First-time buyer education courses
Frequently Asked Questions
Straight answers to the questions we hear most.
Most conventional lenders prefer a back-end DTI of 36% or less. However, some government-backed loans (like FHA loans) may allow DTIs up to 50% or even higher in certain cases, provided the borrower has strong compensating factors like a high credit score or significant cash reserves.
Discount points are optional fees you pay to lower your interest rate. Origination points are fees charged by the lender to cover the cost of processing and underwriting the loan. Origination points do not lower your interest rate.
# Property Taxes and Escrow Accounts
You should meticulously compare your Closing Disclosure to the Loan Estimate you received at the start of the process. Key items to check include:
Loan Terms: Interest rate, loan amount, and loan type.
Projected Payments: Your monthly principal, interest, mortgage insurance, and escrow payments.
Closing Costs: Compare the “Total Closing Costs” and ensure no new or significantly higher fees have appeared unexpectedly.
Loan Terms: Interest rate, loan amount, and loan type.
Projected Payments: Your monthly principal, interest, mortgage insurance, and escrow payments.
Closing Costs: Compare the “Total Closing Costs” and ensure no new or significantly higher fees have appeared unexpectedly.
Lenders require an escrow account to protect their financial interest in your home. Since the property serves as collateral for the loan, the lender needs to ensure that the property taxes and insurance are paid. If taxes go unpaid, the local government could place a tax lien on the property, which could take priority over the lender’s mortgage. If insurance lapses, the property could be damaged or destroyed without coverage.
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