Frequently Asked Questions
How much of a Down Payment Do I need to make?
The common minimum down payment made is 20% of the total cost of your house.
What is PMI?
PMI stands for Private Mortgage Insurance. These policies are designed to reimburse a mortgage lender if you where to default on your loan and your house can’t cover the cost you owe to them. PMI has a monthly premium that is added to your mortgage payment. PMI is usually reserved for those who can’t meet the minimum 20% down payment.
Should I Get a Fixed or Adjustable Rate Mortgage?
That depends on what works best for you. It depends on how much of a risk you are willing to take. If you like knowing your interest rate will never change then a fixed rate mortgage is for you. If you want to gamble and hope the current interest rates stay down then an adjustable rate mortgage is for you.
What are Discount Points?
One discount point is equal to approximately one percentage point of your loan. The more discount points you buy the lower your interest rate will be, therefore the less you will have to pay on your mortgage.
What is an FHA Loan?
An FHA loan is a mortgage loan insured by the Federal Housing Administration. FHA loans are usually offered to those with lower incomes that can not afford to make conventional down payments and do no qualify for PMI insurance. An FHA loan just insures your loan to a mortgage lender; the FHA does not actually pay for your house. They do if you happen to default on your loan but overall they are more of just an insurance policy for mortgage lenders. In order to qualify for an FHA loan you usually need:
- A steady employment history
- A stable income
- Your credit report must be in good standing within the past two years
- No bankruptcies in the past two years.
- No foreclosures in the last three years