Frequently Asked Questions
Below is a list of commonly asked questions previous clients have asked when they are in the beginning (or middle) of the mortgage application process. These questions are designed to help you feel more confident about purchasing or refinancing your current home. However, if you think you still have questions, please do not hesitate to contact Therese for more help! That's what she's here for - she takes pride in helping homebuyers feel more assured about all mortgage decisions.
What is the difference between a pre-qualification and a pre-approval?
One mistake that home buyers commonly make is not getting a pre-approval. Many home buyers believe that a pre-qualification is the same as a pre-approval. This is actually the furthest from the truth.
How long does it take to get Pre-Approved?
In most cases a pre-approval can be done in a few hours to a day or two. Every buyer’s situation is different. For hourly, salary W2’d employees; it’s a pretty simple process. For those who are self employed it’s usually more complex and takes a bit more time to verify and review tax returns, etc. The faster you can provide the documentation required, the faster the pre-approval can be completed!
How long does it take to get a Mortgage?
The amount of time it takes for a mortgage to get approved and ready to close will vary from lender to lender. When shopping around for mortgages, it’s extremely important to have an idea on average how long a mortgage lender is taking to get their loans closed. A top mortgage lender should be able to get a mortgage financed within 30-45 days from application. My average closing takes 30 days or less. Sometimes the both parties need a longer time frame to close perhaps 45-60 days.
What is the difference between a Home Inspection and an Appraisal?
A standard pre-purchase inspection covers a home's major mechanical systems -- electrical, plumbing, heating and cooling - and its construction from roof to foundation, exterior and interior. Overall inspections do not cover soil, pools, and wells, septic systems, building code violations or environmental hazards such as lead.
An appraisal is a fair market value derived from comparable sales in the neighborhood. The appraised value must equal at a minimum, what the purchase price is. If an appraisal comes in lower the buyer and seller must try to renegotiate the selling price. All appraisals must conform to guidelines set by the Federal Government, but every appraisal is ultimately a subjective analysis of a property's current market value. To determine current market value, an appraiser will compare the price of your home with that of 4 or more comparable homes in the area and have sold within the last 3-6 months or more if necessary, then adjust for differences between comparables and subject property such as lot size, square footage, updating, etc. An appraiser will physically measure and inspect the home, taking photographs to include in the report with floor plans and a site map. Appraisers are licensed by the state of Michigan under federal guidelines. All appraisers must abide by professional and ethical standards by the government.
What is a Residential Mortgage?
A Residential Mortgage is a loan that a mortgage broker, lender or bank offers to help you finance the purchase or refinance of a residential property. The house or condo you buy is the collateral for the lender in exchange for the money you are borrowing to finance the property. A mortgage payment usually includes four parts: principal, interest, taxes and insurance.
Principal Balance is the total amount of money you borrowed to buy the home (the final mortgage amount). Interest is the price that you pay to borrow money from your lender paid over the life of the loan.
Property taxes and homeowner’s insurance in most cases have to be included in the payment if you put less than 20% down payment on the property. When you have more than 20% down payment you can elect to pay those items yourself.
Mortgage insurance is required on all loans when you put less than 20% down payment on the property. There are many different choices available to cover that, either included in the interest rate, paid monthly or in a lump sum.
What are Mortgage Discount Points?
Some buyers hear the term mortgage points or discount points and wonder what exactly they are. When you are ready to get your interest rate locked in, you will have the option to “buy” the interest rate down lower. One point will generally reduce the interest rate by .25% which can save a significant amount of money for a borrower over a 30 year term.
Paying for mortgage points doesn’t always make sense though. Every borrower has a different situation. As your mortgage advisor, I’ll explain those options to you and together we’ll determine what is in your best interest.