Pre-qualification is the method of determining how much money you will be eligible to borrow before the loan application process occurs. A pre-qualification letter does not hold much weight when making an offer on a home. Buyers are strongly encouraged to go thru the pre-approval process.
You can lock or float your interest rate at any time once you are in contract to buy a home and a closing date has been determined. Your loan officer will advise you and discuss options at the appropriate time.
The costs of buying a home will vary depending on things like the price of the home, type of mortgage, and property taxes. Here’s a breakdown of the types of costs to expect: Ernest Money - When you make an offer on a home, you'll need to come up with earnest money to show the seller that you're serious about purchasing the home and can be around 1% to 2% of the purchase price. Down [...]
Initially, there is no fee collected for a pre-approval. Appraisal fees that may apply to your request will be collected if you choose to move forward with your loan.
An escrow account is maintained by the lender to collect funds from the borrower in order to pay the taxes and property insurance due on the loan.
There are numerous types of ARM loans, with the most popular having a fixed term for a specified number of years (such as 5, 7, or 10 years) and can then be adjusted each year thereafter, up or down. These types of ARMs are referred to as 5/1 ARM, 7/1 ARM, 10/1 ARM, etc.
A Fixed loan has an interest rate that does not change for the duration of the loan, so your mortgage principal and interest payments stay the same. Whereas, with an adjustable rate mortgage (ARM) the interest rates are typically fixed for a specified number of years (5, 7, or 10 years) and can vary up or down after that period, based on an index.
Closing costs are fees paid at the closing of a real estate transaction when you’re buying or refinancing a home. This point in time called the closing is when the title to the property is conveyed to the buyer. Closing costs are the expenses, over and above the price of the property, that buyers and sellers normally incur to complete a real estate transaction. Typically, the buyer's costs include underwriting, appraisal fees, mortgage insurance, homeowner's [...]
Points represent any loan discount points sometimes charged to lower the interest rate.
PMI is Private Mortgage Insurance. On a conventional loan (Fixed, ARM), PMI is required if you borrow over 80% of your appraised value or purchase price (whichever is lower). This protects the lender against financial loss if the loan is defaulted.