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Real Estate Loan FAQs

Should I buy or continue to rent?
Depending on your situation, buying real estate is an investment that may appreciate in value as opposed to paying rent to someone else and never receiving a return. Refer to our loan payment calculator to help determine what your monthly mortgage payment would calculate to be and compare it to your rent payments. Or, contact one of our experienced real estate lenders for more information.

Do I need a real estate agent?
Most of the time it is a good idea to retain the services of a real estate agent when looking to purchase a home. Your agent should represent your best interest when negotiating with the seller and his or her real estate agent.

What if I have been pre-qualified, but can't find a house? How long is it good for?
Your loan pre-qualification is generally good for 90 days from the day it was issued. If you cannot find a property within that period of time, simply submit new copies of your supporting documentation such as updated pay stubs and bank statements. We may also have to run a new credit check. If there are no major changes to your credit and monetary situation, we will renew your approval for another 90 days.

Does my credit have to be perfect?
Your ability to purchase a home will depend, in part, on your credit history as profiled in a credit report. The information on the credit report is used to determine how responsible you are in meeting your obligations. You do not have to have perfect credit to be approved for a home loan, but if you have inaccuracies on your credit report, you will need to provide a letter of explanation. It is advisable to check your credit standing several months before you apply for a home loan. When you think you are ready to purchase a home, your real estate loan officer will help you complete the form authorizing him or her to obtain your credit report for you.

Which kind of real estate loan should I apply for?
Once you're ready to buy a home, you need a loan that fits your budget and your financial objectives. Some people prefer the predictability of a fixed-rate home loan. Others need low initial monthly payments that an adjustable-rate loan offers. However, others like the idea of paying off their loan sooner and saving thousands of dollars in interest and, thus, opt for a shorter term. 

Selecting the best home loan for your needs can be confusing. It is best to consult with one of our experienced real estate lenders to discuss your financial goals, income and expenses. They can help you determine the appropriate home financing option based on your needs.

How large of a down-payment will I need?
In most loan programs, at least a portion of the down payment must come from your own funds. This demonstrates to the lender that your home is an investment that is important to you. For example, if the loan program you select requires a 5% down payment and the purchase price on your home is $100,000, your down payment will be $5,000. However, you may only have to provide a 3% down payment from your own funds, totaling $3,000. The remaining 2%, or $2,000, can be a gift or grant. Some people contribute to their down payment by borrowing against the equity in their profit sharing or 401(k) plans or borrowing against an asset.

What is PITI?
Real estate lenders use this term over and over again, so it is important that you understand what it means. "PITI" is the total monthly payments you will make each month to your lender and includes principal and interest on the loan, real estate taxes, and homeowners insurance. If you will be paying private mortgage insurance or condo/co-op association fees, these monthly payments are also included in the PITI amount.

What exactly are points?
Points represent an optional charge paid to the lender at the time of closing. Each point is one percent of the loan amount. For example, two points on a $100,000 loan is $2,000. The more points you pay, the lower your interest rate will be, thus lowering your monthly payment.

How do I make an offer?
Once you have found the house you want and can afford, be sure to determine the home's true value by comparing its price to that of other houses in the same neighborhood. Your real estate agent can help you with this, or you might want to hire an independent appraiser to help guide you. Once you and the seller have reached an agreement on the price of the home, you may be asked for an earnest money deposit to hold the house while the purchase contract is being prepared.

How do I get an appraisal? When should I do this? Can you help?
Once you commit to our bank for your real estate loan, an appraisal will be ordered. Once we receive the original appraisal, your loan officer will make you aware of the property value. He or she will also present you with a copy of the appraisal at your loan closing.

What is included in the closing costs?

  1. Closing costs can be divided into three categories:
  2. Lender fees (points, appraisal, credit report, and underwriting)
  3. Pre-paids (interim interest, real estate taxes and escrow, insurance premiums and escrow)
  4. Settlement costs (title insurance, settlement/attorney fees, city/county/state taxes, recordation and courier fees)

Help! I have to close quickly. How can I speed up the loan approval process?
We can work with you to close on your home loan in a short timeframe. The best thing you can do to speed the process along is to provide all of the necessary documentation at the time of application.

What happens at the closing?
At closing, your loan papers and other real estate documents are signed. Your first home loan payment will be due approximately 30 days after closing.

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