Frequently Asked Questions

Q. What does Loan-To-Value (LTV) mean?
A. This is the ratio of how much money you want to borrow against how much your home is worth. For example, if you want a mortgage for $200,000 and your home is worth $285,000 your LTV is 71%. You calculate this by dividing your loan amount by the value. The value of your home is the appraised value or purchase price, whichever is less.

Q. What is the benefit of going through a broker?
A. As a broker we are able to get wholesale rates from many different lenders. In our case we have over 20 lenders that we do business with. Because we do business with so many lenders we have hundreds of different programs to offer. As a broker we can shop for you to find the best program and interest rate that best suits your needs. We pull your credit once so your score does not get pulled down by being pulled multiple times. We have relationships built with our lenders so we can get you the best mortgage.

Q. How much money can I afford to borrow?
A. There are many factors that go into getting qualified for a loan. All you need to do is call us and your Thomas Family Mortgage loan officer will pre-approve you for a mortgage. There is no application fee and there is no obligation. We give same day pre-approvals.

Q. How can I purchase a home with no money?
A. We have many programs for people that do not have money to put down on a home and in some cases our customers do not have to bring any money to the closing including closing costs. You can call your Thomas Family Mortgage loan officer and in minutes we can qualify you for the program.

Q. Should I find a home or talk to a mortgage company first?
A. In today's market people selling there home only like to deal with buyer's who have been pre-approved. We recommend that you contact us before going to a realtor and we will be able to help you determine how much you can borrow and what range of prices to stay within. It is simple and fast to get pre-approved.

Q. What is escrowing and do I have to do it?
A. When you refinance or purchase a home an escrow account is set up. This account is used to pay your taxes and insurance when they come due. Every month part of your mortgage payment goes into your escrow account so when your taxes and insurance are due there is enough money for them to get paid. In some cases you can choose not to set up an escrow account. By not escrowing you will be responsible to pay your taxes and insurance when they are due. If you choose not to set up an escrow account there may be associated fees.

Q. What is included in my monthly payment?
A. Your payment is broken up between your Principal and Interest (P&I). The principal is money going towards paying down the money you have borrowed. The interest goes to the lender for loaning you the money.

If you escrow your payment is broken down to Principal, Interest, Taxes and Insurance (PITI). The principal and interest are the same and the taxes and insurance go into your escrow account so that when the bill comes the lender can pay them.

In some cases you have to pay Private Mortgage Insurance (PMI), if this is the case then this will also be included in your monthly payment. See PMI Below.

Q. What is a good middle credit score?
A. When a loan officer tells you your credit score they are giving you your middle credit score. When your credit is pulled we are given 3 credit scores, one from each credit reporting agency, Experian, Transunion, and Equifax. Credit scores range from 300 to 850. Your credit score is used to determine how much of your home value you can borrow and what your interest rate is. Your Thomas Family Mortgage loan officer will go over your credit with you and educate you on what it means and how you can potentially improve it. At Thomas Family Mortgage we always offer a free loan consultation.

Q. What is Annual Percentage Rate (APR)?
A. The APR takes into account the interest rate and up front charges paid by the borrower, whether expressed as a percent of the loan or in dollars. It is usually higher than the interest rate because of up front charges. The APR is adjusted for the time value of money, so that dollars paid by the borrower up front carry a heavier weight than dollars paid in later years.

Q. What is Private Mortgage Insurance (PMI)?
A. This insurance is required if you have less than 20% equity in your home. It is additional insurance to help protect lenders from individuals who default on paying there loan. If you do not have 20% to put down when buying a home or you do not have 20% equity in your home, there are many options to avoid PMI. Contact your Thomas Family Mortgage loan officer for further details.

Q. What is Debt to Income Ratio (DTI)?
A. This is the ratio used to determine how much of a mortgage you can afford. This is calculated by dividing your monthly obligations by your monthly income.

Q. What is considered a late mortgage payment?
A. Usually your mortgage company offers a grace period of 15 days. So if your loan is due on the first you have until the 15th to make your payment. Always make sure to ask your Thomas Family Mortgage Loan officer when your payment will be due and what your grace period is as they can be different. After the grace period there is usually a late fee added to your mortgage. Once 30 days have passed your lender reports you 30 days late to the credit bureau and being more than 30 days late can drastically affect your credit score and future interest rates you may qualify for.