FAQ's

FAQ's

Q: What Happens during the initial meeting?

A Home Financial Group Mortgage Specialist will analyze a snapshot of your income, assets and employment. In order to give you an idea of the mortgage amount you qualify for.

 

We will meet you for the introductory meeting, this can be done in person, via phone, or skype. This when your Mortgage Specialist gets to know you, in addition to your wants and needs. We will discuss your income, long term debts, financial history. Depending on your financial situation, Home Financial Group will issue you a prequalification letter which can help you shop for affordable properties in your adequate price range.

Q: What is the difference between pre-qualified and pre-approved?
When a homebuyer is pre-qualified, he or she has provided the lender with the basic information to determine which loan program the homebuyer may qualify for. Whereas, when a homebuyer is pre-approved, the decision for loan approvals are made based on the probability that you will repay the amount lent to you. Lender’s consider many factors when analyzing your ability to repay. To ensure a mortgage loan is right for you, a lender will verify your income and employment. In addition to your monthly Debt to Income ratio – your total income minus monthly credit payments and other debts.
Q: What are the closing costs?

The actual expenses incurred in the origination of a new home loan are referred to as the closing costs. There are a variety of costs associated during the process of acquiring a mortgage, such as the expense of a credit report on all applicants, appraisal of the property, processing and underwriting fees, just to name a few.

 

The detail of the closing costs will be presented by your Mortgage Specialist in the “Loan Estimate”, this document includes all the estimated costs to close your loan. Prior to closing you will be presented with closing disclosures, which may have a small variance (larger or smaller) than the loan estimate closing costs. Finally, on closing day, the full itemized list will be again presented to you. Home Financial Group prides itself in offering the best value service, an application fee is not charged to the client and we are as transparent with the client as possible.

Q: Which amounts are included in my monthly payments?
If you have a fully amortizing mortgage, portions of your monthly mortgage payment go toward loan principal and interest. Interest-only mortgage payments include only the interest that is due on the outstanding principal balance. If your mortgage carries mortgage insurance, a portion of your monthly mortgage payment will pay this also, unless the lender has paid your mortgage insurance or you have paid your mortgage insurance upfront. If you have set up an escrow account for your mortgage, then portions also go toward your property taxes and homeowner’s insurance.
Q: What is the difference between Interest Rate and APR?
Your interest rate is the monthly cost you pay on the unpaid balance of your home loan. An Annual Percentage Rate (APR) includes both your interest rate and any additional cost or prepaid finance charges such as the origination fee, points, private mortgage insurance, underwriting and processing fees (your actual fees may not include all of these items). While your interest rate is the rate at which you will make your monthly mortgage payments, the APR is a universal measurement that can assist you in comparing the cost of mortgage loans offered by different mortgage lenders.
Q: What will my rate be?
Rates are based on a variety of factors such as the loan purpose, your credit history and ability to repay, the value of the collateral and the loan amount.
Q: What is PMI?
Private Mortgage Insurance is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Private Mortgage Insurance is generally required for a loan with an initial loan to value (LTV) percentage in excess of 80%. In most cases, this will mean that you will have to pay Private Mortgage Insurance if your down payment is less than 20% of the value of the home you are purchasing or refinancing. The cost of the mortgage insurance is typically added to the monthly mortgage payment.
Q: What is an Escrow Account?

Mortgages and Escrow Accounts are closely related. Escrow Accounts are used to hold the property taxes, fire and hazard insurance premiums, mortgage insurance premiums (if applicable), and other escrow related items borrowers pay monthly.

 

Escrow Accounts are like the impartial third party that makes sure everyone is happy. They guarantee that there is always enough money to pay the bills (mentioned in the paragraph above) on time. The homeowner avoids the risk of delinquent taxes or lapsed insurance. It alleviates the homeowners from worrying about payment lump sums when the annual bills are due and instead help them safe enough throughout the year.

 

On the other hand, escrow accounts are also a factor in facilitating the availability of mortgages. Because escrow accounts protect the interest of investors of home mortgage loans by making them more attractive and secure investments. This translates into lower rates and down payments for borrowers. Finally, the local governments also benefit by providing a more efficient mean of property tax collection.

Q: What is PITI?

Once you purchase a home it is important to understand the components of your monthly payment made to your mortgage servicer. Your monthly payment is made up of four components, which are: principal, interest, taxes and insurance, A.K.A “PITI”.

 

Q: What is Principal This refers to the remaining balance of the loan

 

Q: What are Interest This is the fee charged based on the interest rate applied to your mortgage

 

Q: Can you explain my property taxes in detail? Specifically, property taxes which are levied by the respective property’s community, this is based on a percentage of the value of your home. (In some cases the community will appraise the value of the property lower than the price you paid for it). The Servicing Lender usually collects a month’s worth of taxes (1/12th of annual property tax bill). These funds are placed in an escrow account and paid to the government by the lender on your behalf.

 

Q: Why do I need Insurance? Insurance is like water, everyone needs it! As a buyer, you need hazard insurance to cover your home and personal property against losses from fire, theft, bad weather or other factors. Insurance payments are collected much like the taxes. The Servicing Lender usually collects a month’s worth of insurance payments (1/12th of the annual insurance bill). These funds are placed in an escrow account and paid to the insurance provider by the lender on your behalf.   The main chunk of your monthly payment will go to Principal and Interest. Amortization is the method which reduces your debt over time. Initially, your monthly payments fund mostly interest, and as your loan matures, more funds are allocated towards the principal. Reference our Mortgage calculator to view your specific amortization schedule.

Q: How do I know how much I can afford?
You can use our complimentary mortgage calculator to help you with this question. If you need further assistance an HFG Mortgage Professional will be happy to help, contact us.