Frequently Asked Questions

Please reach us at info@gmccloan.com if you cannot find an answer to your question.

What is a mortgage?

A loan that enables you to buy a home, using the property as collateral.

How do I know if I qualify for a mortgage?

Lenders evaluate your credit score, income, debt-to-income ratio, and down payment resources.

What is the difference between fixed-rate and adjustable-rate mortgages?

Fixed-rate mortgages have a constant interest rate throughout. Adjustable-rate mortgages can change based on market conditions

What is a down payment?

The upfront payment made when purchasing a home, typically ranging from 3% to 20% of the purchase price.

Can I buy a home with a low down payment

Yes, programs like FHA loans allow down payments as low as 3.5%.

What is private mortgage insurance (PMI)?

Insurance that protects the lender if you default on your loan, typically required for down payments less than 20%.

What are closing costs?

Fees associated with finalizing a mortgage, including appraisal, loan origination, and legal fees.

What is a credit score, and why does it matter?

A numerical representation of your creditworthiness. A higher score can lead to better loan terms.

What is pre-qualification vs. pre-approval?

Pre-qualification is an estimate of what you might be able to borrow. Pre-approval is a more formal offer from a lender.

How much house can I afford?

Typically, your housing costs should not exceed 28% of your gross monthly income.

What documents do I need to apply for a mortgage?

Proof of income, assets, debts, ID, and residence, among other documents.

What is an escrow account?

An account where funds are held to pay property taxes and homeowners insurance on your behalf.

What does LTV ratio mean (LTV)?

Loan-to-Value ratio, the comparison of your loan amount to the value of your home.

Can I get a mortgage if I'm self-employed?

Yes, but you'll need to provide additional documentation regarding your income.

What is a VA loan?

A mortgage loan program for veterans and active military, offering zero down payment options.

What are USDA loans?

Loans designed for rural homebuyers, offering low interest rates and no down payment requirement.

What is refinancing?

Getting a new mortgage to replace the original, often to achieve a better interest rate.

Can I pay off my mortgage early?

Yes, though some lenders may charge a prepayment penalty.

What happens if I miss a mortgage payment?

You may incur late fees and risk defaulting on your loan, affecting your credit score.

What is a mortgage amortization schedule?

A table detailing each payment, how much goes to interest vs. principal, and the remaining balance.

Can I negotiate mortgage rates?

Yes, rates can sometimes be negotiable, especially if you have a strong credit profile.

What's the difference between interest rate and APR?

The interest rate is the cost of borrowing the principal loan amount. APR includes interest rate plus other costs such as closing costs, title fees, and prepaids like property taxes and homeowners insurance.

How does bankruptcy affect my ability to get a mortgage?

It can make it more challenging but not impossible. You'll likely need to wait a few years and rebuild your credit.

Can I use gift money for a down payment?

Yes, but you'll need a gift letter to confirm that the funds are a gift, not a loan.

What's a jumbo loan?

A mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac.

The conforming loan limit for 2024 is $766,550.

What is a home equity loan?

A loan where the borrower uses the equity of their home as collateral.

What does underwater mean on a mortgage?

When you owe more on your mortgage than your home is currently worth.

What's the difference between a home inspection and an appraisal?

An inspection evaluates the condition of the home, while an appraisal determines its market value.

Can I get a mortgage with bad credit?

Yes, but your options may be limited, and you'll likely pay a higher interest rate.

What is a balloon mortgage?

A mortgage with a large payment due at the end of the loan term.

What is a reverse mortgage?

A loan for older homeowners that allows them to convert part of their home equity into cash.

What is a construction loan?

A short-term loan used to finance the building of a home or another real estate project.

How long does it take to close on a house?

Typically, 30 to 45 days from the time your loan application is approved; however, GMCC can close as early as 25 days.

What is a good faith estimate?

An estimate of the mortgage loan's costs provided by the lender within three days of application.

What is a lock-in or rate lock on a mortgage?

An agreement with the lender to freeze the interest rate for a certain period.

What does "points" mean in a mortgage?

Fees paid directly to the lender at closing in exchange for a reduced interest rate.

Can I buy a second home or investment property with a mortgage?

Yes, but the requirements can be stricter, including higher down payments and credit scores.

What is a debt-to-income ratio (DTI)?

A ratio comparing your monthly debt payments to your monthly income.

Can I get a mortgage if I have a co-signer?

Yes, a co-signer can help you qualify for a mortgage by promising to pay if you default.

What are non-conforming loans?

A loan that exceeds the maximum loan limits set by Fannie Mae and Freddie Mac, often called a jumbo loan.

What is a title search and title insurance?

A search to ensure there are no liens against the property; insurance protects against future discoveries.

Can I change my mortgage application details after pre-approval?

Yes, but it may require a new approval process.

What are the benefits of a 15-year vs. a 30-year mortgage term?

A 15-year term usually has lower interest rates but higher monthly payments than a 30-year term.

What happens at a mortgage closing?

The buyer signs the mortgage documents, pays closing costs, and the property's ownership is transferred.

What is a conforming loan?

A mortgage that meets the underwriting guidelines

Can I get a mortgage on a property that needs significant repairs?

Yes, through programs like the FHA 203(k) loan, which allows you to finance both the purchase of a home and the cost of its rehabilitation through a single mortgage.

What is a second mortgage?

A type of subordinate mortgage made while the first mortgage is still in effect. The second mortgage gets its name because it is secondary to the first mortgage.

What should I do if I'm having trouble paying my mortgage?

Contact your GMCC loan officer or loan servicer as soon as possible to discuss your options, which may include refinancing, loan modification, or forbearance.

How does an interest-only mortgage work?

For a set period, you pay only the interest on the loan, not the principal. After this period ends, you start paying off the principal, usually resulting in higher monthly payments.

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Frequently Asked Questions