Frequently Asked Questions (FAQs) – Finances

Q:What can I afford?
A: Mortgage Qualifier: http://5thavenuere.com/mortgage-qualifier/ There are two ways of looking at what you can afford – how much you can afford in total or what you would like to pay on a monthly basis. Buyers should also factor in additional expenses into their analysis. Additional expenses can include: moving expenses, Home Owners Association (HOA fees), electricity bills, water bills, repairs/maintenance, furniture & fixtures and renovations

Q: What is my monthly payment?
A: Mortgage Loan Calculator: http://5thavenuere.com/mortgage-loan/

Q: What is a mortgage?
A: See this link for an in depth overview of mortgage basics: http://www.investopedia.com/university/mortgage/#axzz1XkQkg4V6

Q: What is the best structure for a mortgage (Fixed, ARM, something else?)
A: Mortgage Comparison Tool: http://5thavenuere.com/mortgage-comparison/

Q: How much money do I need to put down?
A: Typically, you want to put down 20% for a conventional loan. For example, if the house costs a total of $200,000 – you will need to have $40,000 in cash available for a down payment.

Q: What do I do if I cannot put down 20%?
A: You can put down less than 20% however, the lender will require that you get PMI.

Q: What is PMI?
A: Private Mortgage Insurance (PMI). For more information on PMI check out these links: http://www.investopedia.com/articles/pf/07/avoid_pmi.asp http://www.investopedia.com/terms/p/privatemortgageinsurance.asp

Q: What financial information will a lender require from me?
A: Personal financial statement (statement of assets and liabilities) Recent pay stubs Tax returns W-2 Credit report

Q: What is the difference between a pre-qualification and pre-approval letter?
A: A pre-qualification letter is the initial step in the mortgage process. It basically shows that you have begun the process. A pre-approval letter is one step further than a pre-qualification letter. It shows how much money the lender is willing to loan to you.

Q: How long will it take to get a pre-qualification or pre-approval letter?
A: Typically, a week or so – however, this varies from lender to lender. The faster you can get all of your financial information to the lender the better.

Q: What is an appraisal?
A: The process of estimating a property’s market value based on established valuation methods and the appraiser’s professional judgment. Lenders require appraisals as a part of the loan process.

Q: What is earnest money?
A: Think of it as a deposit for the property. It can be forfeited if the buyer defaults on purchasing the property or will get credited towards the purchase price during closing.