Have you ever walked into a crowded elevator and realized everyone was looking at their phone? More and more, our phones are demanding our attention and keeping us from starting a conversation with those around us. AAFMAA Mortgage Services LLC (AMS) makes a point of having meaningful conversations with each of our customers. By understanding your financial situation and your unique needs and goals, we can design a mortgage program just for you.
Getting the Conversation Started
Before you start shopping for a home, ask your lender these five questions:
1. How much money can I borrow to buy a home?
When determining how much you can borrow, lenders take into consideration your debt-to-income ratio, sometimes referred to as “DTI.” They also consider your current employment status, credit history, and your available funds to cover your down payment and any other expenses. The best first step is to get pre-approved prior to looking at homes. This will give you an idea of your budget and how much you are qualified to borrow. It’s equally important to think about how much you can comfortably afford to pay on a monthly and annual basis, not just the maximum loan amount you can get.
2. How much money do I need for a down payment?
Traditionally, when you get a conventional mortgage, it is best to put down 20% of the purchase price. While a smaller down payment won’t necessarily disqualify you, your lender may add private mortgage insurance (PMI) to your loan, which means an additional monthly PMI premium is then added to your regular mortgage payments. Typically, PMI is required when your down payment is less than 20% of the purchase price. However, there are options, such as getting a 1st and 2nd mortgage to purchase the home, which may enable you to avoid paying PMI. For current and former servicemembers using their VA Home Loan benefit to purchase a home, lenders may not require a down payment or PMI if you are eligible for a no-money-down VA loan. However, you may have to pay a VA fee on the loan. Your lender can help you determine any applicable fees and costs associated with your mortgage.
3. What is the interest rate?
This should be one of the first questions you ask your lender, as the rate can vary widely by mortgage provider. But it is not the only question to ask. Some lenders may charge upfront fees called “origination points” that they add to your loan amount. There are also various fees for applications, appraisals, and title insurance. Make sure you understand all of the fees and closing costs, as these will impact your overall annual percentage rate (APR) and monthly payment. To view current AMS rates and other helpful information, please visit our website at: www.aafmaa.com/mortgage.
4. What are my estimated closing costs?
Be sure to understand the amount of your closing costs and/or additional fees that might apply at closing. Closing costs include the loan origination fees, appraisal fees and attorney fees (if any). Your lender should provide you with a Loan Estimate showing the approximate amount of all of the costs associated with your loan so that you can budget accordingly.
5. What might delay my closing?
Be sure to ask your lender this question early in the process. You need to be aware of any issues which might delay or hinder you from closing on the scheduled date. Home buying is a complex process with many stages and requirements. Delays are normal, but the best way to avoid them is to stay in touch with your lender and provide the most up-to-date documentation as quickly as you can.
We’re ready to have a conversation with you and answer all your home-buying and mortgage-related questions. Please give us a call at 757-800-1552.
Chip Briggs is the Virginia Beach (Tidewater region) Branch Manager with AAFMAA Mortgage Services LLC. Chip has been in the mortgage industry for more than 30 years, helping many military families with their mortgage needs.