Frequently Asked Questions

1. What documents do I Need for a Loan?
2. What is escrow and what is an escrow account?
3. What is Amortization?
4. How much can I afford to spend on a home?
5. What are the tax advantages to owning a home?
6. Should I get pre qualified for a loan before I look for a home?
7. How long does it take to get pre qualified?
8. How much cash is needed to cover closing cost?
9. What different types of mortgages are there?

What Documents do I need for a loan?

Federal income tax statements and verification of any additional income
You’re two most recent W2’s.
Current paycheck stubs
Recent bank statements
Asset and liability information (stocks, bonds, other real estate, etc.)

How much cash is needed to cover closing costs?

• Closing costs usually range from 2%-3% and can include the following

1. Lender fees these which may include origination, application, points, credit report, and appraisal.
2. Third-party fees vary by state they may include fees for closing, title insurance, title,exam, and recording.

What is an escrow account?

• An escrow account could be required with your mortgage program but could also be an option.  An escrow account is set up so you can set aside a small portion of money each month that would go towards your insurance and property taxes.  You send additional funds each month when you make your mortgage payment.  Your lenders hold the money in the escrow account, when they are due they make the payment for you. 

What is amortization?

• Amortization definition is: paying off the loan a bit at a time. It is derived from the root word “mort” which means to deaden or kill.  Amortization literally means your killing off your debt one payment at a time. Amortization is calculated by taking the principal and dividing it by the number of months minus the down payment, then the interest rate is added in and that gives you your monthly payment.

How much can I afford to spend on a home?

• This is calculated by three main factors

1. How much you earn compared to your monthly payment?
2. How much cash you have for closing?
3. Your past credit history.

What are the tax advantages to owning a home?

• Income tax reduction is one major advantage during the first few years of a mortgage; most of your monthly payment covers interest on the mortgage. In most instances, your mortgage interest and property tax are deductible from your taxable income, lowering your overall tax bill therefore; your after-tax cost of owning a home may become lower than renting. If you later sell the home at a profit there may be tax implications.

• Tax deductible borrowing power is another major advantage as your home equity increases; you may borrow against it with a home equity loan or line of credit. Because your home equity loan or line of credit is backed by the equity in your home, you may have the ability to deduct that interest from your taxable income.

Should I get pre-qualified for a loan before I look for a home?

• Yes getting pre-qualified for a home is a vital step in searching for that new property.  When you get pre-qualified you know how much house you can afford and it makes negotiating a deal with a seller go a lot smoother.  Getting pre-qualified should be considered step #1 on purchasing a property.

How long does it take to get pre-qualified?

• It only takes a few minutes to get pre qualified, just fill out our quick app form on this site or give us a call.

What different types of mortgages are there?

• There are three

1. Fixed rate mortgages where your monthly payment is comprised of full principal and interest and you pay the same payment for the life of the loan.
2. Adjustable rate mortgages (ARM) This mortgage the monthly payment is fixed for a couple of years then it adjusts to a new payment based on market conditions.
3. Combination loan: This is where you have two loans a first and a second and sometimes even a third. The combination can be a fixed and adjustable rate loan, two adjustable rate mortgages, or two fixed rate mortgages.