Frequently Asked Questions

1. Should I get pre-approved for a mortgage before I shop for a home?

Getting pre-approved for your mortgage is an important step before you shop for a home; it means you have received a loan commitment from your mortgage company, that commitment is based upon a review of your credit and finances. Having a credit pre-approval shows sellers that you are a qualified borrower and it helps you establish a price range, furthermore, it provides additional leverage with a seller in negotiating the best possible terms of the sale. The pre-approval process is virtually the same as the application process, except you do not include property information.

2. What is the minimum down payment required in order to purchase a home?

In today’s mortgage world, you can realize the dream of owning your home with little or no money down. Many first-time homebuyers follow the belief that they must have 20% of the purchase price in cash. That may have been true in the past, however, there are many mortgage options available today to all potential homebuyers. With housing prices seemingly always on the rise it would be impossible for many people to own a home without these low down payment options.

Center Street Mortgage has a wide variety of loan programs available to help you buy a home with little or no money down. Please contact us today to find the one that fits you best.

3. What closing costs will I have to pay?

Closing costs vary based on a number of factors including the purchase agreement, loan type and mortgage lender. Closing costs can generally be divided into three main categories:

• Lender fees. These are fees the mortgage company may charge as expenses related to making the loan. These fees can include origination points, discount points, application fee, credit report fee and appraisal fee.
• Third-party fees. These are charges for services that were not provided by your lender, they may include title examination, title insurance, settlement fee, attorney fee, mortgage recording and deed preparation.
• Pre-paid items. These are items collected at the time of closing or in advance of closing, they include pre-paid interest, real estate taxes & homeowners insurance.

4. Should I choose a fixed-rate mortgage or an adjustable rate mortgage?

Most mortgage loans have either a fixed interest rate or an adjustable rate. With a fixed rate mortgage you pay the same monthly payment of principal and interest for the life of the loan. Fixed-rate mortgages are best if the plan on staying in your home for a long period of time or if the interest rates are relatively low at the time of purchase or refinance.

With an adjustable rate mortgage (ARM), the interest rate will adjust either up or down on a regular interval based on a specified market index, this adjustment usually occurs annually. The interest rate will start out as fixed for a specific period of time; the initial period can range from 3 months to ten years. The ARM is a good option if you plan on moving prior to the rates adjusting or the rates are high and you believe the rates will go down over the next few years.

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5. Should I refinance my existing mortgage?

People will refinance their mortgage loan for a multitude of reasons including obtaining a lower interest rate, change the term of their loan, switch from an adjustable rate to a fixed rate, combine a first and second mortgage or lower their monthly payments.

People will also refinance to take cash out of their property, you can use the money to consolidate higher interest debt, do home improvements, start a new business or pay or a child’s education expenses.

6. What is meant by rolling-in your closing costs when refinancing your mortgage?

Rolling-in your closing costs is the mostly commonly used method people choose when refinancing their mortgage. By rolling-in your closing costs you do not have to bring any money to the closing table. Your savings begin immediately with your first mortgage payment.

7. What is equity?

Equity is the amount of value a homeowner has in a particular property. The available equity is calculated by subtracting the total unpaid balances on all mortgages, outstanding liens, judgments and other debts against the property from the property’s fair market value. A homeowner’s equity will increase as they pay down or payoff any mortgages against the property or through property appreciation.

Mortgage lenders use a formula called Loan-to–Value ratio or LTV. The LTV is determine by dividing your loan amount by your property’s appraised value or purchase price, whichever is lower. You can get a home equity line of credit or a home equity loan based on the available equity in your home. Center Street Mortgage has home equity lines of credit and home equity loan programs up to 100% LTV.

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