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Quick Mortgage FAQs

There are many things to consider about mortgages. Here is a brief question and answer on Mortgages that should answer some questions that your quick questions you might have.

Q: What’s the first step to buying my own home?
A: Your mortgage search actually starts before looking for a home. You need to look at the money that you have available to get a mortgage. Some of the things to consider are:

- Present income
- Expected income over the next few years
- Long-term debt (car loans, or other installment loans)
- The amount of time you expect to stay in your future home

These factors will help you determine how much of a mortgage you can afford, or whether you want to get in a home at all.

Q: How do I figure out how much I can afford for a mortgage?
A: The amount of the loan will depend on the monthly payment that you can afford. Lenders generally think that a mortgage loan should not be more than 26-29% of your gross monthly income. If there is no back end debt such as car payments, credit cards, student loans, etc, then the lender can usually go higher on the mortgage payment. If you have a lot of outstanding debt, then you should consider a lower amount.

Q: What are the types of mortgages?
A: There are 2 basic types of mortgages: fixed-rate mortgages and ARMs. A fixed-rate mortgage has the same interest rate over the life of the loan, whereas an ARM (adjustable rate mortgage) has a fluctuating interest rate.

Q: Which mortgage is best for me?
A: That depends what kind of person you are and your situation. If you plan on staying in the home for a long period of time, you might consider the security of a fixed-rate mortgage. But if you only plan on living in the home for a few short years, you might prefer an ARM because your payment would be lower.

Q: What do I have to do to get a mortgage?
A: All you have to do is fill out an application and supply all the information needed to obtain a mortgage. On any standard mortgage application, it will ask for the following information:

- Your name, address, and other identifying information
- Information about the property that you wish to buy
- Information on your assets and liabilities

Q: What happens next?
A: A few things happen after your application is filled out.

- The mortgage lender will verify your information
- The mortgage lender will pull your credit report and check your credit score.
- The mortgage lender will get an appraisal of the property that you are looking to buy. The lender wants to be sure that you are paying fair market value.

Once this information is gathered, it is turned over to an underwriter who ultimately makes the loan decision. If they approve your loan, they will issue you a loan commitment in which they agree to loan you the money. This commitment will have all the details including all the charges and fees that apply at closing.

Q: How much will I need for a down payment?
A: It depends on what type of mortgage you have chosen. Generally it is anywhere from 5%-20%.

Q: What are closing costs?
A: Closing costs are the fees that a lender charges you to close your loan. They vary from state to state. Most closing costs include:

- Taxes
- Title insurance premiums
- Interest on the loan pro-rated from the closing date to the end of the month
- Loan origination fee
- Document preparation and filing fees.

Q: What is an escrow account?
A: An escrow account is set up for the purpose of collecting money to pay your property taxes and insurance. Your monthly payments are a combination of mortgage principal, interest, and payments to your escrow account to cover a year’s worth of taxes and insurance. If you put down 20% or more on your house, then you do have the option to “waive escrow” and pay the taxes and insurance yourself, but there usually is a fee for choosing this option.

FJH Realty
756 2nd Avenue
Maben, Mississippi 39750
662-552-2067 662-263-8600

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