Home Loans

Frequently Asked Questions

• What is the difference between an appraisal and an inspection, and what is required?
  

  An appraisal is an estimate of the market value of the home that you are buying and is accomplished by comparing your home to several homes like it that have sold in the last 6 months or so. An appraisal of the home you are buying will be required by your lender.

  A home inspection is a more detailed analysis of the home that you are buying and may include items such as appliances, electrical systems, heating and air conditioning, structural integrity, etc. An inspection is generally not required unless the appraiser notes obvious problems with these areas, but is always a good idea if you are buying a previously owned home.

• What are points?
  

  Points are finance charges paid by the borrower at the beginning of a loan in addition to monthly interest. Each point equals one percent of the loan amount.  By paying these "points," your interest rate is lowered for the life of the loan.

• How much will my monthly payments be?
  

  Your monthly payments are broken down into principal/interest, PMI (Private Mortgage Insurance), taxes, and insurance. The principle and interest portion of your payment is based on your loan amount, your interest rate, and the term (length) of your loan. PMI is a monthly fee that is required if you put less than 20% down.  Taxes and Insurance refer to the monthly (annual divided by 12) cost of your property taxes and homeowners insurance.Be sure that you understand and are comfortable with your total monthly payment (what you will write a check for each month) before deciding to purchase a home.

• If the sellers are not paying my closing costs, then how are they paid?
  

  If the sellers are not paying for your closing costs, then you are responsible for paying these at closing. You will be given credit for anything that you have already paid ($350 is typically paid in advance for credit report and appraisal, and your first year of homeowners insurance is purchased in advance) prior to closing but will need to provide the remainder, along with any down payment you may have, in the form of a certified check made out to the title company.

• Can the sellers pay for my closing costs?
  

  Yes, it may be possible for the sellers to pay for most or all of your closing costs, provided that you have satisfied the minimum down payment requirement of 3%.

• What are closing costs and how much are they?
  

  Various fees and expenses payable by the seller and buyer at the time of a real estate closing. Costs may include: commissions, title insurance premiums, recording fees, inspection and appraisal fees, etc.

• How much do I need as a down payment to qualify?
  

  Down payment amounts can vary anywhere from 3%-10%. On average lenders require 5% down.

• What is a pre-approval and why do I need one?
  

  A mortgage pre-approval is an important part of the home buying process. Potential home buyers should contact a lender they trust to handle this important step. The lender will need a 2 year history of residence and employment, checking/savings/retirement information, and detailed information on your income just to name a few. Most sellers will want a potential buyer to be pre-approved.