Mortgage FAQ

Why should I get pre-qualified before looking at homes?

Getting pre-qualified for a mortgage loan can not only save you a lot of time and stress, it can help you keep your expectations in check. By being pre-qualified, a home that you walk into and fall in love with and submit an offer to purchase the home will move forward more smoothly vs. a buyer that wants to buy the home but is realistically unable to afford it (sellers want to hold out for buyers that can actually buy their home).

By getting pre-qualified, your mortgage advisor at The Casas Team can introduce you to home options and mortgage programs that might be a good fit for you.

To read more details about the importance of getting pre-qualified, visit “Should I get prequalified before buying a home?”

Why did my realtor refer me to The Brenda Casas Mortgage Team to get a mortgage loan?

A high quality realtor knows that the key to a successful transaction means TEAMWORK with a professional mortgage lender. Any experienced real estate agent could tell you horror stories about times when a client made a poor choice to trust in a sub par mortgage lender, and ended up with big surprises at the closing table, or worse, no closing took place at all! A good realtor will form relationships with trusted individuals who have proven themselves time and time again, so that they know you will be given the excellent service that you deserve to find and own your dream house in Las Vegas. It is important to know that your realtor is NOT given any compensation or “kickbacks” for referring you to a mortgage lender. As mortgage professionals, we desire more referrals, both from you and your realtor, so consider the extra motivation this provides for us to take great care with your satisfaction!

Why should I use a realtor to help me find a home?

First and foremost, because you need an experienced and professional realtor working on your behalf. Their commission is not paid by the buyer, but by the seller of the home being purchased, and it is in each party’s best interest to have professional representation. As a seller of home, profits are generally maximized by having an experienced realtor properly market and sell your home, rather than deal with the headaches of trying to do it all on your own.

Why and how do interest rates change?

Many people are surprised to learn that rates change on a daily and sometimes hourly basis. Interest rates fluctuate in response to changes in the financial markets. The bond market is generally a good indicator of the general trend of interest rates.

How can I get pre-approved for a mortgage loan so that I can purchase a home?

In order to get pre-approved for a mortgage loan, the lender will ask for all kinds of paperwork, such as your pay stubs for the last 30 days, two years’ tax returns (plus W-2s or business tax returns if you’re self employed), proof of other income and assets, three months worth of bank records for every account you have, proof of where your down payment will be coming from (such as a bank statement or gift letter with the gift-giver’s bank statement), the names, addresses, and phone numbers of your employers and landlords for the last two years, and information about your current debts, including account numbers, monthly payment amounts, and so forth.

Then, before the loan closes, the lender may ask for follow-up data, such as proof of where a particular deposit came from, or a letter from your employer explaining discrepancies between your year-to-date income shown on your paycheck and the amount you actually earned over the most recent pay periods.

What happens once I am pre-approved for a mortgage?

You are ready to start looking for homes or ready to make an offer on a home that you like! Remember that it is very important to inform us, Las Vegas mortgage lender, of any changes in the financial information that was provided at the time of approval, as it may make a change in the amount or type of loan that you can qualify for and can ultimately lead to you being unable to buy the home that you had already set your eyes on.

How can I know if I should refinance my Las Vegas home?

The old rule of thumb was at people would only refinance if there was at least a 2% improvement on an interest rate, but this is no longer the case. Many different individual factors need to be analyzed to determine if refinancing is right for you, such as the length of time you intend to stay in your home, or the type of loan you currently hold. Some people might also want to refinance in order to take some equity from their home so that they can put their kids through college. Regardless of what the reason might be, it is best to sit down with a licensed loan officer that can provide the best advice and best mortgage program.

What is title insurance?

Title insurance is a policy provided by the title company guaranteeing the accuracy of the title work done on your home at the time of purchase. As a buyer, you are required to purchase a lenders policy of title insurance as part of your standard closing costs, which only protects the mortgage company. You may also choose to purchase an owners policy, which would protect you against any loss in the event of any legal issues relating to the title of your home.

For further information on why you should consider this insurance, visit “Why do I need title insurance?”

What is mortgage insurance?

Mortgage insurance is generally required in one form or another when the down payment for a home is less than 20% of the total price, and protects the lender in the event of loan default. The lower the down payment, the higher the risk for the lender, and thus the higher the monthly premium. Depending on your particulars, there are ways in which mortgage insurance can sometimes be avoided at purchase, or dropped altogether at some point in the future.

What is a credit score or FICO score?

Your creditworthiness comes down to a single number. The years of paying your various bills: your mortgage, car payments, and credit card bills can be analyzed, sliced, spindled and mutilated into a single indicator of whether you’re likely to meet your future debts.

TransUnion, Equifax, and Experian, the three major credit agencies, each have a proprietary formula for building a credit score. The original FICO score was developed by Fair Isaac and Company.

For further information on how a FICO score is calculated, visit “How is a FICO score calculated and how does it affect me?”

How can I improve my credit score?

Fixing your credit score will NOT happen overnight but there are somethings that you can start to do now so that you are able to buy a home in the future or improve your score so that you can refinance and qualify for a better interest rate.

To read our “10 step guide to improving your credit score”

What is escrow?

To finalize the sale of the home a neutral, third party (the escrow holder, a.k.a. escrow agent) is engaged to assure the transaction will close properly and on time. The escrow holder ensures that all terms and conditions of the seller’s and buyer’s agreement are met prior to the sale being finalized, including receiving funds and documents, completing required forms, and obtaining the release documents for any loans or liens that have been paid off with the transaction, assuring you clear title to your property before the purchase price is fully paid.

For further information on how escrow works, visit “How does Escrow work?”

How can I pay off my mortgage faster or save money?

Paying consistent additional payments on your loan principal can yield huge savings. Borrowers can accomplish this using a few different techniques. Making 1 additional payment once per year is probably the easiest to track. If you can’t pay an extra whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. These options differ slightly in lowering the final payback amount and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.

Additional One-time payment

Some borrowers can’t manage extra payments. But you should remember that most mortgage contracts will allow additional payments at any time. You can take advantage of this rule to pay extra on your principal any time you come into extra money.

Here’s an example: a few years after buying your home, you receive a larger than expected tax refund, a very large inheritance, or a cash gift; you could pay this money toward your loan principal, which would result in significant savings and a shorter payback period. For most loans, even this modest amount, paid early enough in the loan period, could offer huge savings in interest and length of the loan.

What is the difference between the mortgage interest rate and the A.P.R.?

You’ll see an interest rate and an Annual Percentage Rate (A.P.R.) for each mortgage loan you see advertised. The easy answer to “why” is that federal law requires the lender to tell you both.

The A.P.R. is a tool for comparing different loans, which will include different interest rates but also different points and other terms. The A.P.R. is designed to represent the “true cost of a loan” to the borrower, expressed in the form of a yearly rate. This way, lenders can’t “hide” fees and upfront costs behind low advertised rates.

While it’s designed to make it easier to compare loans, it’s sometimes confusing because the A.P.R. includes some, but not all, of the various fees and insurance premiums that accompany a mortgage. And since the federal law that requires lenders to disclose the A.P.R. does not clearly define what goes into the calculation, A.P.R.s can vary from lender to lender and loan to loan.

The A.P.R. on a loan tied to a market index, like a 5/1 ARM, assumes the market index will never change. But ARMs were invented because the market index changes and makes fixed rate loans cheaper or more expensive to make — that’s why they’re variable rate in the first placed!

So, A.P.R.s are at best inexact. The lesson is that A.P.R. can be a guide, but you need a mortgage professional to help you find the truly best loan for you.

Note when you’re browsing for loan terms that the A.P.R. will not tell you about balloon payments or prepayment penalties, or how long your rate is locked. Also, you’ll see that A.P.R.s on 15-year loans will carry a higher relative rate due to the fact that points are amortized over a shorter period of time.

What is P.M.I.?

Private Mortgage Insurance helps you get the loan

Private Mortgage Insurance, also known as PMI, is a supplemental insurance policy you may be required to obtain in order to get a mortgage loan. PMI is provided by private (non-government) companies and is usually required when your loan-to-value ratio — the amount of your mortgage loan divided by the value of your home — is greater than 80 percent.

PMI isn’t a bad thing — it allows you to make a lower down payment and still qualify for a mortgage loan. In fact without PMI, many of us would not be able to purchase our first home.

How is PMI calculated?

Your PMI premium is fixed based on plan type (loan-to-value ratio, loan type, loan term, etc.) and is not related to your particular credit history or other individual characteristics. PMI typically amounts to about one-half of one percent of your mortgage amount annually, according to the Mortgage Banker’s Association, and the premium payment is usually rolled into your monthly mortgage payment.  On a $200,000 mortgage, you may be paying $1,000 per year for PMI.

Can I use a monetary gift to help pay for my down payment?

 If you are unable to come up with the necessary amount to cover the down payment of the home, there are a couple options that you can explore so that you are able to buy the home of your dreams.

  • You can use a monetary gift to help pay for your down payment
  • There are non-profit organizations that can help you cover a down payment
  • Mortgage programs exist that do not require a down payment

To read more details about how you can cover the cost of a mortgage down payment, visit “How can I pay for a down payment?”

What different mortgage programs can I apply for?

There are numerous mortgage programs that a home buyer can explore and a mortgage counselor at The Casas Team can walk a buyer through.

For more information about the different types of mortgage programs a home buyer can look into, visit “What type of mortgage programs exist for homebuyers?”

Can you help me find a realtor?

If The Casas Team was your first stop in the home buying process, you might not yet have a realtor that is ready and committed to helping you find a home.  Being in the real estate industry, we have a fair share of realtors that can help you but first we must get a better understanding of what you are looking for. A realtor should be able to meet your expectations and provide a level of service to make your home buying experience pleasant. After reading our guide, we can help recommend an agent that will be the best fit.

Read out guide on “How to find a Las Vegas Realtor”