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Answers to all of your purchase home loan questions


I am a first time home buyer and I have heard the best option for me is an FHA loan, will I have other choices?

This will depend on your overall ability to qualify. FHA offers loans that allow borrowers with little or no credit history to qualify with often as little as 3% down. There may be other programs that would be advantageous to your situation and you should review your options with a few lenders.

When I compare mortgage quotes, what are considered third party fees?

Generally third party fees are referred to items such as your appraisal, title work, title insurance policy, recording fees, etc. They are not considered as fees paid to your lender to close your mortgage.

I am purchasing a new construction home and the builder has their own mortgage company, is this the best way to secure my home financing?

We would recommend obtaining a quote from a few lenders as well as the builders mortgage company. You should find out if there is any price difference with the sales purchase price if you choose an outside lender and compare all of the quotes to ensure you are getting the best deal.

I want to get the lowest mortgage rate, will I need to pay points?

This will depend on the lender and what loan program you decide on. Typically you can buy down the interest rate on a mortgage, by purchasing discount points up front. You will need to review how long you plan to keep your mortgage to determine if this is a good investment.

I am purchasing a new condo are there requirements for a mortgage different?

Typically condos will have different lending standards, for example if you are in a development with over four stories, if this condo is a townhouse or cannot. Every lender will have a specific set of guidelines and programs that will vary on the type of condo you plan to purchase.

I am thinking about buying an investment property in California, Arizona or Nevada. Are there any other hot markets that I should consider and what is the best mortgage program to do this under?

These are three states that have seen a great deal of appreciation in the last couple of years, but a key factor will be whether or not this is a long term investment or a short term plan. California homeowners lead the nation in choosing aggressive mortgage options such as interest only loans and deferred interest mortgages as a way to best leverage their borrowing power. These types of loans help provide you with payment flexibility with the hope your home will appreciate in value at a double digit pace.

What requirements should I be aware of on a multi family home mortgage?

Investment properties generally are considered a higher risk loan by lenders and will have tougher underwriting guidelines and potentially higher interest rates and closing fees. The lender may require a larger down payment, higher level of income and will take into consideration how many total units (up to 4) for a conventional loan.

We are trying to buy an investment property. Should we refinance our home to take cash out for a larger down payment?

There are a number of factors to consider with this scenario. Many lenders now offer 90% + financing options for investment properties. As a general rule, it is typically cheaper to borrow money against a primary residence versus an investment property. You need to closely examine your existing financing on your primary residence and do a side by side comparison with all of your options.

I am applying for a jumbo loan mortgage, are interest rates much higher?

You will only need to apply for a jumbo loan if your mortgage amount will be over $417,000 in most states. Generally there is not a large difference, perhaps a quarter of a point, in mortgage rates on jumbo loans.

I am shopping for a new mortgage as a first time home buyer, what does an 80-20 loan mean?

This is a common way for a mortgage to be structured if you have good credit and are hoping to finance 100% of the value of the home. This helps to keep you from paying mortgage insurance and structures a first loan at 80% of the homes value and a second mortgage for the remaining 20%.

Is it true that discount points on a mortgage are tax deductible?

Generally discount points are treated as mortgage interest. You are able to write off different amounts on your taxes depending if your mortgage was a refinance or purchase. You should consult your tax advisor to review your specific situation.

I live in California, is there a difference in mortgage interest rates between states?

Mortgage interest rates and closing costs will vary from state to state and lender to lender. Different states may have different required fees associated with specific loan programs. The best way to insure you get a competitive mortgage quote on a California mortgage loan is to compare a few mortgage quotes from top lenders, of the same type of loan program.

I am hoping to buy a new home this year, how do I shop for a mortgage quote?

This will depend on a number of items. Are you a first time home buyer, do you have a home to sell and are their any other contributing factors. Generally it is more advantageous to line up your financing and know that you can get approved for your desired loan amount. Keep in mind that the mortgage market is very fluid so an interest rate quote you received at time of application will possibly change by the time you find your dream home. We always suggest starting the pre-approval process 3-6 months prior to when you hope to move.

How do I get the best mortgage rate?

The best way to ensure you are getting a good deal on a mortgage is to not focus strictly on the mortgage rate. When you are shopping for a mortgage rate, you should start by comparing multiple mortgage quotes and examine not only the mortgage rate, but closing costs, prepay penalties, loan programs. Typically the best way to get the best mortgage for your individual situation is to compare a few mortgage quotes from reputable companies.

What is an Option Arm?    

This type of mortgage loan is also known as a pay option arm. The option arm typically provides up to 4 payment options for your mortgage payment. There are both 15 and 30 year principal and interest amortizing payment options, an interest only option as well as a minimum payment option. The minimum payment option could allow you to have a $200,000 loan with a payment as low as $643 per month. These loans may benefit you if you are looking for increased cash flow or debt consolidation.

I want to buy a home, but I don't have a large down payment, can I still qualify for an interest only loan?

Most of our lenders offer a variety of zero or minimal down payment loan programs.  You may qualify for an interest only loan or similar program depending on your specific situation.


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