Lately, we have been fielding lots of questions from clients about home mortgages. To get some answers, we tapped into some of our trusted resources and have compiled their responses for you. Today, Liz Koehler and Jody Kern with Bell Bank Mortgage, and Dean Schiffler with Guaranteed Rate are here to answer all of your most asked questions.

 How do you decide which type of mortgage is best for a client?

“Every level of buyer is different and their personal circumstances matter,” says Dean.

Mortgage lenders can help you determine what type of mortgage is best based on your goals, financial situation, and individual circumstance.

 Jody explains, “Credit scores, home price, and down payment amount factor into the advice I provide. We offer products ranging from a first-time home buyer program allowing 1% down to a $3,000,000 one- or two-time close construction loan, doctor loans with as little as 5% down, and everything in between.”

 Liz draws the analogy of a doctor and a nurse. She says, “By checking vitals, I can provide a diagnosis.”

 Is a 20% down payment still standard?

Dean tells us, “In my 34 years doing this, the 20% has never been standard or normal. It was a number that once upon a time was a requirement because there was no such thing as private mortgage insurance. The government’s goal for home ownership many years ago changed that. It opened all sorts of options for buyers. 3, 5, and 10% are very normal down payments. Mortgage insurance has become a lot less expensive in recent years.”

 When do you need to have private mortgage insurance?

Jody states, “Mortgage insurance is required anytime the down payment on a conventional conforming loan is less than 20% of the purchase price or appraised value, whichever is less.”

What is driving interest rates these days?
“Factors such as inflation, economic growth, stock market conditions, the Fed’s monetary policy, and the state of the housing and bond markets all play into the complicated formula used to determine interest rates and how they change,” says Jody.

Do you charge for an interest rate lock?

Dean explains, “Lenders typically do not have a charge to lock a rate, so no. However, if you want a below-market rate you can pay something called a discount point. That is a fractional number assigned to every .125% in rate based on how the bond market is moving. That can change every few minutes during the workday.”

 How much time do you need to complete a mortgage?

Liz reports, “We manage regulatory timeframes that are in place to ensure we accurately disclose closing costs to buyers so they can plan and have the necessary time to prepare funds for closing.”

Dean says, “Typically, 2-3 weeks and a closing window of about 5-7 days after that. Some can be done much faster if the client has a very straightforward financial situation and can provide us, the lender, the documents we need within a day or two of the requests.”

What is an origination fee?

Liz says, “It is the fees lenders charge for making the mortgage loan. It may include underwriting, processing fees and other administrative costs.”

 What are some of the other costs that are paid at closing?

Jody tells us, “The official loan estimate and closing disclosure break the mortgage fees into categories that include lender fees, 3rd party fees (i.e. credit report, appraisal, flood, tax service fee, etc.), title company fees and government tax and recording fees. These fees can vary by county and state, depending on what is customary for that area. Some of these fees may be negotiable at the time of making/accepting an offer on a new home.”

 We hope these responses provide you with the knowledge and confidence you need to think about a mortgage. Please reach out to the Berg Larsen Group when you’re ready to explore your next home.

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