Frequently Asked Mortgage & Real Estate Questions
What states are you licensed in?
I am licensed to conduct business in Arizona, Colorado, Florida, Maryland, Michigan, Minnesota, Ohio, Virginia, and Washington. The mortgage broker I work for carries licenses in nearly all US states. My personal NMLS number is 1994795 and my employer’s, NEXA Mortgage, LLC., NMLS number is 1660690. You can view our licensing information by visiting the following link: https://nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/1660690
What mortgage products do you offer?
We have access to hundreds of unique programs, this is the benefit to us being a wholesale broker. Most commonly I am doing FHA, Conventional, and VA loans. Although, we do quite a few non conforming loans as well. These are your bank statement loans, 1099 loans, DSCR loans, etc. We have lots of options that can help you accomplish the dream of homeownership.
If you don’t see what you are looking for, visit the contact page and send me a message and I can get back with you to see if I can help.
Do you do down payment assistance loans?
I do have access to down payment assistance programs. We have a really awesome down payment assistance program where you have the option of doing a 3.5% grant or a 2% grant to help fund your down payment. The best part about this program is that the grant doesn’t need to be paid back and you still have the ability to refinance after making 6 months of mortgage payments with no repercussions.
Are down payment assistance programs worth it?
They are a helpful tool when it comes to getting into your first home. Although, you need to be careful when using these programs. Some down payment assistance programs structure it as a lien on the property which can make it difficult to refinance unless you pay off the lien or wait a certain time period until the lien is forgiven if the program allows. Here in 2024 with interest rates being as high as they are, you don’t want to give up the ability to refinance because there will be opportunities to lower your payment in the near future.
Are down payment assistance programs a grant or loan?
They can be structured as either a grant or a loan. It’s an important question to ask your loan officer. I would recommend a grant as that obviously doesn’t need to be paid back.
Who qualifies for down payment assistance?
The program we use is actually very easy to qualify for. Anyone can use the program, it’s not specifically for first time homebuyers but it is based more on income. There are income limits that restrict who may use this grant. However, the income limit is higher than most people may think. It is also based on credit score, you must have a credit score higher than 640 to qualify for down payment assistance.
A lot of programs are available, some have different guidelines but if you want to find out if you qualify, visit the contact page and send me a message.
What mortgage product can I qualify for?
There are hundreds of programs out there for each unique individual. I would be more than happy to go over your specific situation and help select the best mortgage product to help you achieve your goal of homeownership. Visit the contact page and send me a message.
How are mortgage rates determined?
Mortgage rates are influenced by a combination of factors. The primary drivers include the current economic conditions, inflation rates, and the overall health of the housing market. Additionally, your personal financial profile, credit score, and the loan-to-value ratio play a crucial role. Lenders also consider the type and term of the loan, as well as the prevailing interest rates set by the Federal Reserve. Keeping an eye on these factors helps us provide you with the most competitive rates tailored to your unique situation.
What is mortgage insurance?
Mortgage insurance is a safeguard for lenders in case a borrower defaults on their loan. There are two types: Private Mortgage Insurance (PMI) for conventional loans and Mortgage Insurance Premium (MIP) for FHA loans. If your down payment is less than 20%, lenders often require mortgage insurance. The cost is typically added to your monthly mortgage payment. It's important to note that once your loan-to-value ratio improves, you may be able to request the removal of mortgage insurance, potentially lowering your monthly expenses. Learn how to avoid paying PMI here.
Can mortgage interest be deducted?
Yes, in many cases, mortgage interest is tax-deductible. The interest you pay on your mortgage loan may be eligible for deduction on your income tax return, subject to certain conditions. Typically, this applies to your primary residence and, in some cases, a second home. Follow this link to understand more on tax benefits of real estate and talk with your CPA to fully understand how to fully utilize your real estate tax benefits.
Can mortgage payments go up?
Yes, mortgage payments can increase, primarily due to adjustments in property taxes, homeowners insurance, or changes in interest rates for adjustable-rate mortgages (ARMs). While fixed-rate mortgages keep your principal and interest constant, variable factors like property taxes and insurance may fluctuate. For those with ARMs, periodic adjustments can impact the monthly payment. It's crucial to stay informed about potential changes and work with your mortgage professional to navigate any adjustments effectively.
How does mortgage interest work?
Mortgage interest is the cost of borrowing money for your home loan. It's calculated as a percentage of the outstanding loan balance and is paid monthly as part of your mortgage payment. In the early years of your mortgage, a larger portion of your payment goes towards interest, gradually shifting towards principal over time. The interest rate you secure at the beginning of your loan term remains fixed or may adjust depending on your loan type. Understanding how mortgage interest accrues and affects your payments is crucial for managing your overall financial strategy.
How do mortgage discount points work?
Mortgage discount points are prepaid interest that you can pay at closing to reduce your mortgage interest rate over the life of the loan. One point equals 1% of your loan amount. Paying points upfront can lower your monthly mortgage payments and potentially save you money in the long run. However, whether it's advantageous depends on factors like how long you plan to stay in the home. Our team can help you assess whether paying discount points aligns with your financial goals and the specific terms of your mortgage.
Are real estate taxes deductible?
Real estate taxes are tax deductible up to a certain amount. Visit the following link to understand more on tax benefits of real estate and talk with your CPA to fully understand how to fully utilize your real estate tax benefits.
How do real estate agents get paid?
Real estate agents get paid a percentage of the home’s purchase price. Please keep in mind that the sellers actually pay for this so buyers are not responsible for their realtors commission.
How do I find a realtor?
Finding the right realtor is crucial in your real estate journey. Start by seeking recommendations from friends, family, or colleagues. Online platforms, such as real estate websites and social media, can also be valuable resources. You can also ask your loan officer if they have someone in your area that they like working with. Look for a realtor with experience in the specific area you're interested in, and don't hesitate to interview multiple candidates to ensure they understand your goals and preferences. Effective communication and a good rapport with your realtor are key to a successful home-buying experience.
When would I refinance my house?
Refinancing your house can be beneficial in various scenarios. Common reasons include securing a lower interest rate, changing from an adjustable-rate to a fixed-rate mortgage, or accessing your home's equity. Additionally, refinancing may be advantageous if your credit score has improved since your original mortgage or if market conditions offer favorable rates. It's essential to evaluate the costs, potential savings, and your long-term financial goals before deciding to refinance. I can guide you through the decision-making process based on your individual circumstances.
How does a home refinance work?
A home refinance involves replacing your existing mortgage with a new one, typically to secure a lower interest rate or change the loan term. The process includes assessing your current financial situation, completing a loan application, and undergoing a home appraisal (if needed). Once approved, you'll close on the new loan, paying off the old one. It's essential to carefully consider the costs, benefits, and potential savings associated with refinancing. I’d be happy to guide you through each step to ensure a seamless and beneficial refinance experience.
What is better, a home equity loan or refinance?
The choice between a home equity loan or home equity line of credit and a refinance depends on your financial objectives. A refinance replaces your existing mortgage with a new one, potentially offering a lower interest rate and adjusting the loan terms. A home equity loan, on the other hand, allows you to borrow against the equity in your home without replacing your current mortgage. If you seek a one-time lump sum, a home equity loan may be suitable. If you prefer to adjust your overall mortgage structure, including interest rates and terms, a refinance may be the better option. I can help you weigh the pros and cons based on your specific needs.
How does a home equity loan work?
A home equity loan enables you to borrow a lump sum against the equity you've built in your home. The equity is the difference between your home's current market value and your outstanding mortgage balance. Home equity loans typically have fixed interest rates and fixed monthly payments. This loan is separate from your existing mortgage. It's an excellent option for one-time expenses, like home improvements or debt consolidation. Keep in mind that your home serves as collateral, so it's crucial to assess your ability to repay the loan. I can guide you through the application process and help you determine if a home equity loan aligns with your financial goals.
What is an FHA Loan?
An FHA (Federal Housing Administration) loan is a mortgage insured by the FHA, which is a part of the U.S. Department of Housing and Urban Development (HUD). FHA loans are designed to make homeownership more accessible, particularly for first-time homebuyers and those with lower credit scores but not limited to only first-time homebueyrs. These loans typically have more lenient qualification criteria based on income and credit scores.
What are FHA Loan requirements?
FHA loan requirements include a minimum credit score (typically 580 but can be lower depending on your financial profile), a 2-year employment history (does not have to be with the same company), and a down payment of at least 3.5% of the home's purchase price. The property being financed must meet certain standards, and there are limits on the loan amount based on the location. Borrowers are also required to pay mortgage insurance premiums, both upfront and annually, which helps protect the lender in case of default. The upfront mortgage insurance does not have to be paid out of pocket but it can be if the borrower wishes.
What is the difference between FHA Loans and Conventional Loans?
The main differences between FHA loans and conventional loans lie in their eligibility criteria and down payment requirements. FHA loans are government-backed and typically have lower down payment requirements (3.5% minimum) and more flexible credit score requirements. Conventional loans, not insured by a government agency, may have stricter credit score and down payment requirements, but they often offer more flexibility in terms of loan terms and property types. If your income is less than 80% of your area’s median income you may have the ability to put 3% down on a conventional loan.
What is an FHA 203K Loan?
An FHA 203K loan is a type of FHA loan that allows borrowers to finance both the purchase or refinancing of a home and the cost of its rehabilitation or renovation into a single mortgage. This loan is suitable for individuals looking to buy a fixer-upper or renovate their current home. It provides funds for both the purchase or refinance and the needed repairs or improvements.
What is a cash out refinance?
A cash-out refinance is a mortgage refinance where the new loan amount is higher than the existing mortgage balance, and the homeowner receives the difference in cash. This option allows homeowners to tap into their home equity for purposes like home improvements, debt consolidation, or other financial needs. The new loan replaces the existing mortgage, and the homeowner receives the surplus funds at closing.
Are cash out refinance rates higher?
Cash-out refinance rates can be slightly higher than rates for traditional refinances. Lenders may view cash-out refinances as riskier because they involve taking on additional debt. However, the actual rate you receive depends on various factors, including your credit score, loan-to-value ratio, and overall financial profile. It's essential to compare rates and carefully consider the costs and benefits before proceeding with a cash-out refinance.
Are cash out refinances a good idea?
Whether a cash-out refinance is a good idea depends on your financial goals and circumstances. It can be beneficial for accessing funds for home improvements, consolidating high-interest debt, or addressing significant financial needs. However, it's crucial to consider the associated costs, potential impact on your mortgage terms, and your ability to repay the new loan. Consulting with a mortgage professional can help you evaluate whether a cash-out refinance aligns with your overall financial strategy.