Mortgage FAQ: Straight Answers to Common Home Loan Questions

It depends on how long you plan to stay, how stable your income is and what renting costs you locally. Ownership builds equity over time, while renting keeps you flexible. Comparing a realistic monthly ownership cost with your rent, using the mortgage payment calculator, is a good first test.

No. Many buyers talk with a lender first so they know their budget before interviewing agents. Having a pre-approval in hand also helps an agent focus the search on homes and price points that fit your financing.

Pre-approvals are typically valid for a limited window, often around two to three months, because pay stubs, statements and credit reports age. If your search runs longer, we refresh the documents and reissue the letter rather than starting over.

Often, yes. If your income can carry both housing payments, you may qualify without selling first. Otherwise, options include using equity through a bridge loan or a home equity line, or making the purchase contingent on your sale. Each approach has trade-offs worth mapping out early.

The lender funds your loan, and the loan officer is the licensed person who guides your application. After closing, a servicer collects payments and manages escrow; it may be a different company. A servicing transfer does not change your rate or terms.

Buyers usually pay their own loan and title costs, but that is negotiable. Sellers can agree to contribute toward the buyer's costs up to limits that vary by program and down payment. Lender credits in exchange for a slightly higher rate are another option.

Usually. Many borrowers withdraw from or borrow against a 401(k) or IRA. Lenders need statements showing the funds and proof of any withdrawal or loan terms. Taxes and early-withdrawal penalties may apply, so talk with a tax professional before moving retirement money.

A discount point is an upfront fee, commonly equal to one percent of the loan amount, paid to lower your interest rate. Points make sense when you will keep the loan long enough for the monthly savings to recover the cost; otherwise, keeping cash may be smarter.

Most lenders collect property taxes and homeowners insurance each month into an escrow account, then pay those bills when they come due. It spreads large annual bills into predictable installments and protects the home that secures the loan.

Some programs require a set amount of reserves, often measured in months of housing payments, while others require none. Even when not required, keeping a cushion for repairs and emergencies is wise, and documented reserves can strengthen an otherwise borderline application.

Some refinances can happen fairly quickly, but many programs require a seasoning period, meaning a minimum number of on-time payments or months since the last closing. Cash-out and streamline refinances often carry their own waiting rules. Share your closing date and goal, and we will check the earliest realistic date.

Most rate-and-term and cash-out refinances require one, because the new loan amount is measured against current value. Certain streamline options, such as the FHA streamline and VA IRRRL, may not, depending on program guidelines. Waivers are sometimes available on conventional loans based on automated underwriting results.

A rate-and-term refinance changes your rate, term or both while keeping the balance roughly the same. A cash-out refinance replaces the loan with a larger one and pays you the difference. Cash-out loans generally have lower maximum loan-to-value limits and somewhat different pricing.

Refinancing into your name alone is the most common way to release a former spouse or co-borrower from the loan. You will need to qualify on your own income and credit, and title changes are handled separately with a deed. Our refinance options overview covers the programs involved.