Phil Ganz understands the mortgage process can be confusing, and he’s here to answer your questions. Browse the following FAQs to see if they can address your specific issue, or contact Phil today—he’s always available to help.
What is a mortgage? How does it work?
A mortgage is a loan that supports the purchase of a home or other property, and repaid back with interest over a predetermined amount of time, or sooner (at the borrower’s option). The lender is typically a bank, credit union, or independent lender. Common fixed-rate loan periods are 10, 15, 20, or 30 years, to be paid off monthly. A mortgage is secured against the house; if the homeowner is unable to make monthly payments, he or she can face foreclosure.
What’s the difference between a fixed rate mortgage and an ARM? Which one should I choose?
A fixed-rate mortgage offers a constant, non-adjustable interest rate throughout its duration. This means your monthly payments remain equal until your mortgage matures. The first few years of a fixed-mortgage will be spent paying off interest. The interest rate of an ARM (adjustable rate mortgage) varies with the market. An ARM has the advantage of lower initial payments, based on the assumed risk of interest rate changes. It’s important to have an exit strategy when signing up for an ARM, so that your rate doesn’t fluctuate to an uncomfortable level.
What is a mortgage preapproval? Why is it important?
Pre-approval is a preliminary grant of a mortgage under certain stated conditions. Pre-approval does not guarantee loan commitment (the next step) but it is a critical step in the mortgage process. Brokers often overlook the importance of a firm pre-approval. Many of them check the borrower’s credit score, and stop there. Phil is dedicated to ensuring legitimate pre-approvals through his meticulous process. He takes an in-depth look at your financial background—including income, assets, and any outstanding debt—and makes sure everything checks out. This helps ensure you avoid any disappointment, and can help you save when the time comes.
What is the difference between pre-approval, pre-qualification, and commitment letter?
Pre-qualification is the first step in the mortgage process. After supplying a lender with a rough picture of your financial background (income, assets, and any applicable debt), he or she can estimate the mortgage amount you would best qualify for. This allows you to begin looking for the option that is right for you. Pre-qualification does not requite an in-depth look at your financial background. Unlike pre-approval, which stipulates you for a specific mortgage amount, a pre-qualification only gives you an idea of what you might be able to finance. Pre-approval is a much more involved process that carries more weight than a pre-qualification. A commitment letter is a written agreement from your lender that issues the money for your loan. It formalizes the terms of your loan and lays out any conditions that need to be met upon closing. Once you’ve received your commitment letter, the mortgage is officially yours.
How can I find out about the status of my loan?
Look for Phil’s email. The moment he receives a status update about your loan, he’ll let you know.
How can I refinance my loan? How do I know if I need to?
If interest rates are typically lower than when you took out your mortgage, you may want to consider refinancing your loan. But you need to be very careful—refinancing your loan for a lower rate may catch up with you when your mortgage matures, as you’ll have to make up the costs at closing. Refinancing doesn’t eliminate your debt. It just restructures it so you are able to make payments at a later date, when you may be more financially ready.
How long does the process take? When can I expect to close?
You can anticipate finding and closing on the right mortgage about 5-6 weeks after signing your contract. This can vary significantly based on your financial situation, the lending agent, and the type of mortgage.
Do I need an attorney for closing?
Yes. Hiring an attorney for your closing is a good idea. He or she can review your contract and your loan, and help you out of any unexpected, last minute jams.
What are my property closing costs?
Closing costs vary. Typically, they are 3-5% of a total home purchase. The borrower pays them to the lender at closing in addition to the first interest and down payment. Costs can include attorney and appraisal fees, the loan origination fee, or an escrow deposit. As your lender, Phil will give you a good faith estimate of projected closing costs shortly after receiving your loan application.
Can I get a loan without paying for closing costs?
Yes. Not all mortgages come with closing costs. Depending on your credit, Phil can help you get a loan free of closing costs.
What is a point and how does it work? How many can I be expected to pay?
A point equals 1% of the total mortgage. If you’re buying a $200,000 house, then one point is $2,000, two points are $4,000, and so on. Borrowers can choose to pay a certain amount of points upfront in exchange for a lower interest rate. The more points you pay, the lower your interest rate will be. Depending on how long your mortgage term is and how many years you plan to stay in your home, Phil can advise you on how many points it would benefit you to pay up front.