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Frequently Asked Questions
Straight answers to the questions we hear most.
Your DTI ratio is a key metric calculated by dividing your total monthly debt payments by your gross monthly income. It comes in two forms:
Front-End Ratio: Housing costs (PITI) / Monthly Income.
Back-End Ratio: All monthly debt payments (PITI + car loans, credit cards, etc.) / Monthly Income.
Lenders use this to gauge if you can comfortably manage your mortgage payments alongside your other debts. A lower DTI is always better.
Front-End Ratio: Housing costs (PITI) / Monthly Income.
Back-End Ratio: All monthly debt payments (PITI + car loans, credit cards, etc.) / Monthly Income.
Lenders use this to gauge if you can comfortably manage your mortgage payments alongside your other debts. A lower DTI is always better.
The interest rate is the cost you pay each year to borrow the money, excluding any fees. The APR includes the interest rate plus other costs like origination fees, discount points, and certain closing costs, giving you a more complete picture of the loan’s true annual cost.
Discount points are an upfront fee you pay to the lender at closing to reduce your interest rate. Each point typically costs 1% of your loan amount and lowers your rate by a certain percentage (e.g., 0.25%). This is a form of “buying down” your rate and can be a good strategy if you plan to stay in the home long enough for the monthly savings to exceed the upfront cost.
The Closing Disclosure and Final Walkthrough are two critical, final steps in the homebuying process. The CD ensures the financial and loan details are correct on paper, while the walkthrough ensures the physical property meets your expectations. A problem discovered during the walkthrough could directly impact the financials on the CD if it results in a request for a repair credit from the seller.
A Mortgage Broker is a licensed professional who acts as an intermediary between you (the borrower) and potential lenders. Their primary role is to shop around on your behalf to find a mortgage loan that best suits your financial situation and goals. They assess your needs, compare options from their panel of lenders, assist with the application process, and guide you to settlement.
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