Mortgage FAQs

Here's the deal - getting pre-approved is way easier than most people think! First, we hop on a quick call where you basically tell me about your dream home goals and spill the tea on your finances (income, savings, debts - the whole nine yards). Then I need your permission to peek at your credit score (don't worry, we've all been there). After that, I take all your paperwork and run it through our automated underwriting system - think of it as a really smart computer that decides if you're good to go. Within 24-48 hours, boom! You get a shiny pre-approval letter that shows sellers you mean business. Honestly, it's like having a VIP pass to house hunting. Plus, you'll know exactly what you can afford, so no falling in love with a mansion when you've got a cottage budget (trust me, I've seen it happen!).

Ah, the age-old rate debate! Here's the scoop: fixed rates are like that reliable friend who never changes - your payment stays exactly the same for the entire loan term. No surprises, no drama. ARMs (adjustable rate mortgages) are more like that exciting friend who's unpredictable - they start with a lower rate that can change after the initial period. So which should you pick? If you're planning to stay put for the long haul and love predictability, fixed is your BFF. But if you're thinking you might move or refinance within 5-7 years, an ARM could save you some serious cash upfront. Honestly, I've seen people stress about this decision way more than they need to. That's why I always run the numbers for BOTH options using your actual situation. No guesswork, just cold hard math! Want to see how they compare? Let's crunch those numbers together.

Lock your rate when you are comfortable with the payment and closing costs. Most locks last 30-60 days. Longer locks cost more. We monitor markets daily and advise on timing. Once locked, your rate is protected from increases.

One point equals 1% of the loan amount and typically lowers your rate by 0.25%. Points make sense if you keep the loan long enough to recoup the cost through lower payments. Break-even is usually 4-7 years. We calculate your specific break-even timeline.

FHA loans are basically the government's way of saying "hey, we got your back!" They're government-insured mortgages with super flexible guidelines that help regular people become homeowners. You only need 3.5% down (pretty awesome) and credit scores as low as 580 can work. The loan limits vary by county - here in Alameda County, you can borrow up to $1,149,825 in 2024 (which honestly barely gets you a decent house around here, but that's Bay Area life for you!). The catch? You'll have mortgage insurance for the life of the loan, but for many folks, it's totally worth it to get into homeownership. FYI, these loans are perfect for first-time buyers or anyone who doesn't have a huge pile of cash sitting around.

This one's pretty sweet if you qualify! VA loans are for veterans, active duty service members, National Guard folks, Reserves, and even eligible surviving spouses. The service requirements depend on when you served, but most active duty need 90 days under their belt, while Guard and Reserve members need 6 years of service. Here's the kicker - VA loans come with ZERO down payment and no mortgage insurance. Yep, you read that right! It's honestly one of the best deals in lending, and it's the least I can do to help those who served our country. If you think you might qualify, let's get your Certificate of Eligibility sorted out - it's way easier than you'd think.

Ah, looking at the fancy houses, are we? :) Jumbo loans kick in when you go over the conforming loan limits ($766,550 in most counties, but higher in expensive areas like ours). These loans are a bit more high-maintenance - they typically want 10-20% down, a credit score of 700 or better, and you'll need some solid cash reserves sitting in the bank. Your debt-to-income ratio should stay below 43%, which honestly makes sense when you're borrowing that much money. The good news? I've got access to some seriously competitive jumbo rates for qualified borrowers. And between you and me, if you're shopping for a million-dollar home in California, you're probably not sweating these requirements anyway!

Great question! The old rule of thumb was "when rates drop 1% or more," but honestly, that's outdated. I usually tell people to consider it when rates drop 0.75% or more below what you've got now. Here's the math trick: take your closing costs and divide by your monthly savings - that gives you your break-even point in months. Most refis break even somewhere between 18-36 months. But here's what a lot of people miss - it's not just about the rate! Maybe you want to ditch mortgage insurance, switch from an ARM to fixed, or do a cash-out refi for home improvements or debt consolidation. IMO, if you're planning to stay in the house for at least 2-3 years and it saves you money, it's probably worth exploring. Want me to run the numbers for you?

Cash-out refinancing replaces your current mortgage with a larger loan. You receive the difference in cash. Most programs allow up to 80% of home value. Use funds for renovations, debt payoff, or investments. Rates may be slightly higher than rate-term refinances.

PMI automatically cancels at 78% loan-to-value. Request removal at 80% LTV based on original value. With appreciation, order a new appraisal to prove 20% equity. FHA loans require refinancing to remove MIP. We help calculate your timeline and options.

A HELOC (Home Equity Line of Credit) is like a credit card secured by your home - you can borrow up to a limit and pay interest only on what you use. A cash-out refinance replaces your current mortgage with a larger one and gives you the difference in cash. HELOCs are better for ongoing or uncertain expenses, while cash-out refis are better for large, one-time expenses. I can help you decide which makes more sense for your situation.

Great question! And honestly, way less than you probably think. The whole "you need 20% down" thing is basically a myth from your parents' generation. Here's the real deal: conventional loans can start at just 3% down if you qualify. FHA loans need 3.5% (pretty sweet, right?). And if you're a veteran or eligible for USDA? Zero down, baby! Jumbo loans are a bit pickier and usually want 10-20%, but hey, if you're buying a million-dollar house, you probably saw that coming. Now here's the insider scoop - putting more down CAN get you better rates and ditch that pesky mortgage insurance, but it's not always the smartest move. Sometimes keeping that cash for emergencies or investments makes more sense. IMO, the "right" amount depends on your whole financial picture, not just some arbitrary percentage. Want to see what makes sense for YOUR situation?

Yes. Most programs allow gift funds from family members. You need a gift letter stating the money is a gift, not a loan. Donors may need to show source of funds. Some programs require you to contribute your own funds too.

First-time buyers can access FHA loans, VA loans (if eligible), USDA rural loans, and state/local assistance programs. CalHFA offers down payment help and below-market rates. Many programs define "first-time" as no ownership in the past 3 years.

Minimum scores vary by program. FHA accepts 580 with 3.5% down, or 500 with 10% down. Conventional loans typically need 620+. VA has no minimum but lenders often require 620. Best rates go to scores above 740. We offer credit improvement guidance.

DTI compares monthly debt payments to gross monthly income. Front-end DTI (housing only) should stay below 28%. Back-end DTI (all debts) should stay below 43%, though some programs allow up to 50%. We calculate your DTI and suggest strategies to improve it.

Yes. Self-employed borrowers need two years of tax returns showing stable or increasing income. We average your net income over 24 months. Bank statements programs are available for those with limited tax returns. Strong credit and assets help offset income complexity.

Ah, the million-dollar question! (Well, maybe literally in California :/) Purchase loans usually take 30-45 days from contract to keys, while refinances are a bit faster at 25-35 days. Cash-out refis might drag their feet a little longer because lenders get extra nosy when you're taking cash out. But here's the thing - the timeline totally depends on a bunch of moving parts: how quickly the appraiser can get out there, how fast you get me your documents (hint hint!), and how complex your financial situation is. I've closed loans in 18 days when everything aligns perfectly, and I've had others take 60 days because, well, life happens. That's why I send you weekly updates so you always know where we stand - no radio silence here! Plus, I always work backward from your target closing date to make sure we hit your deadline. Trust me, I want you in that house just as much as you do!

Closing costs range from 2-5% of the loan amount. They include lender fees, appraisal, title insurance, escrow, and prepaid items like property taxes and insurance. You receive a Loan Estimate within 3 days of application. Sellers can contribute to buyer closing costs.

Earnest money shows sellers you are serious about purchasing. Typical deposits are 1-3% of the purchase price. Funds go into escrow and apply toward your down payment at closing. You may lose earnest money if you back out without a valid contingency.

An escrow account is set up by your lender to pay property taxes and homeowners insurance on your behalf. A portion of your monthly mortgage payment goes into this account, and the lender pays these bills when they're due. This ensures these important expenses are never missed. The lender calculates how much you need to pay each month based on your property taxes and insurance costs.

The Loan Estimate is a 3-page form showing loan terms, projected payments, and closing costs. You receive it within 3 business days of application. Compare estimates from multiple lenders. Numbers can change slightly but major fees are locked.

Origination fees cover the lender's cost to process your loan. They typically range from 0.5-1% of the loan amount. Some lenders offer no-origination-fee loans with slightly higher rates. We clearly disclose all fees upfront.

PMI (Private Mortgage Insurance) is for conventional loans and can be removed once you have 20% equity. MIP (Mortgage Insurance Premium) is for FHA loans and is usually required for the life of the loan, though some FHA loans allow MIP removal after 11 years if you put down 10% or more. VA loans don't require mortgage insurance, and USDA loans have their own guarantee fee. I'll explain which applies to your loan and how to minimize these costs.

Most mortgages today don't have prepayment penalties, but it's important to check your loan terms. Some loans, especially those with very low rates, might have penalties if you pay off within the first 2-3 years. I always review this with you before you sign, and we can look for loans without prepayment penalties if you think you might pay extra or pay off early.

Yes. Co-signers can help with income qualification but must also be on the loan. Their debts count too. FHA allows non-occupant co-borrowers. Some programs require co-signers to be family. Both parties share credit responsibility.

Yes, with waiting periods. Chapter 7 requires 2 years for FHA/VA, 4 years for conventional. Chapter 13 requires 1 year of payments for FHA, 2 years for conventional. Demonstrate rebuilt credit and stable income. We guide you through the process.

Oh boy, here comes the paperwork party! :) Most folks need the usual suspects: ID (obviously), your two most recent pay stubs, two years of W-2s, two years of tax returns, and two months of bank statements. If you're self-employed, buckle up - you'll also need business tax returns and profit/loss statements (I know, I know, more paperwork). But here's the thing - every situation is different, so after our first chat, I'll send you a personalized checklist that's actually tailored to YOUR specific loan. No generic "here's everything under the sun" nonsense. FYI, the faster you get me these docs, the faster we can get you those keys! Pro tip: scan everything to your phone so you always have copies handy.

An appraiser visits the property to assess value, condition, and comparable sales. The process takes 7-10 days. If the appraisal comes in low, you can negotiate price, pay the difference, or cancel with appraisal contingency. We help navigate any appraisal challenges.

While not required by lenders, a home inspection is HIGHLY recommended! It can reveal hidden problems that could cost you thousands later. In California's competitive market, some buyers skip inspections to make their offer more attractive, but this is risky. I always recommend getting an inspection, even if it's just for your peace of mind. The cost is usually $400-600, which is nothing compared to potential repair costs.

This is called an "appraisal gap" and it's common in competitive markets. You have several options: 1) Pay the difference in cash, 2) Negotiate with the seller to lower the price, 3) Cancel the contract (if you have an appraisal contingency), 4) Challenge the appraisal if you think it's wrong. I help you navigate these situations and find the best solution for your specific case.