St James Mortgage Corporation

FAQ

+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 40l(k) plans.

Federal Housing Administration (FHA) loans are an exception since the entire down payment may be a gift, and the Department of Veterans Affairs (VA) loans require no down payment for qualified members and veterans of the armed forces or their widows.

+Do I need perfect credit?

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 mortgage, but if you have a number of late payments, you will need to provide a letter explaining why those payments were late. It is useful to check your credit standing several months before you apply for a home loan. When you think you are ready to purchase, your mortgage loan officer will help you complete the form authorizing them to obtain your credit report for you.

+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 Realtor 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 a deposit or binder to hold the house while the purchase contract is being prepared.

+What does PITI stand for?

Mortgage 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 mortgage, 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.

+Which type of mortgage should I apply for?

Once you`re ready to buy a home, you need a mortgage that fits your budget and your financial objectives. Some people prefer the predictability of a fixed rate mortgage. Others need low initial monthly payments that adjustable-rate mortgages offer so they can afford more house for the money. Still others like the idea of paying off the mortgage sooner and saving thousands of dollars in interest and thus, opt for a shorter term. Selecting the best mortgage loan for your needs can be confusing. It is best to consult with a mortgage loan officer prior to selecting a loan program. A loan officer can discuss your financial goals, income and expenses and help you determine the appropriate home financing option based on your needs.

+What happens at the closing?

Before closing, you may need to arrange for a home inspection, choose a settlement service or attorney, make arrangements with the utility company, and obtain hazard and (if necessary) mortgage insurance. Your loan officer can be a big help in assisting you with these details.

At closing (ah, the final step) your mortgage is signed and sealed, and your check is delivered. Your first mortgage payment will usually be due approximately 30 days after closing. Now you can settle into your new home.