FAQs
What you always wanted to know about getting a mortgage, but were afraid to ask...
Should I get pre-qualified?
We recommend at the very least that you get pre-qualifed before you begin looking at homes. You don't want to get your heart set on a home that you really can't afford. You need to remember that a pre-qualification is just an estimate based on a few simple questions from your lender. You will be in a much better position to do a pre-approval as this will provide you with some very precise information about your new purchase.
What is private mortgage insurance?
Private Mortgage Insurance (PMI) is charged on loan amounts exceeding 80% of the purchase price of a home. It is also charged on loan amounts refinanced that exceed 80% of the value of the property. The mortgage insurance protects the lender against loan default.
What is an ARM?
An ARM is an Adjustable Rate Mortgage. An adjustable rate mortgage is a loan where your interest rate and payment are fixed for a specific period of time and then are subject to rate and payment adjustments. Depending on the mortgage product you choose, your lender can provide you with the particulars on what happens once your rate starts adjusting.
What are Good Faith Estimates?
Good Faith Estimates are written proposals of your expected closing costs that a lender must provide a prospective home buyer within three days of the homeowner submitting a mortgage loan application.
What is an APR (Annual Percentage Rate)?
The Annual Percentage Rate, or APR, is the cost of the borrower's credit expressed in terms of an annual rate. Because the borrower may be paying "points" and other closing costs, the APR disclosed is often higher than the interest rate on the loan. The APR can be compared to other loans for which the borrower may have applied and give them a fair method of comparing prices
What is title insurance and why do I need it?
The function of title insurance is to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly, and that your interests as a home buyer are fully protected.
What kinds of closing costs should I anticipate?
Closing costs vary based on the mortgage product you choose. Your Northwestern Bank loan officer will be happy to provide you with a written estimate of costs associated with all of your programs.
What is a rate lock?
A rate lock is a lender's guarantee on your loan's interest rate and point payment. You can lock your rate once you have identified a property. Until you request a rate lock, the rate is considered to be "floating", in other works are subject to change due to market fluctuations.
How do I know if I should continue renting or buy?
This is a very personal question. We have a saying in the mortgage area about renting: "Do you want to continue helping your landlord make his payment?" You need to decide how much money you can devote to a house payment and what type of home that will qualify you to buy. You also need to be aware of the additional responsibilities that go along with home ownership. You'll want to factor in tax and insurance payments that you do not have as a renter. You'll want to be able to handle any repairs that will be necessary to maintain that home. You will also want to speak to your tax provider to find out about the tax benefits you will gain as a homeowner and how that can affect your tax liability at year end.
How long does it take to process my loan?
It depends on the type of loan you have applied for. Based on current market conditions, it should not take any longer than 30 days to process a mortgage loan. If you are working with a special government program it may take up to 45 days.
Do you provide loan counseling?
At Northwestern Mortgage we are delighted to have the opportunity to provide loan counseling. There is no fee or obligation for this service!