Mortgage questions? We’ve got answers. Check out the FAQs below for answers to our clients’ most common mortgage questions.
Don’t see the answer to your particular question? Contact us and we’ll be happy to answer any questions that you may have, and work with you to exceed your expectations when securing a loan.
Purchasing a Home
How much home can I afford?
Use the mortgage calculator below to figure out a monthly payment that works for you!
How do I qualify for a loan?
Lenders use specific criteria to determine if you qualify for a loan and the amount you qualify for. Factors include credit scores, income, liquid assets (if any), and if you have a down payment.
Because Seattle Mortgage Planners can shop over 50 different banks and lenders, we typically have a far larger product set from which to choose compared to a bank or credit union. We recommend the easy route: contact us (no obligation) and speak with an expert who will clearly talk with you about which programs, rates, and payment plans will suit your needs.
How do I know what my loan rate will be?
Rates vary primarily based on the type and purpose of the loan, your credit history and income, loan amount, value of the property, and the number of points you are willing to pay. Once the rate is chosen and “locked,” we’ll guarantee the rate up to and including your expected close date.
What are rates, terms, and APR?
All mortgages have an interest rate, a term, and an Annual Percentage Rate (APR). For example, a mortgage might be defined as a 30-Year Fixed Rate Loan at 7.25%, with an APR of 7.45%.
In this example, the mortgage term is 30 years. As the borrower, you will pay back the loan in installments over the course of 30 years.
The interest rate in this example is 7.25%. This means you must pay interest on the money you’ve borrowed at a rate of 7.25% per year. That is, in addition to paying back the loan, you will pay your lender an additional 7.25% of the current loan balance every year. This interest is basically the fee your lender charges you in return for lending you the money.
The Annual Percentage Rate (APR) is a measure of the cost of credit, expressed as a yearly rate. Because APR includes points and other costs such as origination fees, it’s usually higher than the advertised rate. The APR allows you to compare different mortgages based on actual annual costs.
What are points and how many do I have to pay?
One point is equal to 1% of your loan amount. It is important to remember that discount points are linked to the interest rate for the loan and therefore are a choice, not required. Generally speaking, the lower the interest rate, the higher the points paid.
Sometimes it makes sense to pay the extra points and ‘buy’ the rate lower, sometimes it does not. This decision is yours to make, but we will review it with you in-depth and explain your options, the break-even, etc. to determine what final rate and point combination works for your particular circumstances.
You can choose a ‘no-point’ option, or can pay points to get a lower rate. If you choose to pay points and have a lower rate, they are paid when the loan closes, not at the time of application.
What is included in closing costs?
Closing costs may include origination points, discount points, underwriting fee, processing fee, funding fee, broker fee, and tax service fee.
Costs do not include fees charged by 3rd party providers including (but not limited to) appraisers, title companies, escrow, courier, etc. If there are material changes to the loan program or the rate due to Borrower/Client request and this request results in a change in costs, a revised Good Faith Estimate will be provided to the client and used for the purposes of this offer. Borrower/Client must meet all guidelines for loan approval and be able to satisfy required conditions for funding.
Do I get a tax advantage from having a mortgage?
You should consult a tax attorney or accountant for specific details, but interest on a mortgage is usually tax deductible. Interest on credit cards or automobile loans is not normally tax deductible.
Can I make extra principal payments so I can pay off the loan more quickly?
Depending on the loan, and what your state permits, it is possible for you to make extra payments on the loan. Extra payments will have an effect on the amortization schedule over the remaining term of your loan. If you want to pay off your loan in a certain amount of years, discuss this with us and we’ll estimate for you how much extra principle payment you’ll need to send in each month.
It’s important to note however, this is a choice and is not required. You should consult a financial planner to determine if paying extra principle each month is the highest and most adequate use of your money.
Securing a Jumbo Loan
Do I need a jumbo loan?
For 2020, any single-family residence loan over $741,750 in King, Pierce and Snohomish Counties is considered a jumbo loan. We work with a variety of lenders to get you a competitive rate on your jumbo home loan or refinance loan. Request a quote today!
What is a jumbo conforming loan?
In King, Pierce and Snohomish Counties, loans between $510,401 and $741,750 are called “jumbo conforming,” “super conforming” or “high-balance conforming.” This kind of loan typically provides borrowers with more options and better rates than “jumbo” loans.
Do I need to have 20% down?
We shop interest rates with over a dozen of lenders online each day to offer you some of the lowest rates on a large variety of products with numerous lenders. This makes comparison shopping easy, and gets you the best loan to fit your specific needs. There are some jumbo options over 80% loan-to-value (less than 20% equity) that may work for you. Certain restrictions apply. Contact us for more information.
Refinancing a Home
How do I refinance my existing home loan?
The primary reasons people refinance their existing mortgage include lowering their rate, pulling cash out for a remodel, or to consolidate debt and lower overall payments. Seattle Mortgage Planners has a variety of fixed rate and adjustable rate options to choose from. If you are focused on fixed rate programs, the two primary programs are 30 year and 15 year fixed rate.
Choose a 30-Year fixed-rate refinance if:
- You want low monthly payments that do not change
- You want a loan that’s generally easier to qualify for
- You’re planning to remain in your house less than 10 years
- You want the maximum tax advantage (please consult your tax adviser)
Choose a 15-Year fixed-rate refinance if:
- You want a shorter loan life and lower rates
- Low monthly payments are not a priority
- You’re planning to stay in your house for more than 10 years – especially if you’re planning to completely pay off your loan
If the equity in your property qualifies, you can refinance with a loan amount greater than your current mortgage – and keep the difference! Use it for home improvement, debt consolidation, or whatever you want.
How can I estimate the value of my property?
Want a good place to start? Go to zillow.com or redfin.com and type in your address.
While this is by no-means an accurate final estimate, it does offer a starting point. An appraiser may value the property significantly higher or lower depending on condition, recent comps, upgrades, etc. Since a mortgage is a loan secured by a piece of real property, a crucial factor is in the correct value of the property in question.
Property value can be determined in a number of ways:
- The market value of the property – that is, what a buyer will pay for it and what other comparable properties (comps) in the neighborhood have recently sold for.
- The appraised value of the property – that is, what a trained and licensed professional deems the property to be worth based on an inspection, comps, and a thorough analysis of the property and its neighborhood.
Additionally, the appraiser estimates the replacement value of the property – that is, the cost to build a house of similar size and construction on a vacant lot. The appraiser reduces this cost by an age factor to take into account deterioration and depreciation.
What is a cash-out option?
If the equity in your property qualifies, you can refinance with a loan amount greater than your current mortgage – and keep the difference! Use it for home improvement, debt consolidation, or whatever you choose.