| What
is my down payment?
This
is simply the amount of money you choose to invest in your new home.
The down payment and the loan amount make up the purchase price
of the home. We offer many loan programs that require only a 5%
or 10% down payment. We even offer some zero-down payment options.
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What
are the advantages of making a higher down payment?
A
higher down payment will reduce the size of the loan, as well as
provide added strength to your ability to borrow.
The
higher your down payment, the lower your monthly mortgage payment
will be. In addition, your financing costs will be reduced because
you will pay less interest over the term of the loan. It will also
be much easier for you to qualify for a loan at the terms you select.
Down payments meeting or exceeding 20% will generally remove the
need for costly mortgage insurance, thereby lowering your payment
even further.
However,
if you wish to maximize your homeownership tax advantage, consider
making a smaller downpayment. Either way we can help!
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What
is a Good Faith Estimate (GFE)?
A
Good Faith Estimate (GFE) details the costs you will incur during
the mortgage process. Some of these sources are surveyors, title
insurance companies, credit bureaus and government entities. This
is supplied to you at or soon after you make loan application. While
we endeavor to be precise, it is important to confirm your costs.
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Do
I have a choice of points or no points? How do I determine whether
or not to pay points?
Yes,
you do have a choice. The primary idea of points is to pay a fee
at closing in order to lower your interest rate. Depending upon
how long you keep your loan, you may save substantially more money
over the life of the loan. Points are a good idea if you plan to
keep your loan for a long time.
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What
are the pros and cons of getting an adjustable rate mortgage?
When
interest rates are high, many borrowers choose an adjustable rate
mortgage. This option will keep your monthly payment lower as you
start out in your new home. When interest rates are low, fixed rate
mortgages will lock in that low rate over the life of the loan.
Other pros and cons:
Adjustable
rate mortgages may be assumable, conventional fixed rate mortgages
usually are not.
If
you plan to sell in the near future, an adjustable rate mortgage
is usually best because you pay a lower rate at the beginning of
an adjustable loan. Therefore, you’ll incur less interest expense
for the short time you own the house.
This
decision should be thought out carefully. If interest rates rise
you may have higher monthly payments for a significant period with
an adjustable loan.
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When
is an adjustable rate mortgage right for me?
Generally,
if you plan to keep your loan for a short period of time (1-10 years)
or if fixed rates are high, an adjustable rate mortgage may be right
for you. Clarion Mortgage offers a variety of ARMs including
1-year Treasury ARM, 3-year Treasury ARM, 3/1 Treasury ARM, 5/1
Treasury ARM, 7/1 Treasure ARM and 10/1 Treasury ARM.
Other
advantages of an ARM include:
- An
ARM will usually offer a lower starting interest rate than a fixed
rate loan.
- An
ARM can be less expensive than a fixed rate loan if interest rates
remain steady or decline.
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What
is credit scoring?
A
credit score is derived by analyzing a number of variables to determine
the likelihood that a person will repay the loan on time. The scoring
system was developed from a statistical analysis of variables that
predict loan repayment patterns. Variables include late payments,
delinquencies and credit history. A higher score is better.
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What
constitutes a loan approval?
Most
lenders base their decision on three factors: credit, collateral
and capacity. Credit refers to the quality of your current credit
rating. Capacity is your ability to repay the loan based on job
stability, current income and other factors. Collateral is the amount
of equity in your home, and the likelihood of appreciation. Once
everything checks out, you’re approved!
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Should
I pre-qualify or get pre-approval before I begin searching for a
home?
Real
Estate agents and home sellers will generally consider you a more
serious buyer if you receive a pre-approval from a reliable mortgage
banker like Westminster. Not only does it allow you to narrow your
price range, it also assures the seller that you qualify when you
do find the home of your dreams.
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When
should I lock in my interest rate?
To
be an informed buyer, you’ll want to be aware of recent interest
rate movements. Have they been falling or rising? Depending on the
market, you may want to wait before locking in an interest rate,
or may want to lock in as soon as possible. We offer lots of flexibility
but the decision to lock or float can only be made by you.
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Once
I apply, how long will it take before I receive an approval?
It
generally takes only 48 hours after we receive your completed application
to obtain a loan decision. Some programs may require additional
documentation, so approval may take a little longer. Check with
your Clarion Mortgage Loan Officer for an estimate of the
time that it will take to receive your approval. Once approved,
you will receive a written commitment letter, which will outline
your rate (if locked), terms, approval conditions and any additional
documentation needed to close.
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How
much money will I need at closing?
Your
closing costs will depend upon the sale price, the amount of your
down payment and the various fees connected with the purchase of
your home. Generally, conventional loans require a minimum of 5%
to 10% of the sales price in down payment. FHA loans require at
least 3% to 5% down. Closing costs and escrow items include mortgage
insurance, prepaid taxes, attorney’s fees, title insurance,
etc.
Shortly
after you apply for a loan, Clarion Mortgage will provide
you with a Good Faith Estimate of all closing costs and escrow items.
(See Good Faith Estimate above)
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What
is the maximum monthly payment for which I qualify?
Clarion Mortgage, like most lenders, reviews your income and debts.
While we offer lots of flexibility, a good rule of thumb is that
up to 28% of your gross monthly income may be used for the payment
of your mortgage, and up to 36% of your gross monthly income may
be used for your total monthly debts (including your mortgage).
Clarion Mortgage also offers programs with higher qualifying
ratios. Call us for detailed and specific information about programs
with expanded ratios.
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What
are discount points?
A
discount point is a fee that you can pay to reduce your interest
rate. One "point" equals 1% of the loan amount. For example,
one point on a $100,000 loan would equal $1000. If you’re going
to be in your home for a relatively short period, it may not be
worth it to you to pay discount points. If you would like to lower
your monthly payments by lowering your interest rate, then paying
points up front may be the best way to accomplish this.
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Will
one late credit card payment or loan default disqualify me from
getting a mortgage?
If
you have less than perfect credit, Clarion Mortgage has programs
to meet your needs. Late payments should by no means automatically
disqualify you from getting a mortgage. We understand that almost
everyone has forgotten to pay a bill on time, or has had trouble
making a payment. Many people find themselves in difficult financial
situations. These often result from illness, divorce, or temporary
unemployment.
If
you can demonstrate that a problem is in the past, and you have
been able to reestablish a good track record for a sufficient amount
of time, you may be in a good position to get a mortgage loan. There
may be a reasonable explanation, so speak to us honestly and openly
about the situation. It’s important to remember that lenders
don’t just look at your past history, but also at your ability
and willingness to pay in the future.
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