I’ll be more than happy to answer any questions that you might have about lenders or loans. Below you’ll find a glossary of common terms that you might encounter when trying to finance a home.
Please scroll to the bottom of the page for Tom’s recommended lenders.
Common Loan Types
Conventional loans are not directly insured by the federal government. Most of these loans are administered by Freddie Mac or Fannie Mae (private companies regulated by the government).
FHA loans are insured by the Federal Housing Administration and are designed usually for first time home buyers or buyers with moderate income.
VA loans are only available for those who have served in U.S. military. These are easier to qualify for and may have 0% downpayment options.
No-Document ("No-doc) Loans can often be a smart move for people who have poor credit or want to skip the income verification process. The application procedure is much shorter and easier, but the interest rates are higher.
Key terms
Closing Costs: The costs to complete the real estate transaction. These costs are in addition to the price of the home and are paid at closing. They include points, taxes, title insurance, financing costs and items that must be prepaid or escrowed and other costs. Ask a lender or real estate professional for a complete list of closing cost items.
Debt-to-Income Ratio: The percentage of gross monthly income that goes toward paying for your monthly housing expense, installment debts, alimony, child support, car payments, and payments on revolving or open-ended accounts such as credit cards.
Down Payment: A portion of the price of a home, usually between 3-20%, not borrowed and paid up front.
Housing Expense Ratio: The percent of your monthly income that will be put toward paying for the housing expenses.
Mortgage Insurance (MI or PMI): Insurance needed for mortgages with low down payments (usually less than 20% of the price of the home). Many mortgage programs exist that eliminate the need for PMI.
Prequalification: It's the first step in getting your mortgage: in a short discussion with you, a lender of your choosing can check your credit score and ask you some basic questions. This helps you find out how much you can spend. With preapproval, the next step, the lender verifies your income, debt and financial picture, approving the loan subject to a favorable appraisal of the property you select.
Finding a lender is an important part of buying a home. Within the Chapel Hill, Carrboro, and Durham area, Tom’s preferred lender is Mike Capps of Integrated Mortgage Strategies. His contact info is listed below.
Mike Capps, Integrated Mortgage Strategies
(919) 929 2006 |
