Frequently Asked Questions

A mortgage is fundamentally a loan for purchasing property. It represents a legal agreement in which a mortgage lender pays for your house in full with the expectation that you will repay them back (with interest) over a set period of time.

Key Terms Include:

• Loan Officer – your mortgage adviser managing your file
• Interest Rate – cost of borrowing, expressed as a percentage
• Closing – final property ownership transfer steps where buyer signs documents
• Credit Score – numerical representation of creditworthiness affecting approval odds

The Annual Percentage Rate (APR) is an interest rate reflecting the cost of a mortgage as a yearly rate. It typically exceeds advertised rates because it incorporates points and credit costs.

The APR does not directly affect monthly payments — those depend solely on interest rate and loan length.

Fees Generally Included:

• Points (discount and origination)
• Pre-paid interest
• Loan-processing fees
• Underwriting fees
• Document-preparation fees
• Private mortgage insurance
• Escrow fees

Fees Normally Excluded:

• Title/abstract fees
• Attorney fees
• Home inspection costs
• Recording fees
• Transfer taxes
• Credit reports
• Appraisal fees

Mortgage rates fluctuate during application processing. Lenders permit borrowers to "lock-in" rates, guaranteeing that rate for a specified time period, often 30-60 days, sometimes for a fee.

Your Property:

• Signed sales contract copies with all riders
• Deposit verification
• Realtor, builder, insurance agent, and attorney contact information
• Listing sheets and legal descriptions
• Condominium declarations (if applicable)

Your Income:

• Recent 30-day pay stubs and year-to-date earnings
• W-2 forms from past two years
• Current and previous employer names/addresses
• Employment gap explanations
• Work visa or green card copies

For Self-Employed/Commission/Bonus Earners:

• Complete two-year tax returns plus current Profit and Loss statements
• K-1 forms for partnerships and S-Corporations
• Federal Partnership and Corporate Income Tax Returns

Source of Funds/Down Payment:

• Home sale contracts (current residence)
• Bank statements (3 months of savings/checking accounts)
• Brokerage statements (stocks/bonds)
• Gift affidavits with proof of receipt

Debt/Obligations:

• Complete list of all debts with account numbers and balances
• Three months of statements per obligation
• Mortgage/landlord payment histories (two years)
• Alimony/child support documentation

There are three main factors that come into play when being approved for a mortgage: credit score, down payment requirements, and debt-to-income ratio.

Credit Score Ranges:

• 300-579 – May not qualify for mortgage options
• 580-620 – Qualification starting point
• 720-850 – Eligible for best rates and terms

Pre-qualification represents your mortgage adviser's estimate on your ability to buy a home, based on self-reported credit and financial details.

Pre-approval officially confirms how much you're able to borrow through formal documentation review. Post-approval, serious home shopping becomes possible, or advisers offer guidance for improving creditworthiness.

Most of the time, yes! The fact is, with renting, you'll never have a chance to earn your money back. Home ownership builds equity progressively. Upon loan completion, mortgage payments cease entirely — impossible with renting. Homeowners can later sell and recoup invested capital.

Probably not! There are loan options available that allow for 3.5% or even zero down. While twenty-percent deposits reduce monthly payments and total interest paid, they're not universally mandatory.

These are all examples of home loan programs that home buyers can choose from.

• Conventional – Lower rates/fees for down-payment makers with good credit
• FHA – First-time buyer favorite due to minimal down-payment needs
• USDA – Zero-down rural borrower options
• VA – Veteran/active-duty competitive rates, zero-down, no PMI requirements