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FREQUENTLY ASKED QUESTIONS

Can first-time homebuyers get special mortgages?
Yes. We have several affordable mortgage programs that can help first-time homebuyers overcome obstacles that have made purchasing a home difficult in the past. We are able to help borrowers that may not have a lot of money saved for the down payment and closing costs, have no or a poor credit history, or have experienced income irregularities.

What is an earnest money deposit?
Earnest money is money you put down through your Realtor to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and can be anywhere between 2-25% of the purchase price (though the amount can vary with local customs and conditions).

How large of a down payment do I need?
There are still some types of mortgages available that allow you to borrow 100%.

How do I know what I can afford?
Call, email or fill out the online pre-approval form.

What is included in a monthly mortgage payment?
The monthly mortgage payment mainly pays off principal and interest. Local real estate taxes, homeowner's insurance and mortgage insurance (if applicable) may be included as well depending on program and Loan to Value.

What is loan-to-value (LTV)?
This is a ratio of the amount of money you wish to borrow in comparison to the sales price or value of the home you want to purchase. A 75% LTV on a $200,000 home would equal a $150,000 loan.

What is an origination fee?
A fee collected by a lender to offset certain costs such as processing and funding your loan. The fee, calculated as a percentage of your total loan amount, is often referred to as "points".

What are points and why pay them?
Discount points allow you to lower your interest rate. They are essentially prepaid interest, with each point equaling 1% of the total loan amount. Generally, for each point paid on a 30-year mortgage, the interest rate is reduced by 1/4 (or .25) of a percentage point. Discount points may be a good idea if you plan to stay in a home for some time since they can lower the monthly loan payment. Points may be tax deductible.

What are closing costs?
Closing costs (or settlement costs) are the expenses involved in the transfer of real estate from one owner to another. They are paid when the homebuyer and the seller meet to exchange the necessary papers for the house to be legally transferred; otherwise known as the closing.

What is a hazard insurance binder?
This is a homeowner’s insurance policy to cover the property being purchased. An insurance binder is an insurance company’s written commitment to insure. This protects both the owner and lender and must commence at least the day of closing.

What is PMI or MI?
This is Private Mortgage Insurance. This insurance is required if you put less than 20% down payment or have less than 20% equity in your home. It is additional insurance designed to protect lenders from individuals that may default on their loans. If you have less than 20% to put down, there are still other options for avoiding PMI.

What is a good faith estimate and how does it help me?
It's an estimate that lists all fees paid before closing, all closing costs, and any escrow costs you will encounter when obtaining a mortgage. We will supply it at the time of your application so that you can make accurate judgments when shopping for a loan program.

What is a FICO score?
A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. A credit score attempts to condense a borrowers credit history into a single number.

Credit scores analyze a borrower's credit history considering numerous factors such as:

  • Late payments
  • The amount of time credit has been established
  • The amount of credit used versus the amount of credit available
  • Length of time at present residence
  • Employment history
  • Negative credit information such as bankruptcies, charge-offs, collections, late payments, etc.

Will I get a copy of my appraisal or credit report?
Both of these can be provided to you upon your request.


 
© 2003 Presidential Mortgage, Inc.
390 Portsmouth Avenue
Greenland, NH 03840

E-Mail: info@presmortgage.com