Get the answers you need to common questions about mortgages, refinancing, rates and home loans.

How Much Can I Afford?

To calculate ‘how much house can I afford,’ a good rule of thumb is using the 28%/36% rule, which states that you shouldn’t spend more than 28% of your gross monthly income on home-related costs and 36% on total debts, including your mortgage, credit cards and other loans like auto and student loans.

How Do I Calculate My Mortgage Payment?

If you want to do the monthly mortgage payment calculation by hand, you’ll need the monthly interest rate - just divide the annual interest rate by 12 (the number of months in a year). For example, if the annual interest rate is 4%, the monthly interest rate would be 0.33% (0.04/12 = 0.0033).

What is a Mortgage?

A mortgage is an agreement between you and a lender that gives the lender the right to take your property if you fail to repay the money you’ve borrowed plus interest. Mortgage loans are used to buy a home or to borrow money against the value of a home you already own.

What is a Reverse Mortgage?

A reverse mortgage works by using a portion of your home equity to first pay off your existing mortgage on the home - that is, if you still have a mortgage balance. … After paying off your existing mortgage, your reverse mortgage lender will pay you any remaining proceeds from your new loan.

How to Get Pre Approved For a Mortgage?

• • Get your free credit score. Know where you stand before reaching out to a lender. …
  • Check your credit history. …
  • Calculate your debt-to-income ratio. …
  • Gather income, financial account and personal information. …
  • Contact more than one lender.
    

Should I Refinance My Mortgage?

One of the best reasons to refinance is to lower the interest rate on your existing loan. Historically, the rule of thumb is that refinancing is a good idea if you can reduce your interest rate by at least 2%. However, many lenders say 1% savings is enough of an incentive to refinance.

What is Mortgage Insurance?

Mortgage insurance lowers the risk to the lender of making a loan to you, so you can qualify for a loan that you might not otherwise be able to get. Typically, borrowers making a down payment of less than 20 percent of the purchase price of the home will need to pay for mortgage insurance.

How much of a mortgage can I qualify for based on my income?

Why it’s smart to follow the 28/36% rule. Most financial advisers agree that people should spend no more than 28 percent of their gross monthly income on housing expenses and no more than 36 percent on total debt - that includes housing as well as things like student loans, car expenses and credit card payments.

What Type of Loan do I Need to Buy a House?

Fixed-rate loans are ideal for buyers who plan to stay put for many years. A 30-year fixed loan might give you wiggle room to meet other financial needs. … Adjustable-rate mortgages are riskier than fixed-rate ones but can make sense if you plan to sell the house or refinance the mortgage in the near term.

What Type of Loan do I Need to Buy a House?

Fixed-rate loans are ideal for buyers who plan to stay put for many years. A 30-year fixed loan might give you wiggle room to meet other financial needs. … Adjustable-rate mortgages are riskier than fixed-rate ones but can make sense if you plan to sell the house or refinance the mortgage in the near term.

What are Closing Costs?

Closing costs are service fees and other expenses required to close your loan. Lenders are required to disclose these costs to you upfront. They can vary depending on the purchase price of your home, but most people pay 2%-5% of the purchase price.

What is an Escrow Account?

An escrow account is an account that we open to pay expenses related to your mortgage. An escrow account ensures that you will have enough money set aside to pay these expenses like property taxes and homeowners insurance when they come due.

What is a debt-to-income ratio?

Your debt-to-income ratio compares your gross monthly income with how much you owe each month (e.g. your estimated mortgage, credit cards, student loans and car loans). This number turns into a percentage and becomes your debt-to-income ratio. Lenders typically want the number to be below 43%, but some programs allow it to be higher.

What documents are needed to apply for a mortgage?

Several documents are used when applying for a mortgage. Have your pay stubs, W-2s, tax returns, bank statements, investment account statements and brokerage account information ready.

How fast can I get a mortgage?

It typically takes 30 to 60 days to get a mortgage, though it can take longer. Having all your documents and information ready and working closely with a mortgage lender will help move things along more quickly.

What is PMI?

If you're refinancing a first mortgage, and have less than 20% equity in your home, mortgage insurance, such as private mortgage insurance or PMI, is usually required. The mortgage insurance premium is typically included in your monthly mortgage payment.

Do you offer a mortgage rate lock?

Yes! CMS helps you lock in the best rates to ensure your home remains affordable.

What to do when buying a home?

Talk to a mortgage lender. They can make the home buying process much easier. A mortgage broker can help you shop around and find the best financial options for your situation.

How do I know how much home I qualify for?

• • You can use our online prequalification tool to connect with a loan officer and find out approximately how much you can borrow before you start shopping for a house.
  • Once you have that number, you can provide more information and allow your loan officer to run your credit report to verify your assets and income.
  • Your loan officer can also help you obtain complete written credit approval, subject to an appraisal before you make an offer on a house.

How do I access Equity in my home?

• • 1. Pay off your mortgage
  • 2. Increase the value of your home
  • 3. Refinance to a shorter loan
  • 4. Improve your Credit Score