What is a mortgage and how does it work?
A mortgage is a loan used to buy a home. You borrow money from a lender and repay it over time, usually 15 to 30 years, with interest. The home itself serves as collateral for the loan.
What’s the difference between fixed-rate and adjustable-rate mortgages?
A fixed-rate mortgage keeps the same interest rate for the entire term. An adjustable-rate mortgage (ARM) starts with a lower rate that can change over time, depending on market conditions.
How much down payment do I need?
Many conventional loans require around 5% to 20% down. FHA loans can go as low as 3.5%, and VA or USDA loans may offer 0% down options.
What credit score is required to qualify for a mortgage?
Most lenders look for a credit score of 620 or higher for conventional loans. FHA loans allow lower scores, sometimes starting around 580.
How is my mortgage interest rate determined?
Your rate depends on credit score, loan type, down payment, debt-to-income ratio, and market conditions. Rates change daily based on the bond market and Federal Reserve trends.
What are closing costs and how much should I expect to pay?
Closing costs are fees for processing your loan and transferring the property. They typically range from 2% to 5% of the home’s purchase price.
What’s included in a monthly mortgage payment?
Your payment usually includes principal, interest, property taxes, and homeowners insurance. If you have PMI, that’s added too.
What’s the difference between pre-qualification and pre-approval?
Pre-qualification is an estimate of what you might borrow based on self-reported info. Pre-approval is a verified review of your finances and gives you stronger buying power.
How long does the mortgage process take?
On average, it takes 30 to 45 days from application to closing, depending on how quickly documents and appraisals are completed.
Can I buy a home with a low down payment or no down payment?
Yes. FHA, VA, and USDA programs allow low or no down payments for qualified borrowers.
What is private mortgage insurance (PMI) and when can it be removed?
PMI protects the lender if you default. It’s required when your down payment is less than 20%. It can usually be removed once you reach 20% equity.
What documents do I need to apply for a mortgage?
You’ll need pay stubs, W-2s, tax returns, bank statements, ID, and details of any debts or assets.
Should I choose a 15-year or 30-year mortgage?
A 15-year mortgage has higher monthly payments but less interest over time. A 30-year offers smaller payments but more total interest.
What happens if I miss a mortgage payment?
You may owe a late fee after 15 days. Missing more than one payment can impact your credit score and risk foreclosure if not resolved.
Can I refinance later to get a better rate?
Yes. Refinancing can lower your rate, change your term, or tap equity, but it involves new closing costs.
How do property taxes and homeowners insurance affect my payment?
They’re often escrowed and added to your monthly payment. If taxes or insurance go up, your payment can increase.
What are FHA, VA, and conventional loans?
FHA: Government-insured, flexible on credit, low down payment.
VA: For veterans, no down payment, no PMI.
Conventional: Not government-backed, often best for strong credit and higher down payments.
How do I know how much house I can afford?
Use your debt-to-income ratio. Most lenders prefer your total housing costs to stay below 28% of your gross income. You can also use our mortgage calculator or contact us.
What are points and should I pay them?
Points are upfront fees paid to lower your interest rate. They can save money long term if you plan to stay in the home several years.
How soon can I sell or refinance after buying a home?
You can usually sell anytime, but some loans have short occupancy requirements. Refinancing typically makes sense after 6 to 12 months, once equity or rates improve.
