Most Common Mortgage Questions
After some great feedback on our last Q&A session I decided it was time for Mortgage Q&A Part #2. In todays blog post we’ll go over some of the most common mortgage questions I get asked. If you enjoyed this post and would like to see a Part #3 shoot me a message with your feedback and any questions you’d like answered…
1. Do You Look At All My Bank Transactions?
There has been a misconception that lenders review every transaction in your bank account and “nitpick” them to factor into your qualification. This couldn’t be further from the truth, yes we review your bank statements but not for this reason. I’ve broken down the main things we look at below:
- Large Deposits: (over $2000) as we may need additional documentation depending on the source.
- Liability Payments: We’ll look to verify that your monthly liability payments match your credit report.
- Statement Balance: One of the most important aspects of a bank statement is the actual ending balance, whether for verifying funds to close or reserves.
2. What Are The Most Common Mortgages Available?
There are several types of mortgages available, each with its own benefits and requirements. Some of the most common include:
- Conventional Mortgages: The most common loan type used by borrowers with a moderate or better credit score and consistent income.
- Adjustable-Rate Mortgages (ARMs): These loans have an interest rate that can change periodically based on market conditions.
- FHA Loans: These are government-backed loans designed for low-to-moderate-income borrowers who may have lower credit scores.
- VA Loans: These are loans available to veterans, active-duty service members, and their families, often with no down payment required.
- HELOCs (Home Equity Lines of Credit): These are revolving lines of credit secured by the equity in your home, which can be used for various purposes, including home improvements or debt consolidation.
- Non-QM: Non QM Mortgages are non-traditional and follow varying guidelines, utilized for those who do not qualify for other mortgage options or need a unique option to fit their needs. We have a ton of these and it lets us help a lot of individuals that others cant.
3. How Much Can I Borrow?
The amount you can afford to borrow depends on several factors, including your income, credit score, debt-to-income ratio, and the size of your down payment. It’s essential to use mortgage calculators and consult with a mortgage broker to determine a realistic budget.
4. What is the Difference Between Pre-Qualification and Pre-Approval?
- Pre-Qualification: This is an initial assessment of your financial situation to estimate how much you might be able to borrow. It is not a guarantee of a loan.
- Pre-Approval: This is a more thorough evaluation where the lender verifies your financial information and provides a conditional commitment for a specific loan amount.
5. What Are Closing Costs?
Closing costs are fees associated with finalizing a mortgage, including appraisal fees, title insurance, attorney fees, and more. These costs typically range from 2% to 5% of the loan amount and are paid at the closing of the transaction.
6. How Does Refinancing Work?
Refinancing involves replacing your existing mortgage with a new one, usually to secure a lower interest rate, reduce monthly payments, change the loan term or take cash out. It’s essential to consider the costs associated with refinancing and whether the long-term savings justify these expenses.
7. What is a HELOC and How Can It Benefit Me?
A Home Equity Line of Credit (HELOC) is a revolving line of credit secured by the equity in your home. It allows you to borrow money as needed, up to a certain limit, and can be used for various purposes such as home improvements, education expenses, or debt consolidation. We offer both Standalone HELOCs and Piggyback HELOCs, each with its own set of benefits and eligibility requirements. [3]
8. What Resources Are Available to Help Me Understand the Mortgage Process?
We provide a variety of resources to help you understand the mortgage process, including blogs with helpful tips, calculators and most importantly expert guidance and support. We’re available 24/7 to answer all of your questions, get you pre-approved, run scenarios & anything else you may need.
9. Do I Have To Get An Appraisal?
The short answer: Not necessarily. Whether you’ll need an appraisal is transaction specific and will come down to certain factors including: Loan LTV, Recent Sales, Property Type & Loan Type. In certain scenarios we are able to get our clients something called an Appraisal Waiver which forgoes the need for an Appraisal. Read more on another one of our blog posts below:
Conclusion
Understanding the mortgage process and knowing the answers to common questions can make your home-buying or refinancing journey smoother and less stressful. We’re always available to provide expert guidance tailored to your unique situation!
Mortgages can be confusing which is why we’re here to help find a solution tailored to you and provide 24/7 support for all of your financing needs.
Reach out to us any time to learn more about our loan options, We’re always available & here to provide expert guidance and support for you!
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Sources / [1] Mortgage Matchup, [2] UWM Partner Academy, [3] Introduction To HELOCS At UWM
