Mortgage Q and A

1. How do I know how much house I can afford?

It’s smart to learn what you can afford before you begin looking at homes. Some homebuyers make the mistake of looking at homes beyond their price range only to be disappointed. We want to make sure you are armed with the correct information.

To develop a sense of how much of a payment you are comfortable making each month, you’ll need to take a look at your income, debt, general living expenses (like groceries and gas), and social spending to see how much you can afford to lease. To develop realistic personal expectations, play with a budget and get a sense of how much money you’re spending on necessary expenses (debt, groceries, medical care) versus discretionary interests (travel, dining out, hobbies). Because each person’s debt levels and goals differ, only you can determine what you are personally comfortable spending.

Our mortgage calculator will help you research how much house you can budget for. Keep in mind that market conditions can affect affordability. Make sure to ask your lender about rates and programs that could enhance your buying position.

2. Should I rent or buy?

Whether renting is better than buying depends on many factors, particularly how fast prices and rents rise and how long you stay in your home. Compare the costs of buying and renting a home by using our calculator.

3. How long does it take to get approved?

That depends. Many times approvals can come in the same day; most often it takes about three days. In some cases we need to spend extra time getting you the best product possible – and that simply takes time.

4. What is a rate lock option?

This term is easier to understand than you think. The bottom line is, you cannot close a mortgage loan without locking in an interest rate and a program. In essence, you are entering into a contract with Bell, to have your interest rate held for you for a period of time while you are waiting to close.

There are four components to a rate lock: 

• Loan program

• Interest rate

• Points (if any)

• Length of the lock

The longer the length of the lock, the higher the points or the interest rate. This is because the longer the lock, the greater the risk for the rates to increase prior to closing.

For example you lock in a 30-year fixed loan at 7.0% for 0 points for 15 days on May 4. This lock will expire on May 19. Bell must disburse funds by May 19, otherwise your rate lock expires, and your original rate-lock commitment is invalid.

The same lock might cost 0.25 points for a 30-day lock or 0.50 points for a 60-day lock. If you need a longer lock and do not want to pay the higher points, you may instead pay a slightly higher rate.

5. What documentation do I need for application?

The financing program you select determines the exact documentation required, however, generally speaking you should be prepared with the following:

• Federal income tax statements (past 2 years)

• W2s (past 2 years)

• Current paycheck stubs for a full 30 days

• Bank statements for the past two months (all numbered pages even if blank or advertisement)

• Asset and liability information

6. How do I know which type of mortgage is best for me?

Your loan officer is best prepared to answer this question. The right type of mortgage for you depends on many different factors:

• Your current financial picture

• How you expect your finances to change

• How long you intend to keep your house

• How comfortable you are with your mortgage payment changing from time to time

7. How much of a down payment will I need?

Probably less than you might have heard. Typical down payments range anywhere from 3 to 25 percent of the home’s total value, the more you put down, the better. With more than 20 percent down, you won’t need to add mortgage insurance to your monthly payment. Also, a larger down payment reduces your monthly payments. Ask your loan officer about what options make sense for you.

8. What does my mortgage payment include?

For most borrowers, the monthly mortgage payments include three separate parts: a payment on the principal of the loan (that is the amount borrowed), a payment on the interest, and payments into a special account (called an escrow account) that your lender maintains to pay for things like your hazard insurance and property taxes. These elements are called P.I.T.I. (Principal-Interest-Taxes-Insurance). Mortgage payments can also include mortgage insurance and other fees depending on your state and how much money you have for a down payment. Use our loan payment calculator to determine how much your loan payment will be.

9. How long will it take to pay off my loan?

If you are trying to work out how fast you can pay off your mortgage, use our loan payoff calculator. This can help you to determine what length mortgage you should get, or help you work out whether it is a good idea to pay extra money towards your mortgage each month.

10. Where do you send your loans to be approved?

We do not send them anywhere. Bell Mortgage is one of the oldest and most respected mortgage bankers in the country. As such, we normally have the authority to approve your loan right in our offices.