Common Questions / FAQ

The following are answers to the most frequently asked questions when buying or selling a home.

What is the difference between a fixed rate and an adjustable rate mortgage?

A fixed rate loan is where your interest rate is locked for the entire length of your loan, typically 15 or 30 years. An adjustable rate loan, or "ARM", is where your interest rate is fixed for a number of years and then becomes adjustable for the remainder of the term of your loan. There are three basic arm loans: 3/1 ARM, 5/1 ARM and 7/1 ARM.

What are closing costs?

Closing costs are an accumulation of charges paid to different entities associated with the buying and selling of real estate. For sellers, they are usually about 9.5-10% of the total sales price of a property. Some of the closing costs you might encounter are: discount points, escrow fee, documentation fee, homeowners' association fees, pest/rot inspection, real estate commission and title insurance premium.

What is the difference between "pre-qualified" and "pre-approved"?

If a buyer is "pre-qualified" it has been determined, with a loan officer, what price the buyer can afford based on the down payment, debts and the amount the mortgage company will approve for the mortgage. Being "pre-qualified" is only a determination of probable credit. If "pre-approved", credit, employment and funds to close have been evaluated and approved by the lender.

Should I refinance my mortgage?

There are many reasons to consider refinancing. Here are just a few: to get a lower interest rate (by at least 1-2%), switching from an adjustable rate mortgage, shortening the term on existing mortgages in preparation/planning for retirement, tax planning (which gets tricky since individual tax situation vary so widely), and when a couple gets a divorce.  I can run through the numbers for you free of charge to help you determine if you are in need of refinancing.