Top 5 Most Frequently Asked Mortgage Questions
Our real estate experts have put their heads together on the most commonly asked questions they get from Members.
Q. Do I really need a 20% down payment to purchase a home?
A. No. There are several other loan options available that allow you to put as little as 5%, 3%, or even 0% down. Just keep in mind that any home loan with less than a 20% down payment requires Private Mortgage Insurance (PMI). This protects the lender from losing money if you end up not being able to pay the loan.
Q. How long does my pre-approval last?
A. Pre-approvals on average are good from 60 to 90 days. Pre-approvals from your Credit Union expire after 120 days, at which time, if you haven’t put an offer on a home and submitted a loan application, you’ll need to get pre-approved again.
Q. What, exactly, are closing costs, and how much should I expect to pay?
A. When you decide to buy a home, you’ll spend more than just your down payment. You’ll also pay for things like recording fees, wire fees, or escrow account, origination fees, upfront insurance premiums and any “points” you buy pay to lower your interest rate. These expenses are collectively called closing costs, and you can expect them to run you anywhere from 2% to 5% of the purchase price of your home.
Q. What type of mortgage should I choose?
A. This is entirely unique to your financial situation, what you want to buy, how long you plan to live in the home, and more. With options that range from a standard 30-year fixed-rate home loan to a 0% down adjustable-rate mortgage that lets you pay less in interest for the first few years, your best bet at finding the right loan is to speak with an expert. Our mortgage loan consultants can spend time understanding your needs and goals, and then guide you through our complimentary Total Cost Analysis to ensure you make the smartest decision for your situation.
Q. When should I lock in my interest rate?
A. This answer differs depending on whether you’re purchasing or refinancing a home. But of course, either way, you want to obtain the lowest rate possible on such a large amount of money. If you’re refinancing, your application has to be credit-approved before you can lock in your rate. If you’re shopping for a home, your application has to be credit-approved and the seller has accepted your offer. Then, you’ll need to decide if you want to lock in today’s rate or keep an eye on rates in the days that follow. Be sure to understand any fees associated with the rates you see advertised — not all are created equal, so you want to pay attention to the Annual Percentage Rate (APR), not just the interest rate. It’s important to keep in mind that your mortgage loan cannot proceed until you’ve locked in a rate.
Have more burning real estate questions? Orange County's Credit Union is here to help with experienced consultants who can offer guidance and answer all your home loan questions. Contact us today at (800) 506-5070.
NMLS # 403462
This is not an offer for an extension of credit or a commitment to lend. All applications are subject to borrower and property underwriting approval. Not all applicants will qualify. Membership