Mortgage FAQ
Below you will find answers to some of the commonly asked questions about what to expect from the mortgage process.
How much of a down payment will I need to save to qualify for a mortgage?
Most lenders now require a 20% down payment to qualify a home owner for lending. That means that you will need 20% of the home's selling price. For example, if you wish to purchase a home for $100,000, you must have $20,000 as a down payment. The exception is an FHA loan which allows less than 20% down payment and has less stringent credit requirements.
What is an FHA loan?
FHA loans are part of a federally funded program that offers loan insurance for borrowers that qualify. Lenders are willing to award mortgages to borrowers that might not otherwise secure a mortgage because the program agrees to repay the loan if the borrower defaults or forecloses. Borrowers need to meet certain credit requirements and are allowed to put down as little as 3.5%, which can come from a gift from a family member or friend.
What is a VA loan?
A VA loan is for current members of the military or members that have an honorable discharge and meet certain eligibility requirements. The Departent of Veteran Affairs guarantees a portion of the loan should the borrower defaults or forecloses.
What is a fixed rate mortgage?
A fixed rate mortgage has the same interest rate and monthly payments throughout the life of the loan.
What is an adjustable rate mortgage?
The interest rates of an adjustable rate mortgage change due to the market. It will not be constant like that of a fixed rate mortgage. An adjustable rate mortgage is also known as an ARM.
What is mortgage insurance?
Mortgage insurance ensures that the mortgage is paid off in the case of the death of the borrowers.