Whether you’re a first-time homebuyer or its been many years since you last went through the mortgage process, there are bound to be questions that come up along the way. You should never feel embarrassed to ask your loan officer any question, no matter how simple you may think it is. However, if you want to start with some mortgage basics, here are the answers to five questions you may feel shy about asking - but shouldn’t!
1. Am I considered a First-Time Homebuyer?
This may seem like an obvious question, but the answer may surprise you. In the mortgage industry, you are considered a first-time homebuyer if you have never purchased a home, if you have not owned or co-owned a home in the last three years, or if you’ve fulfilled the necessary waiting period after a foreclosure or short sale.
2. What is the difference between a home appraisal and an inspection?
A home appraisal provides information on the value of a home, decided by several factors including, but not limited to, the location of the home, proximity to schools and facilities, size of the lot, size and condition of the home itself, and recent sale prices of comparable properties. A certified appraiser formulates this value for the lender, and it is an essential part of the mortgage process.
An inspection provides information to the buyer about the home’s current condition and will note any existing or potential future issues. An inspector will notify a buyer about any areas that are in need of repair. This can help the buyer to negotiate a better purchase offer or at the very least, be aware of the conditions in the home they wish to purchase.
3. What is an interest rate?
Like a credit card or auto loan, a mortgage will have an interest rate. Interest is simply defined as the cost to borrow money from your lender. The interest rate is expressed as a percentage of your total loan balance and is paid on a monthly basis, along with your principal payment, until your loan is paid off. Your interest rate is determined by several factors, including the current economy, your credit score, the loan amount, and more.
4. What is DTI?
The debt-to-income (DTI) ratio is a personal finance measure that compares an individual’s monthly debt payment to his or her monthly gross income. Your mortgage loan officer will calculate your DTI, and let you know what amount you are qualified to borrow.
5. How long will this process take?
Everyone’s loan scenario is unique and while we cannot give an exact timeline, we are proud that at Norcom, 85% of our loans close in 30 days or less. If you are interested in closing in a timely manner, we suggest you call a Norcom Loan Officer to get pre-approved. With our JumpStart Pre-Approval Program with Rate Assurance, we can lock in your interest rate for 90 days while you search for the right home!