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| Apply Online | Pre-Qualify | Rate Request | Major Markets | Partners | Calculator | Glossary | FAQ's | Contact | Home |
FREQUENTLY ASKED QUESTIONS
1. How much house can I afford?
The amount of a loan for which you qualify is based on two different
calculations. Using what are known as qualification ratios, lenders
evaluate your income and long-term debts to determine a "safe" amount
for your mortgage payments. A fairly standard ratio is 28/33. Certain
mortgage plans sometimes use more liberal ratios-for example, the Fair
Housing Authority currently uses 29/41.
Here's how it works: With a 28/33 ratio, you are allowed to spend up to
28% of your gross monthly income for mortgage payments.
The lender will then run a different calculation. This one is your loan
payment and debt payments combined, which may not exceed 33% of
your gross monthly income.
To calculate exactly how much you may borrow, you also need an
estimate of interest rates. For example: Suppose you had $1,000 a month
for mortgage payment; at 7% that would let you borrow about $160,000 on
a 30-year loan. At 6% the loan amount would be nearly $175,000. If your
rate were 8%, the loan amount would be a bit less than $150,000.
As part of this calculation, you also need to estimate and include the
property taxes, homeowner's insurance, and homeowner association fees
(if applicable) you might need to pay, which are considered part of your
monthly expense.
--------------------------------------------------------------------------------
2. Why do I need to check my credit prior to purchasing a
house?
Even if you're sure you have excellent credit, it's wise to double-check at
the outset. Straightening out any errors or disputed items now will avoid
troublesome holdups down the road when you're waiting for mortgage
approval.
You may see disputed items, in addition to errors caused by a faulty social
security number, a name similar to yours, or a court ordered judgment you
paid off that hasn't been cleared from the public records. If such items
appear, write a letter to the appropriate credit bureau. Credit bureaus are
required to help you straighten things out in a reasonable time (usually 30
days).
--------------------------------------------------------------------------------
3. How much do I need to put down for a down payment?
This depends on many factors. For purchases, we have loan programs
that allow financing from 95%, 97%, to even 100% of the home value. Of
course, loans with a loan-to-value ratio (LTV) of greater than 80% will
likely require private mortgage insurance (PMI) by the lender. For
refinance loans, we have several "no out of pocket" loans available. For
exact amounts, please contact us.
--------------------------------------------------------------------------------
4. How is pre-qualification different from pre-approval?
Any reputable real estate broker will "pre-qualify" you for a mortgage
before you start house hunting. This process includes analyzing your
income, assets and present debt to estimate what you may be able to
afford on a house purchase. Mortgage brokers or a lender's own
mortgage counselor can also calculate the same sort of informal estimate
for you.
Obtaining mortgage "pre-approval" is another thing entirely. It means that
you have in hand a lender's written commitment to put together a loan for
you (subject to verification of income and employment).
Pre-approval makes you a strong buyer, welcomed by sellers. With most
other purchases, sellers must tie the house up on a contract while waiting
to see if the would-be buyer can really obtain financing.
--------------------------------------------------------------------------------
5. What is the difference between Conforming and
Non-Conforming loans?
Conforming loans are loans that comply with the guidelines set forth by the
federal government for "conforming" lending. Some of the guidelines are
borrower credit scores, and total loan amounts.
Non-conforming loans to do not abide by these guidelines.
Non-conforming loans have higher loan limits. They can also be
advantageous to borrower with credit scores that make conforming loans
unavailable to them.
--------------------------------------------------------------------------------
6. Should I choose fixed or adjustable interest rate mortgage?
Interest rates are usually expressed as an annual percentage of the
amount borrowed. You can choose a mortgage with an interest rate that is
fixed for the entire term of the loan or one that changes throughout. A
fixed-rate loan gives you the security of knowing that your interest rate will
never change during the term of the loan. An adjustable-rate mortgage
(called an ARM) has an interest rate that will vary during the life of the
loan, with the possibility of both increases and decreases to the interest
rate and consequently to your mortgage payments.
--------------------------------------------------------------------------------
7. What are points?
In the special vocabulary of mortgage lending, "points" are a type of fee
that lenders charge (the full term to describe this fee is "discount points").
Simply put, a point is a unit of measure that means 1% of the loan
payment. So, if you take out a $100,000 loan, one point equals $1,000.
Discount points represent additional money you can pay at closing to the
lender to get a lower interest rate on your loan. Usually, for each point on
a 30-year loan, your interest rate is reduced by about 1/8th (or .125) of a
percentage point.
TIP: Usually, the longer you plan to stay in your home, the more sense it
makes to pay discount points.
--------------------------------------------------------------------------------
8. What is APR (Annual Percentage Rate)?
"APR" is a yearly rate that captures the total cost of the mortgage; such as
Interest, Mortgage Insurance (MI), Loan Origination Fee (Points), lender
Funding Fee, etc.
--------------------------------------------------------------------------------
9. What are closing costs?
On the day you actually buy your new home, in addition to your down
payment, the prepaid property tax and homeowners insurance premiums,
you'll need cash for various fees associated with the purchase. These
expenses are known as closing costs and are paid by both buyers and
sellers.
Some closing costs you pay up-front when you apply for a mortgage loan.
Those include money for a credit check on all applicants and an appraisal
on the property. Keep in mind that even if you don't eventually receive the
loan, that money is not refundable.
Other closing costs are possible and should be considered when
evaluating your financial situation. These may include, but are not limited
to:
a. Title insurance fee
b. Survey charge
c. Loan origination fee
d. Attorney fees or escrow fees
e. Document preparation fee
f. Garbage or trash collection fees; and the big one
g. Points-up-front interest paid in return for a lower interest rate. Each
point is one percent of the loan amount. Sometimes you can contract for
the seller to pay your points.
--------------------------------------------------------------------------------
10. What is LTV (Loan To Value)?
LTV is the ratio of the loan amount to the appraised value of the property.
LTV will affect the kind of rate and programs available to a borrower. The
lower the LTV the better terms and programs offered by the lenders.
--------------------------------------------------------------------------------
11. What is Mortgage Insurance (MI)?
MI is an insurance required by the lenders for loans over 80% LTV (Loan
To Value) of the property.
--------------------------------------------------------------------------------
12. What is a Rate Lock or Locking in a Rate?
Signing an agreement with a lender that a borrower will be guaranteed a
special Interest Rate if the loan is closed within a specific period of time
(Lock Period), which is usually 30 or 45 days.
1. How much house can I afford?
The amount of a loan for which you qualify is based on two different
calculations. Using what are known as qualification ratios, lenders
evaluate your income and long-term debts to determine a "safe" amount
for your mortgage payments. A fairly standard ratio is 28/33. Certain
mortgage plans sometimes use more liberal ratios-for example, the Fair
Housing Authority currently uses 29/41.
Here's how it works: With a 28/33 ratio, you are allowed to spend up to
28% of your gross monthly income for mortgage payments.
The lender will then run a different calculation. This one is your loan
payment and debt payments combined, which may not exceed 33% of
your gross monthly income.
To calculate exactly how much you may borrow, you also need an
estimate of interest rates. For example: Suppose you had $1,000 a month
for mortgage payment; at 7% that would let you borrow about $160,000 on
a 30-year loan. At 6% the loan amount would be nearly $175,000. If your
rate were 8%, the loan amount would be a bit less than $150,000.
As part of this calculation, you also need to estimate and include the
property taxes, homeowner's insurance, and homeowner association fees
(if applicable) you might need to pay, which are considered part of your
monthly expense.
--------------------------------------------------------------------------------
2. Why do I need to check my credit prior to purchasing a
house?
Even if you're sure you have excellent credit, it's wise to double-check at
the outset. Straightening out any errors or disputed items now will avoid
troublesome holdups down the road when you're waiting for mortgage
approval.
You may see disputed items, in addition to errors caused by a faulty social
security number, a name similar to yours, or a court ordered judgment you
paid off that hasn't been cleared from the public records. If such items
appear, write a letter to the appropriate credit bureau. Credit bureaus are
required to help you straighten things out in a reasonable time (usually 30
days).
--------------------------------------------------------------------------------
3. How much do I need to put down for a down payment?
This depends on many factors. For purchases, we have loan programs
that allow financing from 95%, 97%, to even 100% of the home value. Of
course, loans with a loan-to-value ratio (LTV) of greater than 80% will
likely require private mortgage insurance (PMI) by the lender. For
refinance loans, we have several "no out of pocket" loans available. For
exact amounts, please contact us.
--------------------------------------------------------------------------------
4. How is pre-qualification different from pre-approval?
Any reputable real estate broker will "pre-qualify" you for a mortgage
before you start house hunting. This process includes analyzing your
income, assets and present debt to estimate what you may be able to
afford on a house purchase. Mortgage brokers or a lender's own
mortgage counselor can also calculate the same sort of informal estimate
for you.
Obtaining mortgage "pre-approval" is another thing entirely. It means that
you have in hand a lender's written commitment to put together a loan for
you (subject to verification of income and employment).
Pre-approval makes you a strong buyer, welcomed by sellers. With most
other purchases, sellers must tie the house up on a contract while waiting
to see if the would-be buyer can really obtain financing.
--------------------------------------------------------------------------------
5. What is the difference between Conforming and
Non-Conforming loans?
Conforming loans are loans that comply with the guidelines set forth by the
federal government for "conforming" lending. Some of the guidelines are
borrower credit scores, and total loan amounts.
Non-conforming loans to do not abide by these guidelines.
Non-conforming loans have higher loan limits. They can also be
advantageous to borrower with credit scores that make conforming loans
unavailable to them.
--------------------------------------------------------------------------------
6. Should I choose fixed or adjustable interest rate mortgage?
Interest rates are usually expressed as an annual percentage of the
amount borrowed. You can choose a mortgage with an interest rate that is
fixed for the entire term of the loan or one that changes throughout. A
fixed-rate loan gives you the security of knowing that your interest rate will
never change during the term of the loan. An adjustable-rate mortgage
(called an ARM) has an interest rate that will vary during the life of the
loan, with the possibility of both increases and decreases to the interest
rate and consequently to your mortgage payments.
--------------------------------------------------------------------------------
7. What are points?
In the special vocabulary of mortgage lending, "points" are a type of fee
that lenders charge (the full term to describe this fee is "discount points").
Simply put, a point is a unit of measure that means 1% of the loan
payment. So, if you take out a $100,000 loan, one point equals $1,000.
Discount points represent additional money you can pay at closing to the
lender to get a lower interest rate on your loan. Usually, for each point on
a 30-year loan, your interest rate is reduced by about 1/8th (or .125) of a
percentage point.
TIP: Usually, the longer you plan to stay in your home, the more sense it
makes to pay discount points.
--------------------------------------------------------------------------------
8. What is APR (Annual Percentage Rate)?
"APR" is a yearly rate that captures the total cost of the mortgage; such as
Interest, Mortgage Insurance (MI), Loan Origination Fee (Points), lender
Funding Fee, etc.
--------------------------------------------------------------------------------
9. What are closing costs?
On the day you actually buy your new home, in addition to your down
payment, the prepaid property tax and homeowners insurance premiums,
you'll need cash for various fees associated with the purchase. These
expenses are known as closing costs and are paid by both buyers and
sellers.
Some closing costs you pay up-front when you apply for a mortgage loan.
Those include money for a credit check on all applicants and an appraisal
on the property. Keep in mind that even if you don't eventually receive the
loan, that money is not refundable.
Other closing costs are possible and should be considered when
evaluating your financial situation. These may include, but are not limited
to:
a. Title insurance fee
b. Survey charge
c. Loan origination fee
d. Attorney fees or escrow fees
e. Document preparation fee
f. Garbage or trash collection fees; and the big one
g. Points-up-front interest paid in return for a lower interest rate. Each
point is one percent of the loan amount. Sometimes you can contract for
the seller to pay your points.
--------------------------------------------------------------------------------
10. What is LTV (Loan To Value)?
LTV is the ratio of the loan amount to the appraised value of the property.
LTV will affect the kind of rate and programs available to a borrower. The
lower the LTV the better terms and programs offered by the lenders.
--------------------------------------------------------------------------------
11. What is Mortgage Insurance (MI)?
MI is an insurance required by the lenders for loans over 80% LTV (Loan
To Value) of the property.
--------------------------------------------------------------------------------
12. What is a Rate Lock or Locking in a Rate?
Signing an agreement with a lender that a borrower will be guaranteed a
special Interest Rate if the loan is closed within a specific period of time
(Lock Period), which is usually 30 or 45 days.
Frank Singh
108-05 Liberty Ave.
Richmond Hill, NY. 11419
Phone: 718.845.1014
Fax: 718.323.3540
Email: Click Here
108-05 Liberty Ave.
Richmond Hill, NY. 11419
Phone: 718.845.1014
Fax: 718.323.3540
Email: Click Here