Common First-Time Homebuyer Questions

Common First-Time Homebuyer Questions










Understanding the path to buying a home can be overwhelming especially for first-time buyers. From deciphering mortgage terms to navigating the loan process, many can questions arise. Discover below a list of common questions our team has received over the years. Don't see a question on your mind listed below? Contact our team today, we'd be happy to help!


What is the difference between pre-approval and pre-qualification? 

For pre-qualification, the loan officer asks discovery questions and provides the borrower with a pre-qualification letter. Pre-approval includes all the steps of a full approval, except for the appraisal and title search. A pre-approval can put you in a better negotiating position, similar to a cash buyer.


When can I lock the interest rate, and what will it cost?

Interest rates might fluctuate between the time you apply for a mortgage and closing. To prevent getting a higher rate, you can lock the rate, and even the points, for a specified period. Fees may apply, but not always. A rate lock is a contractual agreement between the lender and buyer. There are four components to a rate lock: loan program, interest rate, points, and the length of the lock.


What are points?

Points are an upfront cash payment required by the lender as part of the charge for your loan, expressed as a percent of the loan amount. For example, 2 points means a charge equal to 2% of the loan balance.


How important is my credit score during the mortgage financing process?

A credit score plays a critical role impacting loan approval, interest rates, and loan terms. A higher credit score can signal to lenders that you’re a lower-risk borrower. Maintaining a good credit score can broaden your mortgage loan program options. 


What is the difference between a home appraisal and home inspection?

A home appraisal determines a property’s market value focusing on the home’s condition, location, and comparable sales. Meanwhile, a home inspection identifies any issues or defects with a property after being examined by an inspector protecting the buyer.


When does it make sense to refinance? 

Usually, people refinance to save money either by obtaining a lower interest rate or by reducing the term of the loan. Refinancing is also a way to convert an adjustable-rate mortgage (ARM) loan to a fixed-rate loan or to consolidate debts. The decision to refinance can be difficult. Consider contacting a licensed loan officer to explore your unique scenario.  


What is a good faith estimate?

A list of settlement charges that the mortgage lender is obliged to provide the borrower within 3 business days of receiving the loan application.


What is a conforming loan?

A loan is considered a conforming loan when it is eligible for purchase by Fannie Mae and Freddie Mac and meets the conforming loan limits.


What types of mortgage loan programs are available?

Common types of loan programs include Conventional loans that are generally offered as a fixed-rate or adjustable-rate mortgage option as well as government loan programs such as FHA, VA, and USDA or Rural Housing programs. Our team also offers niche mortgage products such as Renovation 203(K) loan programs, Reverse mortgages, Manufactured Housing loan programs, non-QM loan programs, and Virginia Housing mortgage products. Each program has its own qualifying terms and conditions. 


How much of a down payment is needed?

The amount of the down payment required varies by the loan program. For example, select government loan programs have a 0% down payment program feature while other loan programs require Private Mortgage Insurance (PMI) for down payment amounts less than 20%.