Frequently Asked Questions

When is a good time to refinance?

A general rule of thumb is to consider refinancing when mortgage rates are typically about 1% lower than your current rate. Even a 1/2% difference can make a meaningful impact on your monthly payments. For example, a $500,000 loan at 6.5% would have a monthly payment of about $3,150. Refinancing to 5.5% could lower that payment to $2,830—saving you $320 per month. Your exact savings depend on your loan amount, income, budget, and how long you plan to stay in the home. As your trusted lender we will show options to see if this makes sense for you to consider.

What are points?

Points are fees paid directly to the lender at closing in exchange for a reduced interest rate. One point equals 1% of the loan amount (e.g., $1,000 on a $100,000 loan). Discount points lower your interest rate, while origination points cover lender costs. Lenders may also refer to points in basis points—100 basis points = 1 point.

Should I pay points to lower my rate?

It depends on how long you plan to stay in the home. If you’ll be there for several years, paying points to reduce your interest rate can lower your monthly payment and save you money over time. However, if you plan to sell or refinance within a couple of years, this may not be worth it for you. Reach out to us to give you the best information so that you can make an informed decision.

What is APR?

The Annual Percentage Rate (APR) reflects the total cost of your mortgage over the life of the loan, including interest, points, and lender fees. APR is often higher than the advertised rate because it includes additional costs. It’s a useful way to compare loans but doesn’t affect your monthly payment directly.

• Points (discount and origination)
• Prepaid interest
• Loan processing, underwriting, and document prep fees
• Mortgage insurance
• Escrow fees

• Title or attorney fees
• Home inspection
• Recording and transfer taxes
• Appraisal and credit report fees

What does it mean to "lock" an interest rate?

A rate lock guarantees your interest rate for a specific period—usually 30 to 60 days—while your loan is processed. It protects you from rate increases during that time as the rates are continually going up and down just like the stock market.

How do I apply for a mortgage and get pre-approved?

A Simple Online Application:

• This takes 10-12 minutes to complete

Documents Needed:

• Last 30 days of pay stubs
• W-2s from past two years
• Employer info (past 2 years)
• Letter for employment gaps
• Driver license or other government ID

If self-employed or receive additional income:

• One to two years of tax returns and K-1s
• Year-to-date profit & loss statement (not always applicable)
• Business tax returns (if owning 25%+)

Additional Income Sources:

• Alimony/child support: court order + proof of receipt
• Social Security, disability, VA benefits: award letters

Assets/Down Payment:

• Bank/brokerage statements (last 2 months)
• Gift letter + proof of receipt (if applicable)
• Sale of home: signed contract or closing statement

How do lenders judge credit?

Lenders use credit scores, typically FICO scores (350–850), to evaluate your ability to repay a loan. Your score is based on:

• Payment history
• Outstanding debt vs. limits
• Length of credit history
• Recent credit inquiries
• Types and number of accounts

Check your credit annually at AnnualCreditReport.com.

How can I improve my credit score?

• Pay bills on time
• Keep credit card balances low
• Limit new credit inquiries
• Maintain older accounts
• Review your credit report for accuracy

What is an appraisal?

An appraisal is an expert estimate of a property’s market value, typically required by the lender before loan approval. A licensed appraiser evaluates the home’s features, location, and recent comparable sales.

What is PMI (Private Mortgage Insurance)?

PMI is usually required on conventional loans when your down payment is under 20%. It protects the lender in case of default. PMI can be avoided by putting down 20% or choosing loan programs that don't require it.

What is 80-10-10 financing?

This structure helps avoid PMI by using:

• 80% first mortgage
• 10% second mortgage
• 10% cash down payment

A variation called 80-15-5 is available for buyers with only 5% to put down, but it may come with higher rates or fees.

What happens at closing?

Closing is when the property legally transfers to you. You'll sign documents, finalize the mortgage, and receive the keys. Prior to closing, you’ll conduct a final walkthrough. In most cases, a title or escrow company will handle the disbursement of funds.