Find answers to common questions about mortgages, loans, and the homebuying process to help you make informed decisions.
Refinancing is usually a good option when mortgage rates are 1–2% lower than your current rate, as even a small reduction can lower your monthly payment. For example, on a $100,000 loan, an 8.5% rate results in ~$770/month, while a 7.5% rate drops it to ~$700/month, saving $70. Your actual savings depend on your loan, budget, and interest rates, and a trusted lender can help calculate your options.
A point equals 1% of the loan amount (e.g., 1 point on a $100,000 loan = $1,000) and is paid upfront to reduce your mortgage interest rate. Discount points lower the rate, while origination points cover lender costs.
Yes, if you plan to stay in your home for several years. Paying discount points can reduce your monthly payment and potentially increase your loan amount. For short-term ownership (1–2 years), the savings may not cover the upfront cost.
The Annual Percentage Rate (APR) reflects the true yearly cost of a mortgage, including interest, points, and most fees. It allows comparison between loans but does not affect monthly payments. APR includes points, prepaid interest, loan processing, underwriting, document preparation, PMI, and escrow fees. It typically excludes title fees, attorney fees, inspections, transfer taxes, credit reports, and appraisal fees.
A rate lock guarantees your interest rate for a set period (usually 30–60 days), protecting you from rate increases while your loan is processed. Some lenders may charge a small fee for this.
Credit scoring predicts your likelihood of repaying a loan. Factors include:
Payment history
Outstanding debt & credit utilization
Length of credit history
Recent credit inquiries
Types and number of accounts
Most widely used: FICO score (350–850). Ensure your credit report is accurate. You can request one free report annually from each agency:
Equifax: 800‑685‑1111
Experian: 888‑397‑3742
TransUnion: 800‑916‑8800
Free online report: annualcreditreport.com
Focus on:
Paying bills on time
Reducing outstanding debt
Avoiding new debt unnecessarily
Improvement takes time, but consistent positive behavior helps most scoring models.
This method avoids PMI by combining:
80% first mortgage
10% second mortgage
10% cash down payment
Variations like 80‑15‑5 are available, though lower down payments may increase loan fees and interest rates.
Closing (or funding) officially transfers ownership from seller to buyer. It may involve realtors, attorneys, lenders, escrow agents, and other staff.
