Home Loans 101
Frequently Asked Questions
How much house can I 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.
When does it make sense to refinance?
Many people still think that you should only refinance if your new interest rate will be at least two points below your existing one? Years ago that might have been true, but the cost of refinancing has dropped significantly recently, it is never the wrong time to think about a new loan! A refinanced mortgage is often worth its cost several times over, considering the benefits that come, as well as a lower interest rates we can provide.
What is the difference between a banker, a broker, and a lender?
Bankers open checking and savings accounts, give people car and credit card loans. They also sometimes do home mortgages. They are restricted to lending what their particular bank offers.
A broker does not lend money they negotiate loan terms between the borrower and the lender. Most brokers are paid a fee for their services on a specific loan by either the borrower or the lender.
A lender is a financial institution that makes loans directly to you. They offer a wide array of products and programs and are not incentivized by opening up checking and savings accounts. They are focused on giving borrowers the best home loan possible for their individual needs.
Why is my credit important?
Before lenders decide to give you a loan, they need to know if you are willing and able to repay that loan. To assess your ability to repay, they assess your debt-to-income ratio. To assess how willing you are to repay, they use your credit score.
The most commonly used credit scores are called FICO scores, which were developed by Fair Isaac & Company, Inc. Your FICO score ranges from 350 (high risk) to 850 (low risk). Credit scores only take into account the information contained in your credit reports. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess willingness to repay the loan while specifically excluding other demographic factors.
Your current debt level, past late payments, length of your credit history, and other factors are considered. Your score reflects both the good and the bad in your credit report. Late payments lower your score, but consistently making future payments on time will raise your score.
Don’t see your question?
Our team of professionals is available to you. Contact us directly for mortgage advice at 855-853-1522