Frequently Asked Questions

A mortgage is basically a fancy IOU that lets you buy a house without having all the cash upfront. The bank loans you the money, and you pay it back monthly, plus interest, over time (typically 30 years).

Pre-Qualification:

An initial, informal estimate of your borrowing power based on self-reported information. Quick and easy, but not as reliable or respected as pre-approval.

Pre-Approval:

A detailed and verified evaluation of your financial status, resulting in a commitment from the lender (with conditions). Takes more time and effort but provides a stronger position when making offers on homes.

Most serious homebuyers opt for pre-approval to strengthen their position in the competitive real estate market.

Common Myth: You need a 20% down payment. Actually, you can buy a home with as little as 3% down (Conventional), 3.5% down (FHA), or 0% down (VA/USDA). So, nope, you don’t need a suitcase full of cash.

About 30 days, give or take. Enough time to get overly attached to Pinterest boards and fill a Wayfair shopping cart.

Most programs start at 620, but higher scores = better rates. FHA and VA loans are a bit more flexible with FHA allowing down to a 500 score and VA allowing down to 580.

The interest rate on your mortgage will depend on various factors, some within your control and others dictated by the broader economic environment.

Personal Financial Factors

Credit Score:

Higher credit scores generally qualify for lower interest rates. Scores above 740 typically get the best rates, while scores below 620 may struggle to secure favorable rates.

Down Payment: A larger down payment can lower your interest rate. Putting down at least 20% can help you avoid private mortgage insurance (PMI) and get better rates.

Loan Amount and Term: Loan amounts that are too small or too large can affect your rate. Additionally, shorter loan terms (like 15 years) usually have lower rates compared to longer terms (like 30 years).

Debt-to-Income Ratio (DTI): A lower DTI ratio (total monthly debt payments divided by gross monthly income) can improve your chances of getting a lower rate. Lenders prefer DTIs below 36%.

Employment History: Stable employment and consistent income can positively influence your rate. Lenders look for at least two years of steady employment.

External Economic Factors

Federal Reserve Policies: The Federal Reserve’s actions on interest rates can indirectly affect mortgage rates. When the Fed raises or lowers rates, it influences the overall economic environment, impacting mortgage rates.

Economic Conditions: Economic growth, inflation, and employment rates can all affect mortgage rates. Strong economic growth and higher inflation typically lead to higher rates.

Bond Market: Mortgage rates are influenced by the yields on 10-year Treasury bonds. When bond yields rise, mortgage rates often follow.

To determine how much you can afford to borrow:

• Assess your income and debts.

• Calculate your DTI ratio.

• Factor in your down payment.

• Estimate your monthly housing costs.

• Apply the 28/36 rule for a general guideline.

• Use mortgage calculators for precise estimates.

• Get pre-approved for a detailed and accurate loan amount.

This approach ensures you have a realistic understanding of your borrowing capacity and can make informed decisions during the homebuying process.

A fixed-rate stays the same (aka drama-free). An adjustable-rate can is fixed for a set period of time (5, 7, 10 years) then changes over time. There are caps on how much the rate can change per adjustment period as well as over the life of the loan.

• Initial Deposit: Funded at closing.

• Monthly Payments: A portion of your mortgage payment goes into the escrow account.

• Payment of Bills: Lender uses escrow funds to pay property taxes and insurance.

• Annual Analysis: Lender reviews account to adjust for any changes in tax and insurance costs.

• Shortages and Surpluses: Managed by adjusting future payments or issuing refunds.

An escrow account provides peace of mind by ensuring that property taxes and insurance are paid on time, helping you avoid penalties and ensuring continuous coverage.

PITI (Principal, Interest, Taxes, Insurance). All loans will have homeowner’s insurance but some will also require mortgage insurance (PMI). If you put at least 10% down on a Conventional loan you have the option to pay your taxes and insurance separately if you wish.

Ideally, yes, but no need to panic, there is flexibility on this! There are workarounds for recent grads, self-employed folks, or job changes within the same field.

Depends on your debt-to-income ratio (DTI). Basically, we add up what you owe vs. what you make. It’s like adult math, but we’ll do it for you.

Think of them like the price tag on borrowing money. Higher rates = higher payments. They change daily based on the economy, inflation, and Fed vibes. The depend on your credit score, down payment, property type (condo vs. SFR vs. duplex), lock period, and other factors.

A temporary buydown (like a 2-1 buydown) lowers your rate for the first year or two. It’s a nice way to ease into your payment if you expect your income to grow or rates to drop.

"Points" or “discount points” are upfront fees you can pay to lower your interest rate. One point = 1% of your loan amount. Pay more now, save more later. It’s important to look at a breakeven point to determine how long you will need to keep the loan to break even of the additional upfront cost in monthly savings.

Yep! Renovation loans like FHA 203(k) or Conventional renovation programs let you roll the cost of repairs into the mortgage. It’s HGTV dreams with real-world financing.

Don’t go it alone. Ask questions (even the “dumb” ones), work with a team you trust, and remember that this process is temporary but your home is yours forever.

Step 1: Get Pre-Approved

Review Fairway's Document Checklist. Then complete your loan application and providing supporting income and assets documentation. Meet with Michelle so you know your budget for a home.

Step 2: Search For A Home

With a trusted real estate agent, find the type of home that you're looking for within your budget.

Step 3: Make An Offer

Once you have found a property you desire, make an offer! We know the anticipation in waiting to see if your offer has been accepted or not is excruciating but this is why getting pre-approved is essential. It will make your offer more attractive to a seller when you submit a pre-approval letter with your offer.

Step 4: Purchase Price Negotiation

Once you and the seller agree on a price, a contract is created and accepted.

Step 5: Earnest Money Deposit

A copy of the contract is sent to Michelle and Melissa from your amazing realtor. You remit your earnest money and option fee.

Step 6: Home Inspection

A home inspection is not required by the lender but is highly recommended. All inspections need to be completed within your option period.

Step 7: Initial Loan

Loan estimates and federal/state disclosures are delivered to you via our secure Fairway portal. You must then provide your intent to proceed to order services to move forward with your loan.

Step 8: Appraisal

The Michelle Team will order an appraisal on your behalf. Your new home will be appraised by an independent appraiser to determine its value. The appraiser will take pictures of the inside and outside of the home and provide recent comparable sales. Once the appraisal is completed, the Michelle Team will then submit your appraisal to underwriting for approval as well as provide a copy to you.

Step 9: Underwriting

An underwriter will review all loan documentation to ensure it adheres to the loan requirements set by HUD (United States Department of Housing and Urban Development) and determine if additional information will be needed.

Step 10: Final Loan Approval

Once all information has been approved, your loan is moved to the "Clear to Close" status.

Step 11: Closing Documents

Either Michelle or Melissa will provide closing disclosures to you, you may then share them with your real estate agent, or if prior consent is received, we can share the disclosures with them on your behalf. Closing documents are sent to the title company for review and approval.

Step 12: Funding

Michelle will contact you with the final figures and additional information PLEASE be sure to confirm the payment options for closing costs with the title company BEFORE sending. Typically funds are remitted via cashier's check or wire. Wire fraud is a serious issue so it is imperative to get wiring instructions verified directly by the settlement agent.

Step 13: Final Closing Steps

Meet to sign closing documents at the title company, with a notary, or set up a virtual close with the Michelle Team. Bring a photo ID and complete payment of closing cost as directed. If you are purchasing a home, this is when you get your keys! On a refinance, this is when you would receive any cash out proceeds (if applicable).

Step 14: Your Loan Has Funded

CONGRATULATIONS - You are now a homeowner!

Do you have a photo of your new home you want to share?

We love to see happy clients in their new spaces!

You can always refinance later - There us no crystal ball needed. Focus on buying when you’re ready, not when rates are perfect (spoiler: they never are).

Yes, a lot! Experience, responsiveness, and problem-solving skills can make or break your homebuying experience. Work with someone who gets it done and done right. It’s worth doing your homework!

• Conventional - standard, flexible

• FHA - lower credit, smaller down payment

• VA - for veterans, 0% down, no PMI

• USDA - for rural areas, 0% down, income limits

• Jumbo - For loan amounts above the conforming loan limit (currently $806,500)