Frequently Asked Mortgage Questions
Buying or refinancing a home comes with many questions. This FAQ page provides clear, simple answers to the most common mortgage topics so you can feel confident throughout the process.  

When should I refinance?

Refinancing may make sense when current mortgage rates are 1–2% lower than your existing rate. Even a small reduction can lower your monthly payment and save you money over time. Your savings depend on your loan amount, interest rate, and how long you plan to stay in the home. A loan officer can help you calculate your break‑even point.  

What are points?

Points are fees paid to the lender at closing.

• 1 point = 1% of the loan amount
• Points can be used to lower your interest rate (“discount points”)
• Paying points may make sense if you plan to keep the loan for several years

Should I pay points to lower my interest rate?

Yes — if you plan to stay in the home long enough to recover the upfront cost. Paying points reduces your monthly payment, but if you plan to move or refinance soon, the savings may not outweigh the cost.  

What is an APR?

APR (Annual Percentage Rate) reflects the true cost of your mortgage, including:

• Interest rate
• Points
• Lender fees
• Certain closing costs

APR helps you compare loan offers, but it does not determine your monthly payment. Your payment is based only on the interest rate and loan term.

What does it mean to lock the interest rate?

A rate lock guarantees your interest rate for a set period (usually 30–60 days). This protects you from market fluctuations while your loan is being processed.  

What documents do I need to prepare for my loan application?

Documentation varies by borrower, but most lenders require:

Property Documents

• Signed sales contract
• Listing sheet or legal description
• Condo documents (if applicable)

Income Documents

• 30 days of pay stubs
• W‑2s for the past 2 years
• Full tax returns if self‑employed or receiving rental/commission income
• Proof of alimony/child support (if used to qualify)
• Social Security or VA award letters (if applicable)

Assets & Down Payment

• Bank statements (last 2–3 months)
• Investment account statements
• Gift letter (if using gift funds)

Debts & Obligations

• Statements for credit cards, loans, and mortgages
• Divorce decree (if applicable)

Your lender may request additional documents depending on your credit profile and loan type.

How do lenders evaluate my credit?

Lenders use credit scores (typically FICO) ranging from 350–850. Your score is based on:

• Payment history
• Amount of debt
• Length of credit history
• New credit inquiries
• Types of credit accounts

You can obtain a free credit report annually at AnnualCreditReport.com.

How can I improve my credit score?

• Pay all bills on time
• Reduce credit card balances
• Avoid opening new accounts
• Keep older accounts open
• Review your credit report for errors

Improvement takes time, but consistent habits make a big difference.

What is an appraisal?

An appraisal is a professional estimate of your home’s market value. Lenders require it to ensure the loan amount is appropriate for the property.  

What is PMI (Private Mortgage Insurance)?

PMI protects the lender when your down payment is less than 20%. It can be removed once you reach sufficient equity, depending on the loan program.  

What is 80-10-10 financing?

This structure helps borrowers avoid PMI:

• 80% first mortgage
• 10% second mortgage
• 10% down payment

A similar option, 80‑15‑5, requires only 5% down

What happens at closing?

Closing is when ownership officially transfers to you. During closing:

• Final documents are signed
• Funds are disbursed
• You receive the keys

Before closing, you’ll complete a final walk‑through to ensure the property is in agreed‑upon condition.

Have More Questions? We’re Here to Help.

Whether you’re buying your first home, refinancing, or exploring investment options, our team is ready to guide you. Contact us today for personalized answers and expert support.