Good Buyer Questions – Better Lender Answers – LOL! Yesterday, a client reached out with some common yet critical questions about securing a home loan, prompting me to share these insights with you. As a Mortgage planner, I often encounter these inquiries, which reflect the concerns many face when navigating the home-buying process. For this blog, I’ll base the examples on a $1 million property with a 5% down payment ($50,000), making it relatable for many. Below, I’ve outlined the questions, updated answers with new figures, and added more frequent queries. Let’s dive in! Closing Costs and Fees Are your loan closing costs included in this estimate? If not, what are the expected total closing costs? Our fees are approximately $1,800, but this excludes escrow, title, and appraisal fees. For a $950,000 loan, I estimate these additional costs at $4,000 to $6,000, depending on who the escrow company is, and who they choose for title, etc. With zero points, are there any lender fees, origination fees, underwriting fees, or third-party fees for closing a loan other than appraisal and inspection costs? The $1,800 covers our lender fees. Appraisal, escrow, title, notary, and other third-party costs are extra. Escrow Are property taxes and Insurance included in an escrow account, or will they be paid separately? We’ll set up an escrow account at closing. You’ll pay a year’s Insurance upfront (around $4,000-$5,000 for a $1 million home), plus 2-3 months as reserves. About 6-8 months of property taxes (roughly $6,200-$8,500) will be collected to cover the next due date. These are required, but you can skip impounds with a down payment over 10% ($100,000). PMI Details How long will PMI be required? When does it fall off? After 20% equity? Or? You can request an appraisal after two years to check for 25% equity to remove PMI. After five years, 20% equity. Can the PMI be removed automatically, or must it be requested? PMI drops automatically when your loan balance hits 78% of the original $1 million ($780,000), typically after several years of payments or you can pay it down yourself. Rate Buydown Options What are the costs of a temporary buydown vs. a permanent buydown? A permanent buydown lowers your rate by 0.250% per point (1% of $950,000 = $9,500), saving ~$158 monthly. With a 5-6 year breakeven, I don’t recommend it. 2 Points would save $315.00 for $11,900. Same 5-6 year breakeven. A 1-year temporary buydown (e.g., from 6.99% to 5.99%) saves ~$623 monthly, costing $7,476. It’s viable if the seller pays or we use a higher rate (e.g., 7.25% to 6.25% for year one). A 2-year buydown (4.99%, 5.99%, then 6.99% from years 3-30) costs $7,560 + $14,820 = $22,380. A 3-year buydown (3.99%, 4.99%, 5.99%, then 6.99% from years 4-30) costs $7,560 + $14,820 + $21,660 = $44,040. How would a temporary buydown work? A temporary buydown reduces your rate for 1-3 years, funded upfront or via a higher later rate. A 1-year buydown at $7,560 drops your rate to 5.99% for year one, then reverts to 6.99%. Seller help or rate adjustments can offset costs. Refinance Assurance We offer a No Cost refinance to our buyers with loan amounts above $500,000 when they go to refinance. He asked – What does “no points and no fees” mean for the refinance? Will you waive all closing costs, or will third-party expenses remain? We’ll cover closing costs (lender fees, escrow, title, appraisal, +++) for a refinance. You’ll handle what you typically handle: interest, property taxes, and Insurance. What prepayment penalties or terms? You can’t pay off the loan until after your sixth payment. Credit Score Impact How does my credit score affect the loan terms? A higher score (e.g., 740+) typically secures better rates (e.g., 6.99%) and lower fees. Below 680, rates may rise (e.g., 7.25%+) or require higher reserves. We can review your score to optimize your offer. Pre-Approval Process What’s involved in getting pre-approved? Submit income docs (pay stubs, tax returns), credit info, and employment details. We’ll pull your credit, verify assets, and issue a pre-approval letter in 1-2 days, strengthening your buying power. What makes you different from other lenders? We work differently here. I work 24/7, and my team and I are committed to ensuring your loan closes on time with the least hassle. I promise to give you great advice and ensure you understand every part of the loan process you need to know or ask about. I have 35 years of experience, and my team and I have closed more loans than most companies in this area! Most Importantly, every agent in the area knows who I am, and my reputation will help you get the house you want vs. any other lender in town. Down Payment Assistance Are there options for down payment assistance? Yes, programs like FHA or state grants can help with the $50,000 down payment, especially for first-time buyers. Your income is too high for some grant programs, but it fits on a $0 down loan if you don’t mind a higher Interest rate and payment. Interest Rate Lock Is the quoted 6.99% rate locked in? If not, how long is the rate quote valid, and when can it be locked? We can’t lock the rate until your offer is accepted. You can then lock or float. If you lock your rate and rates improve, we can renegotiate with the investor two weeks before closing. We do have a shop and lock option, but most people wait until they are in escrow to lock in that way, as there is a slight interest rate increase to do that. Why These Questions Matter These FAQs reflect the real-world challenges of home financing. Using a $1 million property with 5% down as an example, I aim to demystify the process. My goal is to guide clients with tailored solutions. Let’s connect if you or your clients have questions or want to discuss a situation! I’ll send a link to our secure portal for document uploads. Have a great day, and remember that I am here to help you or your clients with anything they need in the mortgage world! Please let me know if you have any questions or if a client needs my guidance. I’m just a call, text, or email away. 📞 Cell: 661-714-6258 TEXT: 661-714-6258 📞 Office: 661-260-2970 ext. 2222 📞 Direct Line: 661-291-2222 📧 Email: Mike@AugustaFinancial.com But wait, there’s more… Interest Rates Rates have eased slightly today after a challenging drop yesterday, offering some relief for prospective buyers. Over the past week and month, rates have experienced noticeable fluctuations, reflecting the ups and downs of the current market. Ongoing economic uncertainties, including shifts in trade policies and investor reactions, largely drive this volatility. We’ll keep monitoring the trends to provide you with the latest insights. We do loans on Non-warrantable condos! We offer 12-day escrows for pre-approved buyers - Conventional/FHA/Jumbo/Bridge loans. We provide loans in all 50 states, so call me with anything you need. Government loans (FHA/VA/USDA) are in the high 5’s and low 6’s. Conventional loans up to $806,500 are in the mid 6s. High Balance Loans from $806,501 to $1,209,750 are also in the 6’s. Jumbo loans above $1,209,750 are in the 6’s and 7’s. Bank statement loans are available with 10% down again, with larger down payments in the 6’s ++. Profit and Loss Statement loans require 20% down - no bank statements needed, only a profit and loss statement! 0 down loans are available in the high 6s, with a minimum credit score of 620, up to $1,300,000. Private Money lenders offer Hard Money Loans with 35% down. No Ratio Loans require 30% down. DSCR (Debt Service Coverage Ratio) loans are available with as little as 15% down. Bridge Loans typically have an interest rate of 7.99% with limited fees, helping you get where you need to go! 3/2/1 Buydowns, 2/1 Buydowns, and 1/0 Buydowns are available at great starting rates! Please note that interest rates are subject to change without notice, and the information above reflects LA County Loan Limits. **Good News for Condos:** – Nothing new! **Bad News for Condos*** American Beauty Gardens is having an issue with Insurance now. They were at a 19% delinquency rate and now the Insurance will make it 10% down instead of 5% like we could in the past! The full state of California naughty list has been added to MikeMeena.com! See the link below: https://mikemeena.com/non-warrantable-condos/ Let me know if you hear anything new about condos or townhouses. I am available every day if you need anything. 📞 Cell: 661-714-6258 TEXT: 661-714-6258 📞 Office: 661-260-2970 ext. 2222 📞 Direct Line: 661-291-2222 📧 Email: Mike@AugustaFinancial.com Have a great day, and an even better tomorrow! Please call me when you have a client who needs to borrow! Mike Meena President | Loan Officer Click to Call or Text: (661) 714-6258 This entry has 0 replies Comments are closed.
