Buying a home represents the largest purchase most of us will make in our lifetimes. Sometimes getting the financing can seem like the challenging or confusing part of the path. With just a little knowledge and preparation, you'll see that it's not as complicated or difficult as you might think.
At McCaffrey Home Mortgage, we pride ourselves on partnering with you to make your mortgage and home buying experience as easy and efficient as possible. Here you'll find some frequently asked questions about financing your dreams.
Click on a question link below to view the answer.
Why should I buy instead of rent?
You'll love the feeling of having something that's all yours, as there is nothing more rewarding than owning your own home. Best of all, the interest on your home mortgage as well as certain property taxes and mortgage closing costs are often tax deductible. You'll also have the potential to start building equity. Another plus, you can have pets when you own your own home.
I have had some credit problems in the past. Can I still become a homeowner?
Yes! You may be a candidate for one of the many financing programs that are available. A good place to start is with McCaffrey Home Mortgage. Your Loan Consultant will provide a free evaluation of your financial picture and offer suggestions and options in a relaxed environment. We're here to help with all your questions and concerns.
How do I compare lenders?
When comparing lenders it is always wise to request a Good Faith Estimate. This estimate allows you to compare the three main items of a home loan: the interest rate, points and closing costs. Be sure when comparing loans that you are comparing the same loan type, like a 30 year fixed rate mortgage versus a 5 year Adjustable Rate Mortgage or "ARM". You should also check the length of time that the lender has guaranteed the interest rate. For example, it's helpful to know if the quote is for 15 days or 60 days.
I know there are several types of loan programs. How do I know which one is best for me?
Begin by asking yourself the following questions:
- How much of a down payment can I afford?
- How much of a mortgage payment am I comfortable with?
- How long do I intend to own this home?
- Do I want the opportunity to refinance my home loan?
- Would the loan allow me to pay more toward the principal balance if I wanted?
Your answers to these questions will help your Loan Consultant compare different loan programs and help you determine the best loan available for you.
What will my monthly mortgage payment cover?
Mortgage payments are made up of four basic parts: principal, interest, taxes and insurance, also commonly referred to as PITI. Not all loan programs require that taxes and homeowners insurance be included with the monthly mortgage payment. It's best to review this with your Loan Consultant to see if this option is available for you.
What is an origination fee?
An origination fee is a fee paid to the lender for processing your loan application. The origination fee is stated in the form of points. This fee is usually computed as a percentage of the loan amount. One point is one percent of the loan amount.
What are points?
Discount points, also known as points, are the charges by the lender to reduce the interest rate. A point is equal to one percent of the loan amount. For example, if you get a mortgage for $100,000 one point would be $1,000. If you choose a loan with zero discount points, this is often referred to as a "par rate." You may want to consider paying points if you plan on staying in your home for more than five years.
Can non-citizens qualify to buy a home?
Each loan type has different guidelines for citizens of other countries. Some loan programs require that you have permanent resident alien status. If you are a non-permanent resident alien, financing is available to you. Some of these loan programs may require additional down payment, as well as verification to work in the United States for extended periods. It is important that you discuss your situation with your Loan Consultant to identify the financing available for your particular situation.
What is mortgage insurance and why is it required?
Mortgage insurance is an insurance policy issued only for the protection of the lender. It allows homebuyers to purchase a home with a lower down payment. Mortgage insurance is typically required on most loans with a down payment less than 20%. The amount of mortgage insurance and the terms of the insurance will vary based upon the amount of down payment, credit score, etc.
When can I request the mortgage insurance be dropped?
On non-government loans, when you achieve a 20% equity position in your home, you may request that private mortgage insurance be dropped from your monthly payment. Your loan servicer will, at their discretion, allow the termination of the coverage if sufficient evidence exists verifying that you have achieved the appropriate equity position.