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Frequently asked questions

• What is the difference between a fixed-rate and an adjustable-rate mortgage?

  A fixed-rate mortgage has the same interest rate for the entire term of the loan, providing predictable monthly payments and stability against interest rate increases. An adjustable-rate mortgage (ARM) typically starts with a lower interest rate than fixed-rate loans but can change periodically based on market conditions, which means your monthly payment could increase or decrease.

• How do I know how much house I can afford?

  To determine how much house you can afford, consider your annual income, monthly debts, and financial obligations. Typically, lenders recommend that your mortgage payment (including homeowners insurance, property taxes, and any homeowner association fees) should not exceed 28-31% of your gross monthly income, and your total debt payments should not exceed 36-43% of your monthly income.

• What are the minimum requirements to qualify for a mortgage?

  While requirements can vary by loan type and lender, most require a minimum credit score of 620 for conventional loans. You’ll also need to provide proof of income, employment verification, a suitable debt-to-income ratio, typically no higher than 43%, and a down payment, which can range from 3% for conventional loans to 20% to avoid private mortgage insurance.

• Can I qualify for a mortgage if I have a poor credit history?

  Yes, you may still qualify for certain types of mortgages, such as FHA loans, which are more lenient on credit requirements and accept credit scores as low as 500 with a higher down payment. Lenders may also consider other factors such as your employment history and income stability to offset your credit risk.

• What are closing costs, and how much should I expect to pay?

  Closing costs are fees associated with finalizing your mortgage and can include lender fees, appraisal fees, title insurance, escrow fees, and more. Generally, you can expect to pay between 2% and 5% of the home’s purchase price in closing costs. Sometimes, these can be negotiated with the seller or rolled into the loan, depending on the loan type and lender.