Advantage Home Mortgage

Frequently Asked Questions (FAQs)

We are here to help you buy or refinance you home and so we have compiled some frequently asked questions (FAQs) to help you understand the process. Just scroll on the links below to go to the FAQ. If the answer you are looking for is not here, just drop us a note here. We just want to make sure that this is a painless process for you, so feel free to ask us any question you may have.

1. Can I apply for a purchase loan before I find a property?
2. I don't have much money for down payment. Can I still get a loan?
3. I have to close quickly. How can I speed the loan approval process?
4. Why do Lenders pull credit?
5. Can I get cash out of my home by refinancing?
6. What's the difference between a loan and a line of credit?
7. Is the interest on my home equity loan deductible?
8. What's included in closing costs?
9. What is the difference between the interest rate and one APR?
10. What is prepaid interest?
11. What is hazard insurance?
12. What is private mortgage insurance (PMI)?
13. Can I avoid mortgage insurance?
14. When can I have mortgage insurance canceled?

Can I apply for a purchase loan before I find a property?

Yes! In fact if you are in the process of looking for a property we recommend that you apply for preapproval. A preapproval is a firm lender commitment based on the estimated loan amount and purchase price information that you provide in your application. A preapproval gives you greater flexibility and leverage while you conduct your home search.

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I don't have much money for down payment. Can I still get a loan?

Yes. We offer loan products with no money down. Please contact us for specific product information on zero or low down-payment options.

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I have to close quickly. How can I speed the loan approval process?

At application, please supply us with your last two years W2s; your last two pay stubs; your last two bank statements; and a complete copy of the sales contract for a purchase transaction or current hazard and title insurance for refinance transactions.

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Why Do lenders pull credit?

When a lender is evaluating you for a loan, your credit history is one of the most important factors in determining your credit worthiness. Your credit history will show the debts you own and your ability to pay them. This helps the lender determine their risk, meaning how likely you are to repay your debts. The credit report will also show any items on public records including liens, bankruptcies, foreclosures, etc. To get your credit report, a lender will order a credit report from a credit bureau. The credit bureau will then return your information and credit score back to the lender. There are three main credit bureaus in the United States. They are:

Equifax
Trans Union
Experian

These bureaus do not approve or deny you for a loan.Frequently Asked Questions (FAQs) They simply report your credit information.

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Can I get cash out of my home by refinancing?

You may be able to draw on the equity built up in your home.

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What's the difference between a loan and a line of credit?

A loan generally is for a fixed period of time with an initial balance and fixed monthly payments. A line of credit is similar to a credit card in that it only requires payments when there is an outstanding balance. Contrary to a loan, there is no initial balance on a line of credit. You are required to make a minimum payment each month based on a percentage of the balance.

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Is the interest on my home equity loan deductible?

In most cases the answer is yes. The interest on home equity loans or lines of credit can be tax deductible (please consult your tax planner for exact details). That's why many people choose to get a home equity loan or line of credit to finance cars, boats or other high ticket items. Interest on your credit cards or auto loans is not tax deductible. The interest rate is generally lower.

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What's included in closing costs?

Closing costs can be divided into three categories:
Lender fees (points, appraisal, credit report, underwriting, settlement and tax service fee)
Prepaid (prepaid interest, real estate taxes and escrow, insurance premiums and escrow)
Settlement costs (title insurance, settlement/attorney fees, city/county/state taxes, recordation and messenger fees)

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What is the difference between the interest rate and one APR?

The interest rate is the cost to borrow the lender's money. The APR represents the total cost of the mortgage over the life of the loan, including closing costs and lender points.

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What is prepaid interest?

This amount represents the interest that accrues between the day your loan closes and the last day of that month, and is added to your closing costs. After this one-time prepayment your interest will be included in your regular monthly payments.

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What is hazard insurance?

Hazard insurance protects homeowners against property damage and is required by lenders before you buy or refinance a home. Hazard insurance shields you against property damages caused by a specified disaster and should cover the cost of rebuilding your home. Generally, you have to confirm at closing that you've secured one year of hazard insurance coverage.

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What is private mortgage insurance (PMI)?

PMI is a type of insurance provided by a private mortgage insurance company that is used to protect the lender in the event that you default on the loan. Mortgage insurance is usually required on a conventional loan when your down payment is less than 20%.

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Can I avoid mortgage insurance?

A possible alternative to mortgage insurance is a second trust loan, also referred to as a "piggyback loan". This type of loan may help you avoid private mortgage insurance if you are purchasing a home with less than 20% down. The most common type is an 80/10/10 where a first mortgage is taken out for 80% of the home's value, a second trust of 10% is secured and a 10% down payment is made

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When can I have mortgage insurance cancelled?

Typically PMI will no longer be required once your loan balance falls below 80 percent of the home value. You can reach this 78% level by:

Paying enough of your loan over time to reduce the principal balance.
Home appreciating (increasing in value) enough so your loan balance is less than 78%.
A combination of the two

Be sure that your loans allow PMI to be cancelled once you reach a 78% loan to value.

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Contact Us

If we can help you with your financing and refinancing needs, please contact us:

301.251.9963 (P)
301.251.9983 (F)
301.996.5626 (C)

Or drop us a note here.

Calculators

Explore Your Options

Use these free calculators to help you take the guesswork out of your upcoming financial decisions and save you time and money in the process. With these calculators you can get an idea of everything you need to know from the price of the home that you can afford and the type of loan that you should get to whether you should rent or buy or if a refinance makes sense for you at this time.

Payment Calculator
This lets you know how much your payments will be each month.

Down Payment Amount Calculator
Calculate exactly how much money you need for a down payment on a number of options.

Loan Comparison Calculator
Compare multiple loans quickly and see the impact on interest rates and points on monthly payments and total amount paid.

Annual Percentage Rate (APR) Calculator
Find out how much your mortgage will be with both principal and interest.

Refinancing Calculator
Determine if you will benefit by refinancing.

Loan Spread Calculator
Find out everything about your loan with this calculator.

Rent vs. Buy Calculator
Compare the costs of renting a residence versus buying a home.

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