So you are ready to purchase a home. When does financing come into the picture? Much earlier that you might imagine. Knowing ahead of time how much you qualify for and how much money you will need to put down on your purchase can speed up the process when you finally find that perfect place you want to call home. Here are some of the more common questions we get about mortgages.


How much down payment will I need?

The minimum down payment required depends on the mortgage program you select. Usually at least 3 percent is required. If you put down less than 20 percent your rate may be subject to Private Mortgage Insurance (PMI).

If you are concerned about having enough money to purchase a home you may want to consider rolling your closing costs into either your interest rate or your loan amount. You will still need to come up with money for your down payment but this will help reduce the amount of additional money that you will need to bring to close.

When should I start shopping for a mortgage, and how do I know what I can afford?

The best time to look for a mortgage is before you look for a house. This way you'll know exactly the amount of money you can borrow. You can use the calculators on this site to help you determine these numbers as well as your estimated monthly payments.


Do I need to sell my existing home before I apply for a new mortgage loan?

Absolutely not! You can apply for a new mortgage loan before you sell your current home. However, depending on your income and debt levels, you may need to sell your current home before you can close on your new home.


Why is the Annual Percentage Rate (APR) different from the interest rate?

The annual percentage rate is intended to reflect the total cost of your mortgage loan. To calculate the APR, lenders consider the interest rate on your mortgage loan, the term of the loan, and other loan fees such as closing costs, points, etc. Your monthly payment is calculated based on the mortgage note rate, not the APR. The APR will be higher than your interest rate, especially if you are paying any points.

To be used as a valid evaluation tool the APR must be loan specific. The actual APR will show up on the Truth-in-Lending statement that you will see once you have submitted your information and reserved your funds. When comparing loan programs based on APR make sure you ask each lender their criteria for determining the APR.