Below you will find our most frequently asked questions. If you would like to speak to one of our mortgage loan officers, please call contact us.
Can KFS Mortgage tell me how much home I can afford?
Yes! If you are ready to explore buying a home, a KFS Mortgage loan officer is the right person to speak with to understand exactly how much you qualify for and discuss how much you can afford. In addition, many KFS Mortgage clients find it helpful to have a thorough discussion about long-term homeownership and get a mortgage they can be comfortable with for many years to come.
What is a mortgage pre-approval vs. pre-qualification?
Lenders’ processes vary widely, and the words they use do not tell you much about a particular lender’s process. The important thing is that the certificate or letter you receive provides enough information for sellers to take it seriously.
At KFS Mortgage Company, we will look at your credit report, validate your income and assets, and process your application to ensure you qualify for a mortgage loan. In addition, our pre-approval letter will confirm everything in writing, so real estate agents and sellers know you are a qualified borrower.
You can count on a KFS Mortgage pre-approval because we use the same criteria to evaluate and issue pre-approvals that we use for making loan approval decisions, unlike other lenders whose pre-qualifications can lead to unpleasant surprises when you apply for a loan later.
How much do I need for a down payment?
The amount needed for a down payment on your mortgage will depend on the loan program you choose. Some home buyer programs have no down payment requirements. Consult with one of our experienced mortgage loan officers to decide which loan program is best for you.
What is a rate lock?
If your interest rate is locked, your rate will not change between now and closing as long as you close within the specified time frame and there are no changes to your application. Rate locks are typically available for 30, 45, or 60 days, sometimes for a fee.
How do I apply?
At KFS Mortgage, it’s easy to apply in whatever way is most convenient for you. You can apply online, over the telephone, via mail, or in person. A great way to start is to request more information or call for a free, no-obligation consultation.
Do I need to find a home before I apply?
No! Get pre-approved before you find a home so you can confidently make an offer and don’t miss out on your dream home.
We recommend you talk with a KFS Mortgage loan officer before you start searching for property. Our FREE pre-approval program gives you an advantage when shopping for a home. KFS Mortgage will provide you with a pre-approval letter which you can use to assure real estate agents and sellers that you are a qualified buyer.
Our Loan Officers are local and know the community. We are happy to help you find the right real estate agent for you.
Can I get advice from a Loan Officer even if I’m not ready to apply just yet?
Certainly! Put our years of experience to work for you! Our loan officers are EXPERTS and are here to answer any questions you may have. Contact us today.
How do I know which loan program is right for me?
There are many loan programs to consider, including MaineHousing, Rural Development, Freddie Mac, and more. Each program has unique benefits and requirements. You could spend countless hours looking for the information you need. It can be very overwhelming. So instead, take advantage of our experience and expertise. We’ll answer all your questions, compare the pros and cons of each option, and make sure you end up with the mortgage that’s right for you. To learn more, contact us.
What will my rate be?
Mortgage rates are based on various factors such as the loan program, loan purpose, your credit history, the value of the house, and the loan amount. Talk to one of our experienced loan officers to get an accurate rate quote.
What is PMI (Private Mortgage Insurance)?
When your down payment is less than 20% of the purchase price of the home mortgage, lenders usually require you get Private Mortgage Insurance (PMI) to protect them if you default on your mortgage. The positive thing about PMI is it allows buyers to purchase a home with a lower down payment. Talk to one of our loan officers for more information.
How does an escrow account work?
An escrow account is a separate account that holds funds to pay bills such as homeowner’s insurance and property taxes. The lender collects the escrow funds each month and pays the bills for you when they come due. A payment amount is determined by taking the annual amounts charged for homeowner’s insurance and property taxes and dividing them by 12. Then, it is added to your monthly principal and interest payment. Spreading the cost of these expenses over 12 months makes it easier for you to budget those expenses, and you will not have to come up with additional cash when bills are due.
What does a lender look for when approving my loan?
There are “4 C’s” of loan approval.
- Capacity: Lenders look at your income, employment history, savings and monthly debt payments, and other financial obligations to make sure you have the means to comfortably take on a mortgage.
- Capital: Lenders consider your readily available money and savings plus investments, properties and other assets that you could access fairly quickly for cash.
- Collateral: Lenders consider the value of the property that you're pledging as security against the loan. In the case of a mortgage loan, they consider whether the house value will fully protect the lender if something happens and you cannot repay the loan.
- Credit: Lenders check your credit score and history to assess your record of paying bills and other debts on time. Many mortgages have minimum credit score requirements. In addition, your credit score could dictate the interest rate that you get and other loan terms.
What are points?
Mortgage points come in two varieties: origination points and discount points. In both cases, one point is equal to 1% of the loan amount, so one point on a $100,000 loan is $1,000. Lenders sometimes refer to points as “basis points”, which are expressed in hundredths of a percent. 100 basis points = 1 point, or 1% of the loan amount. Origination points may be charged as fees for specific programs, terms, or conditions on a loan. Discount points are an optional amount that the borrower may choose to pay to get a lower interest rate on their mortgage loan.
Should I pay discount points to lower my interest rate?
Maybe. If you plan to stay in the property for a least a few years, paying discount points to lower the loan's interest rate could be a good way to reduce your required monthly loan payment and possibly increase the loan amount that you can afford to borrow.
However, if you plan to stay in the property for only a year or two, your monthly savings may not be enough to recoup the cost of the discount points that you paid up-front. Talk to one of our experienced loan officers to review this option for you.
What is an appraisal?
An appraisal is an estimate of a property's fair market value. A lender generally requires an Appraisal to ensure that the mortgage loan amount is not more than the property's value. The Appraisal is performed by an Appraiser, who is typically a state-licensed professional trained to render expert opinions concerning property values.
What is homeowners insurance?
Homeowner’s insurance covers loss or damage (such as from fire or theft) to your home and the assets inside your home. When you have a mortgage, your lender wants to ensure your property is protected by insurance. Therefore, lenders typically require proof that you have purchased homeowner’s insurance.
When buying a homeowner’s policy, be sure you discuss what your policy covers and what it does not cover with your agent.
What happens at closing?
For a home purchase, the property is officially transferred from the seller to the buyer at closing. The closing may involve you, the seller, real estate agents, your attorney, the lender’s attorney, the title or escrow company, and the lending staff. You will review and sign the loan papers and related documents.
Before closing, you should have a final inspection or "walk-through" of the property you are purchasing to confirm that any requested repairs were performed and the items (drapes, lighting fixtures, etc.) that were agreed to remain with the house are there.
For a refinance, the closing may involve you, the lender, and the title or escrow company. You will review and sign the loan papers and related documents.
What documents do I need to prepare for my loan application?
We have prepared checklists for purchase and refinance applications, which will assist you in gathering the documents needed for loan application. However, every situation is unique, and you may be required to provide additional documentation. If you are asked for more information, it is important to provide it as quickly as possible. It will help speed up the application process.
What is the difference between interest rate and APR?
The interest rate is the cost you will pay each year to borrow the money, expressed as a percentage rate. It does not reflect fees or charges you may have to pay for the loan.
The annual percentage rate (APR) reflects the mortgage interest rate plus other charges such as points, origination fees, and additional costs that you may pay to get a loan. Therefore, the APR is usually higher than your interest rate.
If you have applied for a mortgage and received a Loan Estimate from one or more lenders, you can find the interest rate on page 1 under “Loan Terms” and the APR on page 3 under “Comparisons.”