Question 1

Are you a HUD approved agency?

Accepted Answer

Yes, Lydia's House  is a leading HUD-approved homeownership development, foreclosure intervention and financial coaching organization.

Question 2

Can I pay my mortgage off early?

Accepted Answer

Most mortgages can be paid off early, and that information is found in your mortgage Note.

Question 3

Do people with good credit scores need guidance in the homebuying process?

Accepted Answer

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.

Question 4

How do I compare loans between lenders?

Accepted Answer

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.

Question 5

How do I select a lender?

Accepted Answer

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.

Question 6

How large of a down payment do I need?

Accepted Answer

There are mortgage options now available that only require a down payment of 5% or less of the purchase price.
But the larger the down payment, the less you have to borrow, and the more equity you'll have. Mortgages with less than a 20% down payment generally require a mortgage insurance policy to secure the loan. When considering the size of your down payment, consider that you'll also need money for closing costs, moving expenses, and - possibly -repairs and decorating.

Question 7

How long do property title insurance policies last?

Accepted Answer

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.

Question 8

How long does it take to get a loan?

Accepted Answer

As a rule of thumb, most lenders ask for 30 to 45 days to receive approval from an underwriter for a loan.

Question 9

How much money will I have to come up with to buy a home?

Accepted Answer

That depends on a number of factors, including the cost of the house and the type of mortgage you get.

Question 10

Should I have a home inspection?

Accepted Answer

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.

Question 11

Should I use a real estate broker? How do I find one?

Accepted Answer

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.

Question 12

What are closing costs?

Accepted Answer

There may be closing cost customary or unique to a certain locality, but closing cost are usually made up of the following:
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)
Recording fees
Survey fee
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

Question 13

What are discount points?

Accepted Answer

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.

Question 14

What does a mortgage payment cover?

Accepted Answer

Most loans have 4 parts which are abbreviated to PITI and sometimes PITIA if there is an Association such as a condo association fee or a homeowner association fee.  The parts are defined as:
Principal: the repayment of the amount you actually borrowed
Interest: payment to the lender for the money you've borrowed
Homeowners insurance:a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards required by most lenders
Property taxes:the annual city/county taxes assessed on your property, divided by the number of mortgage payments you make in a year.

Question 15

What information do I need to apply for a mortgage?

Accepted Answer

Delivering thorough and detailed documents to your lender is critical to loan approval by the underwriter.  A list documents include:
1. Social security numbers for both your and your spouse, if both of you are applying for the loan
2. Copies of your checking and savings account statements for the past 6 months
3. Evidence of any other assets like bonds or stocks
4. A recent paycheck stub detailing your earnings
5. A list of all credit card accounts and the approximate monthly amounts owed on each
6. A list of account numbers and balances due on outstanding loans, such as car loans
7. Copies of your last 2 years' income tax statements
8. The name and address of someone who can verify your employment.
Depending on your lender, you may be asked for other information

Question 16

What is a (203k) loan?

Accepted Answer

This is a loan that enables the homebuyer to finance both the purchase and rehabilitation of a home through a single mortgage.
A portion of the loan is used to pay off the seller's existing mortgage and the remainder is placed in an escrow account and released as rehabilitation is completed. Basic guidelines for 203(k) loans are as follows:
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.

Question 17

What is a Good Faith Estimate?

Accepted Answer

It's an estimate that lists all fees paid before closing, all closing costs, and any escrow costs you will encounter when purchasing a home.
The lender must supply it within three days of your application so that you can make accurate judgments when shopping for a loan.

Question 18

What is earnest money?

Accepted Answer

Earnest money is money put down to demonstrate your seriousness about buying a home. It is also known as a good faith deposit.
It must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price (though the amount can vary with local customs and conditions). If your offer is accepted, the earnest money becomes part of your down payment or closing costs. If the offer is rejected, your money is returned to you. If you back out of a deal, you may forfeit the entire amount.

Question 19

What is mortgage insurance?

Accepted Answer

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%.

Question 20

What is PMI?

Accepted Answer

PMI stands for Private Mortgage Insurance or Insurer. These are privately-owned companies that provide mortgage insurance.
They offer both standard and special affordable programs for borrowers. These companies provide guidelines to lenders that detail the types of loans they will insure. Lenders use these guidelines to determine borrower eligibility. PMI's usually have stricter qualifying ratios and larger down payment requirements than the FHA, but their premiums are often lower and they insure loans that exceed the FHA limit.

Question 21

What is title insurance?

Accepted Answer

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.

Question 22

What's the difference between being pre-qualified and pre-approved?

Accepted Answer

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.

Question 23

When does an ARM make sense?

Accepted Answer

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.

Question 24

Why should I buy, instead of rent?"

Accepted Answer

A home is an investment. When you rent, you write your monthly check and that money is gone forever.
But when you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes. This will save you a lot each year, because the interest you pay will make up most of your monthly payment for most of the years of your mortgage. You can also deduct the property taxes you pay as a homeowner. In addition, the value of your home may go up over the years. Finally, you'll enjoy having something that's all yours - a home where your own personal style will tell the world who you are.