|
|
Q. Should I rent or buy a home? A. You must determine if you and/or your family are ready to commit to living in a home for several years. You should compare the cost of renting to the after tax cost of owning. Use the Rent or Buy calculator for a quick estimate. You should also consider the appreciation of the home and possible rent increases.Q. How much house can I afford? A. You can use the Mortgage Payment calculator to determine how much house you can afford. This calculator provides different scenarios of monthly mortgage payments and will help you understand how much you can borrow based on your income, debts and down payment.Q. How much will fees run to obtain a mortgage loan? A. The rule of thumb is about 3% to 6% of the home’s sale price (not including your down payment).Q. How is an adjustable rate different from a fixed rate mortgage loan? A. With an Adjustable Rate Mortgage (ARM), the interest rate may vary over the term of the loan. Typically, the interest rate is fixed for the first year (3, 5 or 7 years) with annual changes, thereafter. With a Fixed Rate Mortgage, the interest rate is the same for the term of the loan. A. Private Mortgage Insurance (PMI) reduces the risk to the Lender and is required when a borrower provides less than 20% down. In most cases, PMI is eliminated automatically when the mortgage balance reaches 78% loan-to-value (LTV). In some cases, the PMI may be eliminated at 80% LTV.On the other hand, Hazard Insurance is required on all loans with a mortgage. This insurance protects the owner and provides coverage which is used towards the cost of rebuilding the home and replacing the contents when damaged due to fire, wind, hurricane and other disasters. Q. Can I make loan application prior to purchasing a home? A. Certainly. Most realtors strongly advise you to obtain pre-approval before writing a contract to purchase. As a matter of fact, you are encouraged to obtain pre-approval before looking for a home. Typically, when financing is pre-approved, you will have less problems getting a contract accepted than the buyer who does not have financing in place. A. Your credit score is a function of outstanding credit, how you pay those payments, and how much credit is available to you. Wise credit users do not rely on credit to live, pay their monthly statements on time without skipping payments and most importantly, keep their spending and debt under control. Higher credit scores allow you better interest rates and more loan options.Q. What if I do not have any credit? A. There are other ways to document credit not appearing on your credit report. You may be able to provide credit references from your landlord and other service providers, such as utility, phone, and automobile insurance.Q. How do I know that the information on my credit report is correct? A. Each of your creditors reports your payment history monthly on your accounts with them. Annually, you should request a copy of your credit report from each repository to ensure that your credit accounts are accurate. If you find an error, notify the credit bureau and request in writing that the error be corrected and maintain a copy for your files. The contact information for the three repositories are:
Note: When buying investment properties, second homes and 2-4 family dwellings, some of the above answers may not apply or may have more stringent requirements. |
