Frequently asked mortgage questions

It’s generally a good time to refinance when mortgage rates are 1% lower than the current rate on your loan. It may still be worthwhile at a 0.50% difference or less, because any reduction can trim your monthly payment. Example: on a $100,000 loan at 8.5%, principal and interest is about $770; at 7.5% it is about $700 — $70 a month. Your savings depend on income, budget, loan amount, and the rate change. Kim can run the numbers with you.

A point is 1% of the loan amount, so one point on a $100,000 loan is $1,000. Points are costs paid to a lender to get financing under specified terms. Discount points are fees used to lower the interest rate by paying some of that interest up front. Lenders may also talk in basis points: 100 basis points = 1 point, or 1% of the loan amount.

Yes, if you plan to stay in the property for at least a few years. Paying discount points to lower the rate can reduce your monthly payment and may increase the amount you can borrow. If you will sell or refinance again soon, points may not pay for themselves. Kim can show you the break-even point for your situation.

The annual percentage rate (APR) reflects the cost of a mortgage as a yearly rate. It is often higher than the advertised note rate because it includes points, broker fees, and some other closing costs. APR is designed to make it easier to compare loan offers, but the note rate still drives your monthly principal and interest.

Mortgage rates can change from the day you apply to the day you close. A rate lock holds an agreed rate for a set period so a spike during processing does not raise your payment. Locks have expiration dates, so the file needs to close before the lock expires or it may need to be extended.

Typical items include recent pay stubs, W-2s, tax returns, bank statements, photo ID, and details on debts and assets. Self-employed borrowers usually provide extra tax returns and business documents. Every file is different, so if Kim asks for more information, it is to keep your approval on track.

Lenders use credit scoring along with your full credit history: bill-paying record, number and type of accounts, late payments, collections, outstanding debt, and the age of your credit. Scores help them estimate risk and which programs and rates you may qualify for.

Pay bills on time, keep credit card balances low, avoid opening several new accounts at once, and leave old accounts open when they are in good standing. Score models are complex, so one change may not move the number overnight. Kim can review your report and point out the highest-impact next steps before you apply.

An appraisal is an independent estimate of a property’s fair market value. Lenders usually require one before approval so the loan amount is not more than the home is worth. A licensed appraiser reviews location, amenities, condition, and comparable sales.

On a conventional loan with less than 20% down, lenders typically require private mortgage insurance to protect them if you default. PMI is added to your monthly payment. In many cases it can be removed once you build enough equity. Other programs, such as VA loans, do not use PMI.

80-10-10 is a piggyback structure: an 80% first mortgage, a 10% second mortgage or HELOC, and 10% down. It can help buyers avoid PMI when they do not have a full 20% down payment. Whether it beats a PMI loan depends on rates and your numbers. Kim can compare both options.

Closing (or funding) is when ownership officially transfers from the seller to you. You, the seller, and settlement professionals review and sign the final documents, funds are disbursed, and you receive the keys. Kim stays with you through this step so there are no surprises at the table.