Why Buy Instead of Rent?
Typically, a house appreciates in value over time, and therefore is considered by many to be a wise investment. Additionally, an owner can build equity in the home, which can be borrowed against. Don't forget, most homeowners receive significant tax breaks, because interest paid on a mortgage is normally tax deductible.

How do I know how much I can afford?
How much you can afford is calculated based on how large of a mortgage payment you can make. Generally, your monthly payment should not exceed 29% to 33% of gross monthly income; your house payment plus your monthly debt should be in the range of 38% to 45% of your gross income. There are many exceptions to these guidelines, especially if you have great credit.

What does the application process consist of?
When you complete an application, you are telling us who you are, what property you want to buy or refinance, and what assets you have and liabilities you carry.

What Happens Next?

1. Processing
The loan officer collects the information needed to process your loan and initiates a credit check. Required documents will vary depending upon the type of loan program you apply for and your individual financial/credit profile. At this time, it will also be determined whether your property will require a full appraisal, drive-by appraisal, or automated valuation. At this time, you will have the option to lock in your interest rate.

2. Loan decision
Loans are reviewed one of two ways: either by an automated computer program or a human underwriter. Underwriters are trained to evaluate your financing requirements and will do everything possible to help approve your application.

3. Pre-Closing
Prior to closing, your lender will ask you to provide insurance information and real-estate-related documents. When you are ready to schedule your closing date, all involved parties will be contacted to arrange for the closing to take place at a convenient time and location for you. You will be notified of the exact amount of money you may need at the closing and any additional documents you may need to bring with you.

In the case of new construction, the lender will want the appraiser to inspect the home just prior to closing. This is to ensure that it is in accordance with the plans and specifications furnished by the builder or contractor.

4. Closing
At your closing, ownership interest of the property is transferred to you. A closing agent (a title company or real estate attorney) coordinates and distributes all the paperwork and funds, according to the terms agreed upon by you and the seller.

What does my mortgage payment include?
Your monthly mortgage payment is made up of four parts: principal, interest, taxes and insurance (PITI).

Principal is the amount of money you borrow. In the early years, your monthly payment includes only a small portion of your principal. As you continue to make payments, a greater portion of your payment goes to reduce the principal.

Interest is the cost of borrowing money. In the early years, your monthly payment is mostly interest. As you continue to make payments, a smaller portion of your payment goes to interest.

Taxes are paid by homeowners to local governments, and are usually charged as a percentage of the assessed property value. Tax amounts vary depending on where you live. Hazard Insurance is a policy that protects you against financial losses on your property as a result of fire, wind, natural disasters or other "hazards." Unless you have elected to pay your own taxes and hazard insurance, you will pay moneys into an escrow account maintained by your lender. On the due date, your lender will pay all taxes and insurance due.

In addition, mortgage Insurance (MI) may be required on higher loan-to-value loans to protect the lender against financial loss if the borrower forfeits. There are three types of MI. Private Mortgage Insurance (PMI) is associated with conventional loan products. Mortgage Insurance Premium (MIP) is associated with FHA loans. Funding Fee is associated with VA loans, and there are many ways these fees can be charged.

What is the difference between 'locking in' an interest rate and 'floating'?
Mortgage rates can change from day to day or even more often. If you are concerned that interest rates may rise during the time your loan is being processed, you can 'lock in' the current rate. Therefore, your interest rate is locked, and if interest rates should increase, you are protected. However, if rates decrease, you may not get the benefit of the decrease in interest rates.

Alternately, you may 'float', or hold off locking until you are comfortable about the rate; however, there is the risk of interest rates increasing. The benefit to floating a rate is if interest rates were to decrease, you would have the option of locking into a lower rate than if you had already locked in at the higher rate.