Residential Loan- No, you don’t pay anything for loan origination to a mortgage broker. Loan officer gets his commission from lender or the bank. Commercial Loan- It depends
Do I need a pre-approval or pre-qualification?
A pre-approval is an extensive review of your qualifications, and represents an offer of a loan. On the other hand, a pre-qualification evaluates your income and tells you how much you can afford, but is generally based on information you provide (unverified), and doesn’t include a credit check.As a result, a pre-approval carries more weight when you’re shopping for a home.
How do I know how much house I can afford?
Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford.
What is mortgage insurance and why is it required? Is there any way around mortgage insurance?
Mortgage insurance protects the lender against taking a financial loss in the event the mortgagor stops making payments. It is required on mortgage programs that require little or no down payment and the lenders exposure is greater than 80% of the purchase price or appraised value, whichever is less. Mortgage insurance can be avoided by utilizing loan programs such as an 80/20, in which a 1st mortgage (80% LTV) and 2nd mortgage (20% LTV) are taken on the property. No down payment is required. Or, there is Lender Paid Mortgage Insurance (LPMI). With this option, the lender pays the mortgage insurance, which is offset by a higher interest rate charged to the borrower.
How do I know which type of mortgage is best for me?
There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. Purelend Mortgage, LLC can help you evaluate your choices and help you make the most appropriate decision.
How big of a down payment do I need?
That depends on a lot of factors, including the type of loan you choose, the property type, the occupancy type, and so on. I can tell you that there are still 1% down cnventional mortgage options available in certain situations, and widely available 3% and 3.5% down options for a home purchase. Put simply, you can still get a mortgage with a relatively small down payment, assuming it’s owner-occupied and not a vacation home or investment property.
What is a refinance?
As the name implies, refinancing simply means obtaining new financing for something you already own (or partially own, like real estate). It’s kind of like a balance transfer where you move your loan from one lender to another to get better terms. You’d essentially have one lender pay off your existing loan with a brand-new loan at the lower interest rate. You do refinance to reduce the interest rate or to change from adjustable to fixed rate.
What are closing costs, and how much should I expect to pay?
There are several expenses that can be included in closing costs, including (but not limited to) appraisal fees, title insurance fees, attorney fees, pre-paid taxes and insurance, and documentation fees. Buyers’ closing costs generally add up to 2% to 4% of the loan amount. No closing cost options are available.