Frequently Asked Questions

Can I apply for a loan before I've decided on a purchase?

Yes, it is common to obtain pre-approval for a set maximum purchase price, loan amount, and loan program.  Once the property has been found the loan variables can be chanted to match the specifics of the actual transaction. The interest rate cannot be locked in though until a property address can be disclosed.

How do I apply for a Loan?

Most lenders have online forms to pre-qualify the borrowers or for submission of a loan application.  Visit your desired lender’s site and follow their prompts for application.

How much cash will I need for downpayment and closing costs?

Depending on your credit and the loan amount, you may be able to get a home with 0% down.  However, the more you put down, the lower your monthly payment will be.  And if you can provide a 20% downpayment, you will avoid the extra monthly cost of Private Mortgage Insurance (PMI).  Closing costs can generally add 2% to 3% to the final bill.

What kind of documentation is required to verify the information I provide?

Everybody’s situation differs.  After submission of your loan application a custom list of the documents needed will be supplied to you.

What if I have trouble supplying the standard loan application documentation?

It is possible to obtain a loan program that includes low documentation or even no documentation.  You will have to speak with your lender to see if this is a situation they can help with.

Can I get a loan if I'm not a Citizen of the United States?

Yes, the best way to do this is to get in touch with a certified international property specialist.  The National association of Realtors lists agents that specialize in working with foreign buyers.  Just see their website for details.  Typically these agents have trusted attorneys, loan officers and accountants to help foreigners purchase in the USA.

What are monthly mortgage payments made up of?

Typically your monthly payment is made up of Principal, interest, insurance, and taxes.  You may also need to pay a private mortgage insurance premium.

What are impound/escrow accounts?

Homeowner’s insurance and property taxes can be divided up into installments and are included in your monthly repayment.  The lender will hold the money for insurance and taxes in an escrow account and make the payments when they fall due.  Depending on your loan you may or may not be required to have an escrow account.

What are closing costs and points to buy down the interest rate?

Closing costs include all charges in relation to the transaction such as title insurance, charges for credit reports, survey, points, appraisal and origination fees.  Closing costs will depend on your region, loan program and the amount of discount points.  Points are generally paid to the lender at the time of closing so a lower interest rate can be obtained.  The more points you pay the lower your interest rate should be and in turn this will lower your monthly mortgage payment.  A point is one percent of the loan amount.  Most loan programs do offer “zero points” loans which do result in slightly higher interest rates.

Why do I need homeowner's insurance?

Homeowner’s insurance protects your home and is also termed fire insurance or hazard insurance.  The lender requires this insurance but you can choose the insurance company.  The premiums are either paid directly to the insurer or by your lender via an impound/escrow account.

Do I need a good credit rating?

The credit report helps lenders determine how responsible you are in meeting your obligations. It doesn’t have to be perfect but if you have a number of late payments you may need to provide a letter of explanation.  Your credit history does have an impact on your ability to purchase a home and also can affect the interest rate you will be paying.