Frequently Asked Questions About Buying a Home
part 1 | part 2 | part 3 | part 4
Here is an Adobe Acrobat PDF file of the most frequently asked questions that home buyers have. You can read it online or save it to your computer or print it out for future review.
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WANT TO PAY OFF YOUR LOAN EARLY?
Save extra every month.
With the interest you earn on your savings accounts you may be able to make an extra payment at the end of the year.
Pay an extra twelfth of your P & I payment monthly.
Or just send in whatever extra you can every month.
Whichever method you choose, be sure to clearly indicate that the excess payment is to be applied to principal. Better yet, write two checks to create an even better paper trail.
What can I do if I have a fixed rate loan, and interest rates go down?
When interest rates drop significantly, the homeowner should investigate the financial advantages of refinancing. Essentially, this means taking out a new loan to pay off your existing loan. The usual “rule of thumb” is if the rate drops by at least 1% then it may be worthwhile to “run the numbers”.
Refinancing may require paying many of the same fees paid at the original closing, plus origination fees. Most mortgage experts agree that if you can get a rate 2% less than your existing loan, and you plan on staying in your home for at least 18 months, refinancing is a good investment.
What is the difference between pre-qualifying and pre-approval?
Pre-qualifying for a mortgage up to a certain amount is a verbal exchange in which the lender tells you in advance approximately how much money the buyer is able to borrow, based upon the information you provide the lender on your debt and income.
Pre-approval goes a step further than pre-qualifying. It is an actual commitment to lend, provided that, when the borrower is ready to buy, he or she still meets all the qualifying conditions that were met at the time of conditional approval. We strongly recommend it to give you the best negotiating position !
Can I pay off my loan early?
If you can afford it, and are interested in the considerable advantages of having more equity and/or owning your home free and clear at the earliest possible date, the answer in most cases is yes. The FHA, VA, and even some states do not allow lenders to charge penalties for paying mortgages early or refinancing. In fact, many lenders now include space on monthly statements for borrowers to itemize any additional principal payment they wish to include with their regular payment. If you’re unsure about the rules governing pre-payment, review your mortgage agreement.