Understanding the Basics of Lending
Here are few answers to some basic questions about mortgages and the lending process:
What does APR stand for? APR is your annual percentage rate and it's what you'll pay in addition to your principle. It includes your interest rate, points, mortgage insurance, and any other up-front fees.
If I get a pre-approval, do I have to use that lender? No. A pre-approval is simply an estimate of the amount a particular lender is willing to lend to you, based upon your income and credit. There is no obligation attached to a pre-approval.
Won’t I get the best interest rate through my bank? Although your bank may offer you a discount, that doesn’t necessarily mean they can offer better terms or a better interest rate. Your best bet is to shop around and get quotes from multiple lenders.
Is there a minimum down payment I need to make? No, although you may be required to get private mortgage insurance if your down payment is less than 20%. Many government-backed loans such as FHA (Federal Housing Administration) loans require little or no down payment.
Can I refinance my mortgage anytime I want to? Although there are some restrictions, you can refinance as frequently as you’d like to get a lower interest rate or different term. Check with your broker or lender to see if refinancing makes sense for you financially, however.
What is considered a good credit score? As a general rule, a “good” credit score is usually considered 700-720 or above. However, this is tricky because each lender has different standards for different types of loans and you certainly can get a good mortgage with a score lower than that.
As the saying goes, no question is a bad question. Don’t be afraid to call your broker or lender and ask questions!
For 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have more than 60 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. They are located in the Town of Norwood, Massachusetts where they have been operating as Omega Financial Incorporated since 1988. Licensed by the Commissioner of Banks - License No. MB2671