Faqs
Why do you need an appraisal of the home before you get your mortgage approved?
How much money do I have to put down as a down payment?
How do I determine how much money I can borrow with a mortgage?
Is it better for me to be pre-approved for a mortgage?
Should I use a real estate agent when looking for a home?
What does it mean to lock in an interest rate?
What are the different types of mortgages and how do they work?
What are closing costs of a mortgage?
Should I deal with a mortgage broker?
Why do you need an appraisal of the home before you get your mortgage approved?
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The lender requires an appraisal of any property for which you apply for a mortgage to make sure that its value is equal to or greater than the amount of money you wish to borrow. The value is called fair market value meaning that the property is selling for a reasonable amount based on the current market conditions. Appraiser requirements can vary loan program to loan program and even by lender! Your loan officer will guide you through the process depending upon your specific needs.
How much money do I have to put down as a down payment?
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The amount of money required as a down payment depends on the type of mortgage program you want. Usually lenders require 20% of the total mortgage as a down payment. However, there are programs you might qualify for that do not require any money up front. These include:
The amount of money necessary to put down is influenced by many factors. Most folks think it’s just credit and while sometimes this can be true there are other factors as well such as location of property, type of loan, whether the home is going to be your primary residence, second home or an investment – and naturally your own financial goals! Depending on your own needs and qualifications there are government and bond programs requiring little to no money down to conventional loan programs that traditionally require 20% or more. There is no single rule that governs all – your loan officer can analyze your needs specifically in order to make the most appropriate recommendation!
How do I determine how much money I can borrow with a mortgage?
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Everyone has a unique situation and the best bet is a frank discussion with your loan officer.
Is it better for me to be pre-approved for a mortgage?
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If you have pre-approval for a mortgage, you know exactly what price range you can shop within for a home. Once you are pre-approved it makes it easier to get a real estate agent to work with you to find the home you want, or Community Sales Representative” after “Real Estate Agent .
Should I use a real estate agent when looking for a home?
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A real estate agent will actively try to find a home that suits your taste and budget. He/she will search through the listings and make arrangements for you to view the home. Although you can spend hours searching through the listings of homes for sale, you may have difficulty making appointments to see what they look like inside without a real estate agent.
What does it mean to lock in an interest rate?
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Interest rates can and do change daily and sometimes during the course of a day. There are many factors that affect interest rates – specifically those for home mortgages. When you “lock” the interest rate in that means you are guaranteed that rate good through the lock expiration date protecting you during that time from fluctuations in the market.
What are the different types of mortgages and how do they work?
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The different types of mortgages are:
- Fixed Rate: rate does not change for the entire life of the loan.
- Adjustable Rate: rate can change according to various financial indices.
- Hybrid Adjustable: starts out being fixed for a certain time and then becomes adjustable.
Different mortgage programs include (but are not limited to…)
- Government Insured Mortgage Loans: USDA, FHA and VA are all partially Government insured usually allowing for a smaller down payment and no to low monthly mortgage insurance.
- Municipality Bond Programs: These programs allow for grants and down payment assistance where possible where the municipality funds the mortgage loan and then sells the bonds.
- Conventional Loans: non-government insured and non-bond money these are ‘vanilla’ mortgage loan products typically requiring larger down payments than above and requiring private mortgage insurance at less than 20% down.
What are closing costs of a mortgage?
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Your loan officer will provide you with a Good Faith Estimate of costs to estimate for you what various costs are involved in your transaction. Sometimes depending upon different loan programs there will be different costs associated. Generally however there are distinct categories, lender fees, title company fees, government and municipality transfers and taxes and also some local fees. Finally there are reserves put into place for escrows and prepaid interest. Make certain to go over and fully understand your Good Faith Estimate when you receive it!
Should I deal with a mortgage broker?
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- Replace with: “There are many and varied sources for borrowing money to purchase your home. Categorically these fall into mainly 4 areas but this is not an all-inclusive list. –
- Banks and/or Credit Unions: These institutions qualify you and lend money directly to you and may service your loan after even if the loan has been sold. This is typically a retail arrangement.
- Mortgage Brokers: These individuals shop for your mortgage among a group of mortgage wholesalers. The mortgage broker finds the lender and program for you – similarly to a real estate broker or stock broker. These folks use their relationships with various wholesale lenders to advantage.
- Mortgage Bankers/Correspondent Lenders: these institutions have the advantages of both Banks and Mortgage Brokers. Operating as a lender and governed by the Federal Government these institutions also have many large banks known as Correspondents to offer their best as well as being financially strong enough to portfolio or lend the money directly. Contact with underwriting and the loan process is direct and fast. Pricing is highly competitive. Chesapeake Mortgage Funding is a Banker/Correspondent Lender through its affiliation with The First National Bank of Chester County.