| Frequently Asked Questions |
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Q.
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Is a downpayment always necessary? |
| A. |
No. Programs are available that will allow you to purchase a home with no money down and also finance the closing costs. |
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| Q. |
What are closing costs? |
| A. |
Closing costs include origination fee, appraisal fee, credit report fee, attorney fee, title insurance premium, underwriting fee, courier fees, and recording fees. Most of these fees are based on a percentage of the loan amount. |
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| Q. |
What are prepaids? |
| A. |
Homeowners insurance, real estate taxes, and prepaid interest. |
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| Q. |
Why do I have to have an attorney or settlement company? |
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When you purchase a property, you want to make sure that any liens on the property have been released. You also want to make sure that the title is clear of any claims from heirs to the property. An attorney or settlement company will search the title and settle the purchase of the property between the buyer and seller. |
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| Q. |
Do you have to have perfect credit to qualify for a loan? |
| A. |
No. If at least 12 months have passed since you had problems, you may qualify for a standard mortgage loan with market rates. If you do not qualify for a standard loan, you can still buy the home you want, but you may have to pay a higher rate. |
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| Q. |
Is there just one type of mortgage loan or do I have options? |
| A. |
There are many types of loans. At Colonial Mortgage, we will recommend a loan that best suits your needs. This may be a fixed rate, adjustable rate, construction loan, balloon loan, a buy-down loan, and many others. |
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| Q. |
Does it matter if I am self-employed? |
| A. |
A large percentage of our customers are self-employed. Two years tax returns, personal and corporate if incorporated, are required to verify income. Tax returns will help us calculate your debt ratios as well as verify income. |
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| Q. |
I have heard people talk about "ratios." What does that mean? |
| A. |
Your ratios are calculated by dividing your monthly payments by your gross monthly income. The perfect ratio would be 28% for your house payment and 36% for all other monthly debt including your house payment. However, if you have good credit and a good down payment, automated underwriting allows approvals for much higher ratios. |
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| Q. |
What are points? |
| A. |
This is interest paid up front in order to have a lower interest rate. You may choose a rate with no points in order to keep your total closing costs down or you can have a lower rate by paying points. The amount will vary depending on the interest rate. |
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Was your question not listed? Just give us a call at (540) 966-3100 or e-mail us and we'll answer it! |
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