Mortgage FAQs

Pre-qualification is an estimate of what you can borrow based on self-reported financial information. Pre-approval is a more rigorous process where a lender verifies your income, assets, and credit, giving you a conditional commitment for a loan amount.

The down payment typically ranges from 3% to 20% of the home's purchase price. Conventional loans often require at least 5%, while FHA loans may allow as little as 3.5%. A higher down payment can reduce monthly payments and eliminate the need for Private Mortgage Insurance (PMI).

Most lenders require a minimum credit score of 620 for a conventional mortgage, but some government-backed loans, like FHA loans, may accept scores as low as 580. A higher score can lead to better interest rates.

A fixed-rate mortgage has the same interest rate and monthly payment for the life of the loan, making it easier to budget. An adjustable-rate mortgage (ARM) has an interest rate that can change over time, often starting lower than a fixed-rate loan but potentially increasing later.

PMI is insurance that protects the lender if you default on your loan. It's typically required if your down payment is less than 20% of the home's purchase price. Once you reach 20% equity, you can request to have PMI removed.

Closing costs are fees associated with finalizing your mortgage, including lender fees, title insurance, and appraisal fees. These costs usually range from 2% to 5% of the loan amount.

The mortgage approval process typically takes 30 to 45 days, depending on factors like the complexity of your financial situation and how quickly you provide required documents.

Yes, you can buy a house with student loan debt. Lenders will consider your debt-to-income (DTI) ratio, so it's important to have a manageable level of debt and a stable income.

Refinancing can lower your monthly payments, reduce your interest rate, shorten your loan term, or allow you to access your home equity as cash. It can also help switch from an adjustable-rate mortgage to a fixed-rate one.

Refinancing may be right for you if you can secure a lower interest rate, reduce your monthly payment, or meet a specific financial goal. It’s important to consider the closing costs and how long you plan to stay in your home.

Refinancing costs typically include application fees, appraisal fees, title insurance, and closing costs, which can range from 2% to 5% of the loan amount. Some lenders offer "no-cost" refinancing, where costs are rolled into the loan amount.

Refinancing with bad credit can be challenging but not impossible. You may need to provide additional documentation, have more equity in your home, or accept a higher interest rate. Consider improving your credit before refinancing.

Cash-out refinancing allows you to replace your existing mortgage with a new one for more than you owe, and you receive the difference as cash. This can be used for home improvements, debt consolidation, or other expenses.

If your home's value has decreased, refinancing may be difficult. However, programs like HARP (Home Affordable Refinance Program) may help if you're underwater on your mortgage and meet certain criteria.

A HELOC is a revolving line of credit secured by your home’s equity. You can borrow as needed, up to a set limit, and repay over time. A home equity loan, on the other hand, provides a lump sum upfront with fixed monthly payments.

A HELOC can be used for a variety of purposes, including home improvements, debt consolidation, education expenses, or unexpected emergencies. It’s important to use the funds wisely, as your home is used as collateral.

Your HELOC limit is based on the equity in your home, which is calculated by subtracting your mortgage balance from your home's current market value. Lenders typically allow you to borrow 75% to 85% of your equity.

The main risk of a HELOC is that your home serves as collateral, so if you fail to make payments, you could lose your home. Additionally, interest rates on HELOCs are often variable, which can lead to higher payments over time.

Yes, you can pay off a HELOC early without penalty in most cases. Paying it off early can save you interest costs and free up your credit line for future use.

If you can’t make payments on your HELOC, you risk foreclosure, just as you would with a primary mortgage. It’s crucial to contact your lender immediately if you’re facing financial difficulties to discuss possible solutions.