Frequently asked Questions
Purchasing a Home
Are you a HUD approved agency?
Yes, Lydia's House is a leading HUD-approved homeownership development, foreclosure intervention and financial coaching organization.
Can I pay my mortgage off early?
Most mortgages can be paid off early, and that information is found in your mortgage Note.
Do people with good credit scores need guidance in the homebuying process?
Absolutely. A real estate transaction is complex, and education is helpful to getting the best deal. Many of the services earn their living off of commissions so it's critical to know as much as you can.
How do I compare loans between lenders?
First, devise a checklist for the information from each lending institution. You should include the company's name and basic information, the type of mortgage, minimum down payment required, interest rate and points, closing costs, loan processing time, and whether prepayment is allowed.
How do I select a lender?
Choose your lender carefully. Look for financial stability and a reputation for customer satisfaction. Be sure to choose a company that gives helpful advice and that makes you feel comfortable.
How large of a down payment do I need?
How long do property title insurance policies last?
If you purchased the policy, it will last indefinitely as of the purchase date as long as you own the property. However, any liens placed on the property later will not be covered.
How long does it take to get a loan?
As a rule of thumb, most lenders ask for 30 to 45 days to receive approval from an underwriter for a loan.
How much money will I have to come up with to buy a home?
That depends on a number of factors, including the cost of the house and the type of mortgage you get.
Should I have a home inspection?
Paying $300 to $500 for a home inspection is considered a wise investment as the inspector could reveal costly required repairs or future maintenance problems with the home.
Should I use a real estate broker? How do I find one?
Using a real estate broker is a very good idea. All the details involved in home buying, particularly the financial ones, can be mind-boggling. A good real estate professional can guide you through the entire process and make the experience much easier.
What are closing costs?
Attorney's or escrow fees (Yours and your lender's if applicable)
Property taxes (to cover tax period to date)
Interest (paid from date of closing to 30 days before first monthly payment)
Loan Origination fee (covers lenders administrative cost)
First premium of mortgage Insurance (if applicable)
Title Insurance (yours and lender's)
Loan discount points
First payment to escrow account for future real estate taxes and insurance
Paid receipt for homeowner's insurance policy (and fire and flood insurance if applicable)
Any documentation preparation fees
What are discount points?
Discount points allow you to lower your interest rate. They are essentially prepaid interest with each point equaling 1% of the total loan amount. Generally, for each point paid on a 30-year mortgage, the interest rate is reduced by 1/8 (or.125) of a percentage point.
What does a mortgage payment cover?
What information do I need to apply for a mortgage?
What is a (203k) loan?
The home must be at least one year old.
The cost of rehabilitation must be at least $5,000, but the total property value - including the cost of repairs - must fall within the FHA maximum mortgage limit.
The 203(k) loan must follow many of the 203(b) eligibility requirements.
Talk to your lender about specific improvement, energy efficiency, and structural guidelines.
What is a Good Faith Estimate?
What is earnest money?
What is mortgage insurance?
Mortgage insurance is a policy that protects lenders against some or most of the losses that result from defaults on home mortgages. It's required primarily for borrowers making a down payment of less than 20%.
What is PMI?
What is title insurance?
Title insurance is for your and your lender's protection. The policy insures against any defect in the title, old liens, unpaid property taxes, easements or claims on the title.
What's the difference between being pre-qualified and pre-approved?
Prequalification is an unverified estimate of what the lender thinks you can qualify for, many times after they have run a quick credit report. Preapproval is a result of submitted documentation from the client such as, paystubs, bank statements and tax returns in addition to reviewing the credit report.
When does an ARM make sense?
An adjustable rate mortgage may make sense If you are confident that your income will increase steadily over the years or if you anticipate a move in the near future and aren't concerned about potential increases in interest rates.
Why should I buy, instead of rent?
Can I correct a mistake in my credit report?
Simple mistakes are easily corrected by writing to the reporting company, pointing out the error, and providing proof of the mistake. You can also request to have your own comments added to explain problems. For example, if you made a payment late due to illness, explain that for the record. Lenders are usually understanding about legitimate problems.
How can i build my credit?
How do I better my FICO score?
How do I get a copy of my credit report?
How do I get my credit history information?
What are the factors of a FICO score?
What credit score do I need to buy a home?
Housing counselors will typically advise a score of 620 or higher.
What if I don't pay off old debt on my credit report?
What is a Vantage Score?
It was launched in 2006 and competes directly with the Fair Isaac Corporation's FICO score, the most widely used credit scoring system. The Vantage Score rates an individual's credit from 501 to 990, and at the same time gives each individual a letter grade ranging from A to F. It is used more in consumer lending and auto lending than in mortgage risk assessment.