General Questions

How much of a down payment do I need?

The short answer is that you can get a conventional mortgage with as little as 3% down, an FHA loan with 3.5% down, and a VA or USDA loan with no money down at all. However, with a conventional or FHA loan, you’ll have to pay private mortgage insurance, aka PMI, if your down payment is less than 20% of the home’s sale price. (Those payments won’t be a permanent fixture in your monthly payments, however. Once the loan-to-value ratio on your mortgage falls to 80%, you can ask your lender to drop them. And even without your request, lenders are required to cancel PMI when the loan-to-value ratio drops to 78%.)

What are discount points, and should I pay them?

Discount points are money that you pay up front on your mortgage in exchange for a lower interest rate. One “point” is equal to 1% of the loan amount, so on a $200,000 mortgage, one discount point would be $2,000. Discount points are tax-deductible, and mathematically, if the interest savings over the life of the loan is greater than the points paid, it can be worth it. A mortgage calculator can help you determine whether discount points are a good idea by comparing the effect of various interest rates on your mortgage.

What documentation should I gather?

Your lender may ask for many different items, but in general, be prepared to show all of the following:

Income verification (Last two years’ tax returns, W-2s, 1099s, and your last 30 days of pay stubs)
Drivers’ license
2 months Bank statements
Proof of funds to close (and an explanation of where they came from, if it’s not obvious)
If some or all of your down payment is coming from a gift, you will need gift letter from the source of the funds that confirm they are gift, not a loan.

How is my mortgage payment determined?

Depending on your situation, there are typically three or four parts of your mortgage payment:

Principal:Repayment of your outstanding balance.
Interest:Payment of the interest charged on the outstanding balance.
Taxes: One-twelfth of your expected annual property taxes will be included in your mortgage payment and deposited into your escrow account.
Insurance: This includes homeowner’s insurance, as well as any other hazard insurances you’re required to have, such as flood or windstorm. If you put less than 20% down on your loan, this can also include private mortgage insurance.

I’ve heard about getting a Pre-Qualification, but what’s the advantage if I haven’t even started looking for a house yet?

You wouldn’t go shopping for a new car without knowing how much you can afford. Why would buying a home be any different?

Pre-Qualification Today = Less Stress House Shopping Tomorrow

Let’s face it. One of the most stressful things about buying a home is adjusting to your new mortgage payment. Knowing your family’s financial boundaries before shopping for your new home can make the process go much more smoothly.

Your pre-qualification is an essential tool when house shopping, because it…

Determines what homes are in your price range

Assures real estate brokers and sellers that you are a qualified buyer

Can be used to your advantage in future negotiations

Your pre-qualification letter is good for a limited time. One of our experienced loan experts can complete your pre-qualification for you over the phone. Call 708-341-8373 today.

What is an escrow account? Why do I need one?

The Tadros Team will set up an escrow account to collect funds for the payment of your real estate taxes, homeowner’s insurance, and private mortgage insurance, if necessary. Each month a portion of your payment will be held in your escrow account to make sure the funds are available when these payments are due. At that time, funds are drawn from the escrow account. You may pay your own real estate taxes and insurance if you meet the lenders Escrow Waiver Requirements.

How long will it take to close my loan?

On average we are closing our loans in 21 days or less!!

Our goal is to have your loan ready for closing as soon as possible! Generally, the items that take the longest to receive are things such as the appraisal and the title work and the conditions that you need to provide us with. We’ll want to get the appraisal and title work ordered as soon as possible to avoid any delays.

Frequently Asked Questions