Question 1

When should I refinance?

Accepted Answer

It's generally a good time to refinance when current mortgage rates are noticeably lower than the rate on your existing loan. Even a 0.5%–1% reduction can trim your monthly payment meaningfully. The right answer depends on your loan balance, how long you plan to stay in the home, and the closing costs of the new loan; we'll calculate the actual breakeven for you before you commit. (Note: a reduction in monthly payment may reflect a longer loan term and higher total interest paid over the life of the loan. Every borrower's situation is unique and savings will vary.)

Question 2

What are points?

Accepted Answer

A point is one percent of the loan amount, so one point on a $300,000 loan is $3,000. Discount points are fees you can pay up front to permanently lower the interest rate on your mortgage. Lenders sometimes quote costs in basis points instead: 100 basis points equals one point, or 1% of the loan amount.

Question 3

Should I pay points to lower my interest rate?

Accepted Answer

It depends on how long you plan to stay in the property. Paying discount points to buy down the rate lowers your monthly payment (and can sometimes increase the loan amount you qualify for) but it only pays off if you keep the loan long enough to recoup the up-front cost. If you're likely to move or refinance within a year or two, paying points often isn't worth it. We'll model the breakeven both ways before you decide.

Question 4

What is APR?

Accepted Answer

The Annual Percentage Rate (APR) reflects the total cost of a mortgage expressed as a yearly rate. It's usually higher than the stated note rate because it factors in points and certain credit costs. APR is designed to let you compare different mortgages on a level playing field and prevents lenders from advertising a low rate while hiding fees. APR doesn't affect your monthly payment; that's determined strictly by your interest rate and loan term. Because lenders include different fees in their APR calculations, a lower APR isn't always the cheaper loan. The cleanest way to compare is to request good-faith estimates for the same program at the same rate and compare the loan-specific fees side by side. Fees typically included in APR are points (discount and origination), pre-paid interest, loan-processing, underwriting, document-preparation, private mortgage insurance, and escrow fees. Fees typically excluded are title or abstract, borrower attorney, home inspection, recording, transfer taxes, credit report, and appraisal.

Question 5

What does it mean to lock the interest rate?

Accepted Answer

Mortgage rates can change between the day you apply and the day you close. A rate lock guarantees a specific interest rate for a defined window (commonly 30–60 days, sometimes longer), protecting you if rates rise during processing. Some lenders charge a fee for longer locks or for float-down options. We'll walk through the trade-offs when timing makes a difference.

Question 6

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

Accepted Answer

Every situation is unique, but most files draw from the same checklist. Treat this as a starting point. If your loan officer asks for something not listed here, get it over as quickly as you can to keep things moving. Your property Signed sales contract including all riders Verification of any deposit you placed on the home Names, addresses, and phone numbers of realtors, builders, insurance agents, and attorneys involved Listing sheet and legal description (and, for condos, the declaration, by-laws, and current budget) Your income Pay stubs for the most recent 30-day period and year-to-date W-2 forms for the past two years Employer names and addresses for the past two years Letter explaining any employment gaps in the past two years Copy (front and back) of work visa or green card, if applicable If self-employed, commissioned, or with interest/dividend/rental income Full personal tax returns for the last two years plus year-to-date P&L (include all schedules and statements; if extended, a copy of the extension) K-1s for all partnerships and S-corps for the last two years Federal partnership (1065) and/or corporate (1120) returns including all schedules for the last two years (if ownership is 25% or greater) If using alimony, child support, Social Security, disability, or VA benefits Divorce decree or court order showing amount, plus proof of receipt for the last year Award letter from the relevant agency for Social Security, disability, or VA benefits Source of funds and down payment Signed sales contract on your current residence (or listing agreement if unsold), and closing statement at closing Three months of statements for savings, checking, and money market accounts Statements or certificates for stocks and bonds Gift affidavit and proof of receipt of funds for any gift funds Debt and obligations Names, addresses, account numbers, balances, and monthly payments for all current debts, with the last three statements Mortgage holder or landlord history (names, balances, monthly payments) for the past two years Marital settlement / court order for any alimony or child support being paid Check for any required application fees

Question 7

How is my credit judged by lenders?

Accepted Answer

Lenders use credit scoring to estimate how likely you are to repay a loan on time. Your bill-paying history, the number and type of accounts you carry, late payments, collections, outstanding debt, and the age of your accounts are all pulled into a model that compares you against borrowers with similar profiles. The most widely used scores are FICO scores, which run from 350 (high risk) to 850 (low risk). Because your credit report drives the score, make sure it's accurate before applying; you're entitled to one free report every 12 months from each of the three major bureaus (Equifax, Experian, TransUnion) at AnnualCreditReport.com. The bureaus may charge a small fee for the score itself.

Question 8

What can I do to improve my credit score?

Accepted Answer

Most scoring models weigh a few core factors: payment history (paying on time matters more than almost anything else), the amount you owe relative to your credit limits (utilization), the length of your credit history, how often you've applied for new credit, and the mix of account types you carry. The most reliable path to a higher score is paying every bill on time, paying down outstanding balances (especially revolving credit), avoiding new credit applications right before you apply for a mortgage, and being patient; score changes often take a couple of cycles to show up. If you have specific items hurting your file (collections, charge-offs, recent late payments), tell us early so we can map a realistic timeline.

Question 9

What is an appraisal?

Accepted Answer

An appraisal is an independent estimate of a property's fair market value. Most loan programs require one before closing so the lender can confirm the loan amount isn't higher than the home is worth. Appraisals are performed by state-licensed appraisers who evaluate the property's location, condition, amenities, and recent comparable sales.

Question 10

What is PMI (Private Mortgage Insurance)?

Accepted Answer

On a conventional mortgage, if your down payment is less than 20% of the purchase price, lenders typically require Private Mortgage Insurance to protect them in case you default. PMI is paid monthly and sometimes also up front at closing. The cleanest way to avoid PMI is a 20% down payment, but there are alternatives, including FHA, VA (no monthly MI at all for eligible borrowers), 80-10-10 piggyback structures, and lender-paid MI. We'll show you the long-term cost of each.

Question 11

What is 80-10-10 financing?

Accepted Answer

80-10-10 is a way to avoid PMI when you can't put 20% down in cash. A first mortgage covers 80% of the purchase price, a second mortgage (often a HELOC) covers 10%, and you bring the remaining 10% as down payment. Because the first mortgage is at 80% loan-to-value, PMI isn't required. The same principle scales to 80-15-5 if you can only bring 5% down, but the second lien is typically at a higher rate, and total closing costs may rise. We'll model whether the math beats just paying PMI in your scenario.

Question 12

What happens at closing?

Accepted Answer

Closing (sometimes called funding) is when ownership of the property officially transfers from the seller to you. Depending on the state, closing may involve you, the seller, the agents, attorneys for both sides, the title or escrow company, and various clerks and notaries. It usually takes anywhere from an hour to several, depending on the contingencies in the purchase contract and any escrow accounts being set up. Before closing you'll do a final walk-through to confirm that requested repairs were completed and any items meant to stay with the home (drapes, fixtures, etc.) are still there. In most states a title or escrow firm handles the actual paperwork and disbursement: you'll bring a cashier's check (or wire) for the funds due, sign your stack of documents, the seller gets paid, and the keys come to you.

Frequently asked questions

Common mortgage questions, answered

Get a real answer from a real loan officer

Let's get you home, talk to our Buffalo team today

Frequently asked questions

Common mortgage questions, answered

Get a real answer from a real loan officer

Let's get you home, talk to our Buffalo team today