgage rates and fee maybe charged.
This is an easier mortgage question to answer, though it can still vary quite a bit. In general, you might be looking at anywhere from fifteen to twenty-five days for a typical residential mortgage transaction, whether it’s a mortgage refinance or home purchase. Of course, stuff happens, a lot so it’s not out of the ordinary for the process to take up to thirty to thrity-five days.
Closing costs include things like title insurance, survey, prepaid escrows, mortgage loan insurance tax, Realtor commissions and legal costs. A good rule of thumb is to put away two-to-three percent of the home's price in anticipation of these outlays. For pre-construction it is recommended to put away five-to-seven percent.
Working with a Mortgage Broker has almost no downside, because you aren’t obligated to move forward with your mortgage application until after you find out what mortgage product you can secure and from which lender. A Mortgage Broker can pull your credit report once, to use with different Lenders within a thirty-day period. In the best-case scenario, you’ll save thousands of dollars in interest on your mortgage. The worst-case scenario is that you receive free, unbiased advice that is personalized for your financial situation.
Fixed rate mortgage payment will not change through the term, but a variable rate mortgage can if the Lender changes their prime rate.
With a fixed-rate mortgage, the mortgage rate and payment you make each month will stay the same for the term of your mortgage. With a variable-rate mortgage, however, the mortgage rate will change with the prime lending rate as set by your Lender. A variable rate will be quoted as Prime +/- a specified amount, such as Prime - 0.45%. Though the prime lending rate may fluctuate, the relationship to prime will stay constant over your term. If you are looking for a stable monthly payment and do not want to be dealing with the uncertainty, it is advisable to go for a fixed rate mortgage.
The fee you pay for mortgage loan insurance is called a premium. Mortgage loan insurance premiums range from 0.6% to 4.0% of the amount of your mortgage. Your premium depends on the amount of your down payment. The bigger your down payment, the less you pay in mortgage loan insurance premiums.
Lenders will request paperwork for your mortgage application that proves things like how much money you make and your debts. The exact forms you need for a home loan depend on your situation. For example, someone who is self-employed will likely have to provide different forms than someone who is employed by a company. Lenders can ask for paystub’s, job letter, bank statements, tax documents, photo ID, business license, business financials, etc.
We are paid by the Lender where the mortgage is placed - not by the client. In cases where private financing or commercial financing is arranged, or where there are complex financing situations, a fee may be charged, but ALWAYS with our client's consent, so there are no surprises. The actual amount paid to the Broker varies by the Lender but is based on the mortgage amount and not on the interest rate arranged on your behalf. Because compensation is tied to mortgage size rather than rate, clients are assured that Brokers are not “holding back” on giving the best rate in order to be paid more. This means that you will always be offered the best interest rate
A down payment is the amount of money you put towards the purchase of a home. Your Lender deducts the down payment from the purchase price of your home. Your mortgage covers the rest of the price of the home. A down payment can come from saving’s, retirement accounts, investments, gift from an immediate family member and a loan, but the loan will be listed on your application as an added debt.
The minimum amount you need for your down payment depends on the purchase price of the home. If your down payment is less than 20% of the price of your home, you must purchase mortgage loan insurance.
Table 1: The minimum down payment based on the purchase price of your home
| Purchase Price | Min. Amount Down | |
| $500,000 or less | 5% of purchase price | |
| $500,000 > $1 Million | 5% first $500,000 + 10% of bal. | |
| $1 million or more | 20% of the purchase price |
If you’re self-employed or have a poor credit history, your lender may require a larger down payment.
A mortgage pre-approval allows you to lock in an interest rate from 90 to 120 days. During mortgage pre-approval, your credit history and income will be reviewed. If satisfactory to the Lender, a mortgage pre-approval is granted for a specific amount, mortgage rate and term, subject to providing verification of income, down payment, and any other conditions the Lender requires. It is always wise to still include a “subject to financing” clause in your real estate offer, to protect yourself against unforeseen issues. Pre-approval isn’t a guarantee that you will receive a mortgage.
There are usually four main reasons to obtain a Pre-Approval before house hunting:
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