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Whether you're a first time buyer or a seasoned homeowner, you'll find that your personal mortgage banker at Unity Mortgage will provide you with the guidance, efficiency, wisdom and access you need to proceed with confidence. As a beginning, we have prepared a few questions and answers that are commonly asked about mortgage lending, but this is not in lieu of our personal and professional advice. Please just ask and we will gladly answer any questions with consideration of your unique financial needs and circumstances.
- What is the best mortgage for me? Homebuyers in search of the lowest possible mortgage payment should inquire about an Adjustable Rate Mortgage (commonly referred to as an ARM). An ARM may provide an introductory interest rate that is often lower than a fixed rate loan and consequently may allow the homebuyer to purchase more house at the outset. There will be an adjustment period related to market conditions that could result in an increase or decrease in your monthly mortgage when the adjustment occurs. Buyers should consider how long they expect to live in the home they are purchasing.
Fixed Rate Loans may be best suited to the buyer who appreciates the security of knowing exactly what their interest rate will be (and consequently their mortgage payment) for the life of the loan. A homebuyer's decision to choose a fixed rate loan should consider the length of time they expect to own the home. If they expect to stay in the home for a considerable period, a fixed rate loan may be advisable.
United States Veterans with eligible VA entitlement should consider a VA Loan.
FHA Loans are ideal for first time buyers as they often allow the homebuyer to purchase the home with little or no money down.
"No Doc", Expanded Loan to Value, Qualifying or Documentation Criteria is a worthy consideration for borrowers with unique financial circumstances.
- Which is better for me -- A 15-year mortgage or a 30-year mortgage? Each homebuyer must consider their individual financial circumstances when choosing the term of their loan. The homebuyer should consider such factors as: how long they expect to own the house, their salaries and expected cash flow as well as what their other investment opportunities might be. Naturally, a 30-year mortgage would result in lower monthly payment than that of a 15-year mortgage; however, all Unity mortgages, regardless of the term, may be paid off early with no prepayment penalty.
- How much should I borrow? How much can I qualify for? Should I borrow as much as I qualify for? Mortgage lenders routinely and historically have used the same basic guidelines to identify an appropriate amount for a homebuyer to borrow (higher ratios may be permitted for certain programs or for borrowers with excellant credit profiles). Some examples of such guidelines include: The 28% Ratio – this basic and logical calculation factors your overall monthly housing expense, which includes your mortgage payment, insurance and property taxes and compares this total to your gross monthly income. Your overall housing expense should not exceed 28% of your monthly income. (You can find out what your monthly payment should be by using our mortgage payment calculator.) Lenders also use the 36% Ratio (which is also known as the Total Debt Ratio). You can determine your total debt ratio by adding your basic monthly debts such as credit cards, alimony or child support payments, car payments and other loans. (Note: Do not include regular payments for services such as utilities, car, life and health insurance, etc.). Now add your monthly debt to your expected monthly mortgage, homeowners insurance and taxes. This combined total should not exceed 36% of your monthly gross income. If it does, you may want to reconsider the amount you wish to borrow for your home. (See our mortgage payment calculator.) At Unity Mortgage, we encourage customers to consider all their monthly expenses as well as unexpected expenses and not to borrow more than they are comfortable with.
- What is involved in a mortgage application and where and how can I apply?
You may choose to first seek "pre-qualification," which essentially is based on your available down payment, employment history and income. This step will enable you to determine your viability as a borrower. Unity Mortgage will review your pre-qualification application within 24 hours of receipt of the information. OR, you may decide to apply directly for the loan, which we have simplified for your convenience. In most cases, the application can be done in minutes over the phone, in one of our neighborhood offices or on the Internet. We'll even come to you if it makes your life a little easier. When you apply for your loan you should have the following documents available for your Unity mortgage banker:
- Fully executed purchase agreement for your new home.
- Verification of your income including pay stubs for most recent 30-day period, your last 2 years’ W-2’s, the address and telephone number for verifying your employment (often different from where you work – check with your employer) and documentation on other income you may have (rental income, alimony, etc.). If you are self-employed, please provide your last 2 years’ tax returns and a year-to-date Profit and Loss Statement for your business.
- Your last 2 months bank statements for checking, savings and securities accounts.
- Current names, addresses, account numbers and balances for any loans, leases or charge accounts that you may have.
- Information on where you have lived for the last 2 years including landlord phone number and/or information on the home you currently own including lender, account number and original purchase information.
- Additional information may required depending upon your personal circumstances.s
Homebuyers frequently decide to lock in an interest rate at the time of application. See the "lock-in" FAQ for more information.
Typically interest rates are locked in for 15 to 60 days. OR, you may choose to allow the rate to float --or fluctuate-- for a period of time prior to closing.
- What will it cost to "close" my house and what might I be expected to bring to closing? An estimate of closing costs will be provided to you by your Unity mortgage banker well in advance of closing. Just before closing, you will receive a preliminary Settlement Statement (HUD-1) which will provide you with the amount of certified funds (in the form of a cashier's check) you will need at closing. Closing costs for the buyer might include:
- Your down-payment (varies)
- State/County taxes and fees
- Title insurance
- Loan origination
- Appraisal fee
- Credit report fee
- Survey fee
- Commitment fee
- Tax service fee
- Underwriting fee
- Document preparation fee
- Attorney fee
- Flood Zone determination fee
- Interim interest (subject to closing date)
- Discount points (you may choose to pay at closing in order to lower your interest rate. See "Discount points" FAQ.)
- Other fees may be required by your state or for other circumstances.
You will also need to bring proof of homeowner's insurance in the form of a Declaration Page from your homeowner's policy with proof of payment. You should send a copy of the same to your Unity Mortgage Banker at least 5 days before closing. Your contract may also call for you to produce a "Clear Termite Certification." You must also bring a photo i.d. (driver's license or passport) to the closing.
Your Unity Mortgage Banker will order an appraisal of the property you wish to purchase soon after your loan application is received. The appraiser will return the appraisal typically in less than 10 business days (for FHA and conventional mortgages). VA loan appraisals generally takes 10 business days to 3 weeks. You will receive a copy of the appraisal at closing. .
- What are discount points? A discount point is a fee based on one percent of the loan. Homebuyers may choose to "buy down the loan" by paying points (at closing) in order to reduce the interest rate on the loan, lower the monthly mortgage payments and save on the interest paid over the life of the mortgage. Your Unity mortgage banker can help you decide if you should pay points and identify the number of points that are required for you to 'buy down" your interest rate. Considerations should include how long you plan to own the home, tax ramifications and the particular loan type you are using.
- What does it mean to "lock-in" an interest rate and should I do so? The purpose of a "lock-in" interest rate is to guarantee a particular rate for a specified time, which you can do when you file a loan application. OR, you may choose to allow the rate to float --or fluctuate-- for a period of time prior to closing. If you choose to lock-in a rate, the lock-in period is typically for 45 to 60 days; however, there are other options. Your Unity mortgage banker will make you aware of the possibilities.
- What does APR mean? In compliance with the Truth in Lending Act, all lenders must disclose the Annual Percentage Rate (APR), which is the cost of credit based on a yearly rate. You will receive your APR after you have applied for a loan. Frequently, the APR is higher than the quoted interest rate because the APR includes some of the additional costs involved in obtaining your financing.
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