MORTGAGE Q&A

A mortgage is a loan used to purchase real estate, where the property serves as collateral for the loan.

Common types include fixed-rate mortgages, adjustable-rate mortgages (ARMs) used to purchase or refinance real estate. These include Conventional Loans, FHA loans, VA loans, USDA loans, Jumbo Loans, Bank Statement Loans, DSCR (Debt Service Coverage Ratio) Loans, as well as other non-traditional loan types. the loan.

A down payment is the initial amount you pay upfront when purchasing a home, typically expressed as a percentage of the home's sales price or value.

Down payments can range from 0% to 20% or more, depending on the loan type and lender requirements.

Pre-qualification is an estimate of how much you can borrow, while pre-approval involves a more thorough evaluation, resulting in a conditional commitment from the lender.

Closing costs are fees associated with finalizing a mortgage, including lender fees, loan origination fees, appraisal fees, inspection fees, title insurance and fees, government recording fees, HOA dues, homeowner’s insurance, property taxes, and other miscellaneous fees.

PMI is insurance that protects the lender if you default on your loan, often required if your down payment is less than 20%.

An escrow account is used to hold funds for property taxes and insurance, ensuring these expenses are paid on time. Generally, referred to as Prepaid Fee Items.

A higher credit score can lead to lower interest rates and better loan terms, while a lower score may result in higher costs or difficulty securing a mortgage.

LTV ratio compares the amount of the loan to the appraised value of the property, helping lenders assess risk.

Interest rates are the cost of borrowing money, expressed as a percentage, and can be fixed or adjustable (variable).

The approval process can take anywhere from a few days to several weeks, depending on the lender and the complexity of your application.

Missing a payment can lead to late fees, negative effects on your credit score, and if prolonged, potential foreclosure.

Yes, but some loans may have prepayment penalties, so it’s important to check your disclosures or contact your lender.

Homeowners can often deduct mortgage interest and property taxes from their taxable income, depending on their tax situation and the current tax laws.