Frequently Asked Questions (FAQs)

What types of mortgages are available, and which one is best for me?

There are many types of mortgages. The main programs are your fixed or Adjustable mortgages in terms of interest rate. Regarding programs there’s Conventional, Government backed loans for First time home buyers, Veterans and Rural property type loans meaning someone far from the local metro areas and away from a local city as well as Portfolio mortgages and jumbo portfolio mortgage over the confirming limits. 

What is the current interest rate, and how does it affect my monthly payments?

Current rates adjust day to day. In 2024 the average rate has come in above 6%. 

What is the minimum down payment required, and are there any down payment assistance programs available?

Minimum down is as little as $0 in terms of down payment. Each program is different and has additional closing costs that vary per loan structure area and type. Down payment assistance is available locally at the County level, To city and Statewide programs are available as well as programs geared towards helping specific protected groups.  

How does my credit score influence my ability to qualify for a mortgage, and what credit score do I need?

Your credit score is one of the top 3 most important factors when looking for a mortgage. Credit score minimums start as low as 550 with some lenders but you will get the best pricing andsave the most money with a credit score over 780. 

What are the closing costs, and are there any ways to reduce them?

Closing cost consist of several loan fees as indicated by the Closing Disclosure. The best way to reduce your closing cost is to review them with your loan officer and if your not feeling your fees are reasonable and competitive for the loan your asking for you should seek a 2nd Opinion as needed. Also shopping around is great but with a Mortgage Broker Jacob Haddan with Mortgage Consulting Group can shop around for you. 

How long does the mortgage approval process take, and what documentation do I need to provide?

Mortgage Approvals can happen in general 24 hours with some happening quicker if needed. 

What is the difference between fixed-rate and adjustable-rate mortgages, and which one is better for me?

Fixed rate is better unless you have lower rate on the adjustable and are ok with an exit strategy of selling or refinancing out of the current mortgage prior to that adjustment period coming up. With going past the date of adjustment some borrowers have seen payments double on their mortgages so an ARM or Adjustable-rate-mortgage. 

Can I get pre-approved for a mortgage, and what are the benefits of doing so?

Yes. It’s recommended to get your mortgage pre approved before shopping for a home. Think Mortgage first then home. But many people make that decision the other way and that’s ok but is more risky if you get into a mortgage you don’t qualify for or can’t afford in the long run. 

What is private mortgage insurance (PMI), and do I need it?

PMI is required if you go over 80% financing on conventional for some government loans your required to pay mortgage insurance for the life of the loan or you can remove it by refinancing. 

What happens if I miss a mortgage payment, and what are the consequences?

If you go past the 1st of the month you have a grace period until the 15th. If you go past the 15% you have a 4 or 5% late fee as stated in your loan docs. By default always read through all of your loan application and closing documents to confirm these numbers as some non conventional or commercial loans may have different terms and costs if paid past these dates. If you go past 30 days your credit report will reflect this late payment and your credit score will drop. 

Are there any penalties for paying off my mortgage early?

With Mortgage Brokers and most Lenders your going to need to hold the loan around 6-9 months of payments in order not to penalize your mortgage loan originator. If you’re buying a primary residence there is usually not a pre payment penalty. Other loans that are investment property loans or commercial may and usually do as standard have prepayment penalties to be aware of. Always ask your lender confirm in writing and read your loan documents. 

What is the difference between a mortgage lender and a mortgage broker, and which should I use?

A mortgage lender is generally going to have in-house underwriting and be able to walk to an underwriter to get decisions and be able to obtain fast decisions but has a smaller box. A Mortgage Broker is covers a wide range of options as the sky the limit a mortgage broker can sign up with infinite investors and bring many programs that are outside of the standard Mortgage Lender box of programs and offerings. Mortgage Consulting Group Powered by MAC5 Mortgage is a Mortgage Broker and focused on having out side of the box solutions. 

How much can I afford to borrow, and what factors should I consider in determining this?

This is based on your debt to income ratio and can vary based on other factors and your program. If you buying a home and your income is for example $10,000 gross employee wage per month and your expenses with your mortgage are $5,000 you have a 50% Debt to Income ratio. While this is normally the limit it gives you a basic idea of how DTI works. 

What happens if I want to sell my house before the mortgage term is over?

This is allowed and will save interest cost you would have paid over the remainder of the term. Your lender payoff will show all the fees owed up to a date the payoff is good through so you can have an amount to the exact penny to plan on. 

What is the difference between a conventional mortgage and an FHA loan, and which one is right for me?

A conventional mortgage is not government insured so they usually are a 20% down loan in general but some can go up to as little as 3% down with high credit scores. But FHA will help with first time home buyers as it’s just 3.5% down and allows lower credit scores. The 3.5% down payment can also be financed with lender 2nds now available in 2024. 

What is the difference between a mortgage rate and an APR (Annual Percentage Rate)?

The interest rate is your basis for calculating your monthly mortgage payment year over year. Your APR is your annualized percentage rate based on the first year with cost included in theAPR divided by the total loan amount. This gives you a good idea when shopping mortgages and comparing lender to lender on your overall cost for the first year of financing. 

Are there any special programs or incentives for first-time homebuyers?

Yes Colorado has CHFA a first time homebuyer program with additional underwriting criteria they also have the ability to adjust these funds and sometimes call them gifts and other times they are loans so make sure you know what your getting. The downside is these have income limits and you may not always qualify if your income is to high or too low for the DTI requirement. 

How does my employment history and income affect my ability to qualify for a mortgage?

When looking at employees, 

Employment gaps of more than 2 months often impact your ability to qualify for a mortgage loan if they are within the past 2 years and you don’t have employment prior to the 2 year mark. 

When looking at the self employed 

In general on conventional loans they want a 2 year history of employment. 
Other programs that are outside the box are sometimes going to allow 1 year only of documented income but required the business has existed for 2 years based on the formation date. 

What is the role of escrow in the mortgage process, and how does it work?

Escrow is taxes and insurance combined into your monthly escrow payment. There are other terms for escrow but usually they deal with post closing and are not applicable here.