Frequently Asked Questions

Before You Start the Buying Journey:
When should I meet with a lender?

As soon as you start thinking about making a home purchase. Meeting with a lender will help you determine a realistic budget based on your finances, so that you don’t end up falling in love with a home that you can’t afford.

What documents do I need to bring to the meeting?

You can bring records of your bank account and investment balances, a few months’ pay stubs, and at least two years of tax returns.

What is pre-approval?

After looking through your finances, a lender will provide you with “pre-approval,” which verifies how much you’d be able to borrow for a mortgage and at what interest rate. You can use this to show home sellers that you’d be able to obtain financing to back up an offer.

Do I need a 20 percent down payment?

No. Many homebuyers do not put down 20 percent on their purchase. However, you may have to pay private mortgage insurance, an additional monthly fee, if you put down less.

Do I need a real estate agent?

No, you don’t need a real estate agent, but having one can be really helpful to guide first-time buyers through the steps to buying a house. Plus, homebuyers generally don’t have to pay their agent, who will receive a portion of the fee paid by the sellers.

How do I pick a real estate agent?

Start by asking family and friends for recommendations. Then interview a few agents to find someone you feel comfortable with and who has experience working with buyers who have a profile similar to yours.

How long does it take to purchase a home?

It can take months of searching to find a property that you like and can afford. Once you’ve had an offer accepted, however, the closing process typically takes about a month or two but may be faster or slower depending on your circumstances.

Do I really need a home inspection?

It is recommended. A qualified home inspection will closely examine the entire home, from the roof to the foundation, to see whether there are any potential issues that you should be aware of. A tough inspection won’t kill the deal, but you may be able to renegotiate the price to make up for potential repairs or other problems.

What should I look for in a home?

The answer to that question varies depending on your needs. Before you start looking, sit down and make a list of “must-have” amenities in homes, as well as those that would be nice and features that are absolute deal breakers. For instance, maybe hardwood floors would simply be nice to have, but at least two bathrooms is an absolute must.

What if I don't get the home that I love?

Don’t worry — you’ll find another one. While it can be difficult to learn that a home seller has opted for another offer, it’s important to keep in mind that you may find another property that suits your needs even better.

“Can I Even Buy?” FAQs:
How much home can I afford?

“How much home can I afford?” is probably the most common question first-time home buyers have. One general rule of thumb is that your total housing expenses shouldn’t be more than 28 percent of your income.

How much debt can I take on?

Your debt-to-income ratio (DTI) is the percentage of your income you spend on debt repayment each month. When preparing for a mortgage, aim for a DTI of 43 percent or less.

What will my monthly mortgage payment cover?

Your mortgage payment includes the principal and interest on your loan. You may have the option of paying your annual property taxes and homeowner’s insurance premiums in monthly installments, which are added on to your principal and interest payment.

Depending on how much money you put down, your payment could also include private mortgage insurance, or PMI.

What's PMI, and when would I have to pay it?

PMI is a type of mortgage insurance that some loan programs require you to pay when you put less than 20 percent of the purchase price down on a home.

Can I buy a home with less than 20% down?

Yes. You could get an FHA loan with a smaller down payment. Some VA loans and USDA loans don’t require any down payment from qualified buyers.

What other expenses would I need to budget for as a homeowner?

When asking how much home can I afford, don’t forget about other costs besides your monthly payment. Remember to factor in homeowner’s insurance, property taxes, homeowner’s association fees, routine maintenance, and potential repairs.

What credit score do I need to get a mortgage?

Checking your credit is a good idea when preparing for a mortgage. Loan programs require different credit scores depending on the type of loan, the lender, and the amount you’ll be putting towards a down payment.

How does my credit affect my mortgage interest rate?

Generally speaking, the better your credit score, the lower your mortgage rate will be.

Do I need to get pre-approved?

No, but getting pre-approved can help you determine how much home you can reasonably afford, which is helpful for staying on budget. It can also make the formal mortgage process easier, since your lender is already familiar with your credit and financial details. Another great benefit: having a pre-approval in hand shows sellers that you’re serious about buying, and it can give you some leverage if you’re competing with other buyers to get your offer accepted.

What will I pay once I make an offer on a home?

Once your offer is accepted, the next steps to buying a house including scheduling an appraisal, home inspection, and pest inspection. Be prepared to pay for these up front.

How much do I need for closing costs?

Closing costs are paid when you sign the final paperwork on your home loan, and they include things like attorney’s fees, title insurance fees and recording fees. Expect to pay between 2 and 5 percent of the home’s purchase price at closing. The steps to buying a house may seem complicated but your real estate agent and lender can walk you through them. If you’re unsure whether home ownership is the right move.

First-time Home Buyers FAQs
Do I need a real estate agent?

No, you don’t need a real estate agent, but having one can be really helpful to guide first-time buyers through the steps to buying a house. Plus, homebuyers generally don’t have to pay their agent, who will receive a portion of the fee paid by the sellers.

How much home can I afford?

Mortgage companies have pre-approval processes that look at your credit, income, and available assets to determine which price levels you may be able to target. You may get estimates on a down payment and a monthly mortgage amount that fits your budget.

What should I do when I find a house I love?

Consider making an offer. A real estate agent can assist with bringing that offer to the homeowner, or you may take that figure directly to the seller if the house is marketed without an agent’s involvement. Hopefully your bid is accepted. If it is countered, you will have to decide if you can afford the new proposed price. If it is rejected, your search continues.

How much money will I need for closing?

Closing costs vary depending on the mortgage loan product you and your mortgage advisor discuss.

How long does the closing process take?

When all the brush strokes complete the picture, crossing over the literal and figurative threshold to home ownership may take as few as 30 days, but varies greatly based on your individual situation. In between application and closing, you’ll need a home inspection, and the lender will appraise the property to ensure the property value jives with the amount you’re borrowing.

Reach out to Finance of America Mortgage for assistance in your journey. Our experienced mortgage professionals have helped thousands of people achieve their dreams of owning a home.

Mortgage Loan FAQs
What is pre-approval?

Pre-approval means a lender has reviewed your credit and conditionally approved you for a certain amount of financing to buy a home.

Do you need to be pre-approved to get a home loan?

No, but pre-approval can give you an idea of how much home you can afford. It can also speed up the buying process, since the lender has already pulled your credit and checked your financials. And, a seller may be more persuaded to accept your offer when you’re pre-approved.

What's a conventional mortgage?

Conventional mortgages are home loans that are backed by private lenders and aren’t guaranteed or backed by any government agency.

What's an FHA loan?

FHA loans are backed by the Federal Housing Association; they allow you to buy a home with low down payment options.

Who can qualify for a VA loan?

VA loans are designed for qualified veterans, active service members, reservists and their spouses. These loans usually don’t require any money down, though lenders providing these loans do typically have credit requirements.

What is a USDA loan?

USDA loans are zero-down payment loans backed by the U.S. Department of Agriculture. These loans are geared towards buyers living in eligible rural and suburban areas.

When would I need a jumbo loan?

You’d need a jumbo loan if you were buying a home priced higher than the maximum limit allowed for conventional loans.

What's PMI and when would I have to pay it?

PMI, or private mortgage insurance, is a type of insurance that protects your mortgage lender. PMI is required for conventional loans when you put less than 20 percent down.

What's the difference between a fixed-rate loan and an ARM?

Fixed-rate loans maintain the same interest rate for the life of the loan. With an adjustable rate mortgage, or ARM, your rate may reset periodically based on several factors.

What are points?

A point is a fee you pay to the lender at closing, either to discount your interest rate or to cover loan origination and processing costs.

Are there mortgage loans for fixer-uppers?

Yes! The FHA 203(k) rehab loan program is designed for buyers who want to buy a fixer-upper and finance the purchase and home improvement costs together via one loan.

What's included in a monthly mortgage payment?

Your payment covers the principal and interest on your loan, but it can also include PMI as well as monthly payments towards your homeowner’s insurance premiums, property taxes, and homeowner’s association fees.

What is a rate lock?

A rate lock allows you to lock in a specific interest rate on a mortgage for a set period of time. You may be able to extend the rate lock for a fee.

How much are closing costs?

Expect to pay between two and five percent of the home’s purchase price to cover closing costs.

What's a reverse mortgage?

A reverse mortgage is a special type of home loan for homeowners aged 62 and older.

It’s a way to tap your home equity with no monthly payment.

One more question to ask for your mortgage comparison: how much can I afford? If you haven’t worked out your buying budget yet, read this article next to get a grip on mortgage costs.

Refinancing FAQs
What is refinancing?

Refinancing a home means you are obtaining a new home loan to change the interest rate, payment schedule or terms of your original mortgage. The value of the loan remains the same, unlike a cash-out refinance, in which case you apply for a new loan that is worth more than your current loan and the difference in value is yours in cash to use for things such as home improvements or paying off debt.

Why should I consider refinancing my home?

The most common reasons to refinance are to lower monthly mortgage payments and to take advantage of a better interest rate than the one your current loan is tied to. If the new interest rate is at least one percent lower than your current interest rate, refinancing may be beneficial. Another reason to refinance is to eliminate private mortgage insurance (PMI), which you might be paying if you invested in a down payment of less than 20 percent.

Am I eligible?

A solid credit score helps, but even with a lower credit score  you may be able to obtain a refinance with a co-signer, a government loan or an alternative lender.

How will a refinance affect my credit score?

Your FICO score may drop a few points each time a lender checks your credit score and credit report to see if you qualify for a refinance.

What are the costs involved in refinancing?

The fees will vary depending on the type of loan, your credit score, and other factors but often include fees for the application, closing costs, appraisal, home inspection and title insurance.

Interested in more details about getting a refinance on your home? An advisor at Finance of America Mortgage can help.

House Hunting FAQs
How many properties should I look at?

The total number of properties you may look at will depend on several factors, such as your budget and the housing availability in your area. In general, real estate agents recommend that homebuyers look at several properties before making a decision, but there is not an exact number. Most people look at 10 homes, at a minimum, so they can compare them. However, you may find the dream house with more or fewer searches.

What is the best way to search for homes?

When it comes to the best home buying tips, there are different ways to search for properties. Statistics from the National Association of REALTORS® reveal that 51 percent of buyers searched and found their homes on the internet, while 30 percent used real estate agents. Other ways to search for homes include asking friends, relatives, neighbors and homebuilders for help. A small percentage of homebuyers used newspaper advertisements and yard or open house signs to search for homes.

Should I get pre-approval before making an offer?

Although a pre-approval is not one of the required steps to buying a house, it can certainly help you stand out in a competitive market with many buyers. A pre-approval can show sellers that you’re serious and capable of getting a mortgage, so they may be more likely to accept your offer.

Title and Closing FAQs
What is closing?

Closing is the final step of a home purchase. During closing, you complete financial tasks like signing loan agreements and paying any applicable closing costs. Also, the seller transfers ownership of the property to you, and a closing agent (typically from a title or escrow company) helps coordinate the process. Plan to sign numerous agreements when closing on a house, and don’t be afraid to take your time reading everything before you sign.

What are closing costs?

When closing on a house, you may pay a variety of fees to fund your loan and take ownership of a property. For example, you may pay origination fees to your lender for the work of processing your loan application. Other charges could include taxes, prepaid interest on your loan (to cover the time before you start making payments), and title insurance fees. In some cases, you may pay closing costs before closing, as with appraisal and inspection fees.

How much are closing costs?

Closing costs depend on many factors, such as lender origination fees and local taxes. According to, buyers should plan to pay roughly 2 to 5 percent of a home’s market price, but ask your real estate agent and Finance of America Mortgage advisor how much closing costs may be in your situation. Your lender will also provide an official Loan Estimate, which details your expected closing costs.

Who pays closing costs?

Buyers and sellers both pay costs for closing on a house, but buyers are typically responsible for loan-related expenses if applicable.

Learn more about the home-buying process from start to finish. Ready to get an official loan estimate? Talk to a Finance of America Mortgage advisor today!

Reverse Mortgage FAQs
Am I eligible for a reverse mortgage?

If you can answer “yes” to the following questions, then you might be a good candidate:

  • Are you 62 or older?
  • Is this your primary residence?
  • Does your home meet FHA requirements?
  • Do you have sufficient equity in the home?
Do I still own my home?

Absolutely! As long as you stay current on property taxes, homeowner’s insurance, and property charges, you retain full ownership. This also means you can sell the home whenever you like.

How much does a reverse mortgage cost?

The cost of a reverse mortgage depends on the loan type and amount of money you take out. Each loan, no matter who the lender is, comes with upfront costs including lender fees, upfront mortgage insurance, and real estate closing costs. Interest and mortgage charges will be added to your monthly loan balance.

How much money can I take out?

You can borrow a portion of your equity. The exact dollar amount will differ for each borrower based on several factors, such as age, home value, the amount of equity you have, current interest rates, FHA lending limits, and the reverse mortgage product and payment plan you choose.

What can I do with the money?

A reverse mortgage can be a true path forward in retirement. You’ll find that there are many people today who are using reverse mortgages for a variety of reasons. The most common use is to pay off an existing mortgage. While some might use this tool as a means to defer collecting social security or as a safety net for emergencies, others are using home equity to enhance their life with greater flexibility and options in retirement. Some might want to realize a business idea, travel, help family members with education expenses, make charitable donations, or even use the funds for buying additional real estate. The beauty is, this is your hard-earned asset. A reverse mortgage can be an effective tool to help add choices to your retirement years.

What happens to my home after I die?

If you are the only borrower, then your estate repays the loan after you pass. As long as loan terms are met, a surviving borrower is able to continue living in the home without repaying if it’s their primary residence.

With a reverse mortgage, you can still leave your home to your children. The title will pass to your estate. Heirs can choose to either keep the house by paying off the loan or if there is still remaining equity, sell the home and keep what remains from the balance of the loan and the proceeds of the sale.

You always have the option to make elective payments to pay down or minimize the impact of the accrual of interest on your loan. This would protect equity to pass on.

What if my child/heir cannot afford to repay the loan?

If they desire to keep the home, heirs can refinance the amount owed on the reverse mortgage into a forward mortgage of their own.

In the case that home values go down, know that heirs can never owe more than the value of the home at the time your estate has to repay the reverse mortgage. These are non-recourse loans and your heirs are protected from inheriting debt from the reverse mortgage.

When do I have to pay back the reverse mortgage?

You do not have to make principal and interest payments as long as the home remains your primary residence. If you chose to live elsewhere or pass away, then the loan will have to be repaid.

Why should I choose a reverse mortgage over a second mortgage or Home Equity Line of Credit (HELOC)?

The unique feature of a reverse mortgage line of credit is that the unused portion grows over time to be drawn and repaid at any time. This has great potential to add flexibility to your retirement plan.