Frequently Asked Questions

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As experts in the industry, CrossCountry Mortgage, Inc. has seen and heard it all! Here are answers to a few of our most frequently asked questions about mortgages.

Have a question that’s not listed below? Feel free to contact us today!

 

How do I know how much house I can afford?

As a general guide, you can purchase a home with a value of two or three times your annual household income, depending on your savings and debt. However, you may be able to take advantage of special programs to purchase a home with a higher value.

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When should I talk to a mortgage lender?

Though you can’t actually apply for a mortgage until you’ve chosen a home and signed a contract, you shouldn’t wait until then to start talking with a mortgage lender. Your lender will work with you to determine how much house you can afford, advise you on special mortgages for first time home buyers, and make suggestions that could make it easier to get the best mortgage for you. Another advantage: you’ll already have an established relationship with a lender when it comes time to apply for your mortgage.

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Aren’t there really just two kinds of mortgages: fixed and adjustable rate?

All mortgages fall into one of these two categories — the interest rate you pay is either the same (fixed) for the life of the mortgage, or it can change (adjust) over the life of the mortgage. With a fixed-rate mortgage, your monthly payments for interest and principal never change. Property taxes and homeowners insurance may increase, but generally your monthly payments remain the same. ARMs usually begin with an interest rate that is below a comparable fixed rate-mortgage. However, the interest rate changes at specified intervals depending on changing market conditions; if interest rates go up, your monthly payment will go up, too. If rates go down, your mortgage payment will also drop. There are also mortgages that combine aspects of both types of loans— starting at a low fixed-rate, for example, then adjusting to market conditions.

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How do I know which type of mortgage is best for me?

The right type of mortgage for you depends on many different factors, including your current financial picture, how long you intend to keep your house, and how comfortable you are with your mortgage payment changing from time to time. The best way to find the “right” answer is have an honest discussion with your mortgage planner about your finances and your preferences.

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How much will I need for the down payment?

Many first-time buyers are surprised to learn there’s no set answer to this question. Generally, though, your down payment can be anywhere from three to twenty percent of the home’s value. Down payments can be lower for some special first-time buyer loans or for veterans.

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What are points?

Points are loan fees that are paid to lenders and mortgage brokers. One point equals 1% of the loan amount. There are two different types of points: origination points and discount points. Origination points are charged by a mortgage company as a fee to process and approve your loan, while discount points are used to buy down the rate of interest. Discount points are typically passed through to the investor to secure that lower interest rate.

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What is private mortgage insurance and why is it required?

Private mortgage insurance (PMI) is insurance written by a private company that protects the lender from losses in the event the borrower defaults on his or her mortgage. Borrowers are required to pay the premium for private mortgage insurance. Even if you have a good credit rating, lenders still generally require private mortgage insurance if you make a down payment of less than 20%.

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What does my mortgage payment include?

For most homeowners, the monthly mortgage payment includes three separate parts: a payment on the amount borrowed, a payment on the interest, and payments into a special escrow account that your lender maintains to cover expenses like hazard insurance and property taxes. These elements are called P.I.T.I. (Principal-Interest-Taxes-Insurance).

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How can I lower my current mortgage payments?

If you currently have a high fixed rate or a rising adjustable rate mortgage, refinancing your loan may be the way to go. When refinancing, the new money will pay off your first mortgage. You will then be left with the identical size loan but a much lower interest rate. If the remaining mortgage balance, including points and closing costs, can be refinanced at a reduced monthly payment and still be paid off within your existing mortgage payment term, then refinancing may be for you. Closing costs are part of any refinancing package, so remember to include them when calculating the benefits of refinancing.

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If I’d like to finance a large purchase like remodeling my kitchen, or planning for my child’s college education. Is refinancing the answer?

Refinancing can help you tap into your home’s equity, lowering your payments and freeing up cash for other uses. Cross Country Mortgage, Team Montani Branch can help structure a loan that makes the most productive use of your money.

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