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Gershman Mortgage made a miracle happen! They not only helped a family with little hope become homeowners, they consulted and comforted them through the whole process. My buyers and I couldn’t be more pleased with the professionalism, experience and knowledge Jemma and Scott displayed. Thank you Gershman Mortgage.
DeLynn Klosterhoff - ReMax Properties WestMortgage Questions
What does it mean to “lock in” or “float” a rate?
What will my closing costs be?
How much will I need for a down payment?
What is the difference between pre-approval and pre-qualification?
Once I’m pre-qualified or pre-approved, what do I need to do to finalize my loan?
Can I apply for a loan before I’ve decided which home to purchase?
How long does the application process take?
What information do I need to apply?
What factors are used to determine if I’ll be approved for a mortgage?
When I refinance, will I need to get a new appraisal? What else is required?
What are closing costs to refinance?
Are there benefits to choosing a shorter term over a longer term?
Does Gershman Mortgage offer any special programs for first-time buyers?
What are "conforming" and "non-conforming" loans?
What is included in my monthly mortgage payment?
Q: What does it mean
to “lock in” or “float” a rate?
A: “Locking-in” a rate is a process in which a lender guarantees a borrower a
specific rate for a certain period of time, even if rates fluctuate during that
period. At Gershman Mortgage, you can “lock-in” a rate for up to 270 days.
When “floating” a rate, the borrower chooses to allow their rate to fluctuate with the market from the time of the application until the closing.
Q: What will my closing costs be?
A: Your closing costs will vary based on the type of loan you’ve applied for and
the number of points (Gershman Mortgage offers most loans with no points). In
general, plan for 2-3% of the purchase price. Remember that you’ll also have to
pay the down payment at the closing as well as any prepaid items such as
insurance. Gershman Mortgage will provide you with a Good Faith Estimate of the
closing costs within three days of your application.
Q: What are points?
A: Points, often called discount points, are premiums paid to reduce the
interest rate. Each point is equivalent to 1% of the loan amount.
Q: How much will I need for
a down payment?
A: Traditionally, down payments were equivalent to 20% of the purchase price.
Today, there are a variety of programs that allow down payments as low as 3-5%
as well as programs that completely eliminate the need for a down payment.
Q: What is an APR?
A: APR stands for Annual Percentage Rate. The APR takes into account points,
fees, and the interest rate, making it a good tool for comparing loans.
Q:
What
is the difference between pre-approval and pre-qualification?
A: Pre-qualification generally involves a less thorough review of an applicant’s
credit history and gives a general idea of how much they can borrow.
Pre-approval involves a more extensive review and gives a specific amount that
can be borrowed. The pre-qualification process can often be completed on-line or
over the telephone.
Q:
Once I’m pre-qualified or pre-approved, what do I need to do to finalize my
loan?
A: In both cases, you’ll need to provide information on your chosen property to
finalize your loan. If you’re pre-qualified, you’ll need to provide additional
financial information and Gershman Mortgage will need to run a credit check.
Q:
Can
I apply for a loan before I’ve decided which home to purchase?
A: Yes, to apply for a loan before you’ve chosen a house, ask to be
pre-approved. Gershman Mortgage will run a credit check and give you a specific
amount you can borrow. Once you’ve chosen a home, they will finalize the loan.
At Gershman Mortgage, you can lock in rates for up to 270 days, allowing plenty
of time to find the perfect home.
Q: How long does the
application process take?
A: The time required for the application process will vary based on the type of
loan and whether you are pre-approved. Typically it will take one to six weeks
from application to closing.
Q: What information do I need
to apply?
A: You will need to provide Gershman Mortgage with information on your assets
and debts, employment history, and residential history. Visit our Tools and Tips
section for a printable checklist of items you’ll need to fill out your
application.
Q:
What factors are used to determine if I’ll be approved for a mortgage?
A: Lenders look at a number of factors when considering a mortgage application.
The main areas are your credit history, savings, earnings, and the property
itself. Call or e-mail Gershman Mortgage if you have any questions about being
approved.
Q: What is a cash-out refinance?
A: In a cash-out refinance, the borrower refinances their home for an amount
larger than is necessary to pay off the first mortgage. The borrower can use the
remaining funds at their discretion. Some popular uses are remodeling, funding a
child’s education, higher-yield investments, or a vacation.
Q:
When I refinance, will I need to get a new appraisal? What else is required?
A: In most circumstances, you will need to have your home appraised when
refinancing. If you have had the home appraised within the last six months by an
approved appraiser, Gershman Mortgage may waive the appraisal requirement.
Q: What are closing costs to
refinance?
A: When your refinance with Gershman Mortgage, there are no closing costs.
Closing costs at other lenders vary.
Q:
What is Private Mortgage Insurance (PMI)? What is the difference between
mortgage insurance and mortgage life insurance?
A: Mortgage insurance protects the lender if the borrower defaults on the loan.
It is typically offered through private companies and referred to as private
mortgage insurance or PMI. PMI is typically required on loans with less than 20%
down. Government-insured loan programs offer an alternative to PMI.
Mortgage life insurance pays off the balance of the mortgage note in the event of the borrower’s death, protecting the family from costly mortgage payments.
Q: Can I cancel my PMI?
A: You may be able to cancel your PMI before your loan is fully amortized
depending on the type of loan, conditions in the loan note, the loan to value
ratio, and other factors. Some loans require PMI for the life of the loan, while
others can be cancelled earlier. Contact the company that is servicing your loan
to request a waiver of PMI.
Q: What is title insurance?
A: Title insurance protects the lender from liens, defects, and inconsistencies
in the title that did not show up in the title search.
Q:
Are there benefits to choosing a shorter term over a longer term?
A: A shorter term loan accumulates less interest, costing you less over the
course of a loan. The trade-off is that the monthly payments are higher than for
a longer term loan.
Q:
Does
Gershman Mortgage offer any special programs for first-time buyers?
A: Yes, certain government programs offer first-time homebuyers low down payment
loans. FHA loans, insured by the Federal Housing Administration, are popular
among first-time buyers and anyone can apply for an FHA loan. VA loans,
guaranteed by the Veterans Administration, are available only to qualified
veterans. Both programs offer low and no down payment options.
First-time buyers in Missouri may also be eligible for Missouri Housing Development Commission’s (MHDC) Mortgage Revenue Bond Program.
Q: What are
"conforming" and "non-conforming" loans?
A: A conforming loan meets the requirements for purchase by FNMA (Fannie Mae) or
FHLMC (Freddie Mac), whereas a non-conforming loan exceeds these limits. Loan
limits change annually, based on average sale prices.
Q: What is a jumbo loan?
A: A jumbo loan is another name for a “non-conforming” loan.
Q: Who will service my loan?
A: Your loan may be sold to a third party. If this is the case, the loan amount,
payments, and interest rate will remain the same. You will receive a notice
regarding the change as well as a new coupon book. If your loan is sold, you
will not be required to pay any additional fees.
Q: What is included
in my monthly mortgage payment?
A: Mortgage payments generally include four basic components- principal,
interest, taxes, and insurance (referred to as PITI). While principal and
interest are paid directly to the lender, taxes and insurance are directed into
an escrow account, which the lender uses to pay the annual insurance premium and
taxes.
