What is the difference between pre qualification and pre approval?
Pre qualification is when a prospective buyer discloses, either verbally or by providing documentation of, their income, assets and credit so that a lender can determine how much a borrower will be likely to afford in loan payments. A pre approval involves an underwriter and is a more formal review of your credit and income. A prequalification will commonly only provide you with an idea of what you can afford while a pre approval will actually guarantee you a loan of a certain amount.

Am I required to get financing from the lender that my real estate agents recommends?
A recommendation is just that, a suggestion, you are never required to choose the lender that anyone suggests to you. The best way for you to find a lender is to shop around and compare deals.

What are points?
Also called discount points, a point is 1% of the amount of the loan. Points are a one-time fee added to your closing costs and generally results in a slightly lower interest rate on your loan.

What is a good faith estimate?
A Good Faith Estimate is an estimate that outlines the costs you will incur during the mortgage process. This is provided to you when you apply for your loan.

What is an Escrow Payment?
The portion of your monthly payment that is held by the lender to pay for taxes, hazard insurance, mortgage insurance and other items as they become due is known as an escrow payment.

What will a lender look at when I apply for a mortgage?
Lenders consider many factors in evaluating your loan application. Lenders will look at your income and debt to determine how much money you can put towards a mortgage payment each month. They will look at your credit score to see if you have been financial responsible in the past. They will also look at the property you are planning to buy to see if it is worth the amount of money you are planning to pay for it.

What will my mortgage payments include?
Your mortgage payment usually consists of two parts. The principal is the amount of money you are paying towards the amount borrowed. The interest is the amount of money you are paying to borrow the money. In the beginning of your mortgage you will pay more to interest and less to principal and as your mortgage progresses you will see a shift where more of the money is going to principal and less to interest.

When is refinancing a good option?
There are a number of reasons why someone would refinance. You can refinance if the interest rate has gone down, which will lower your monthly payment. Some people refinance when they have built equity in their home and would like to take some of that money out. Many people also refinance their loan when the initial period of their adjustable rate mortgage is coming to an end and they want to switch to a fixed rate mortgage.

Do I need to appraise my home if I am refinancing?
Yes, essentially refinancing is paying off your mortgage with a new mortgage. Especially if you are changing lenders, they want to make sure the property they are funding is worth the cost that is being mortgaged.

What is a home equity loan?
A home equity loan is a loan that allows you to borrow a large amount of money, using your home as collateral. Your home equity loan will be a set amount of money at a fixed interest rate. It is a great option when you need a large amount of money for home improvement, debt consolidation or other major expenses.