FAQs

We provide the answers to some frequently asked questions concerning buying a home and getting a mortgage below. For definitions of any unfamiliar terms, please check our Glossary.

Q: How do I start the process of buying a home?

Q: How do I decide on a neighborhood?

Q: How does Bridgeview Mortgage Company decide how large a loan I can afford?

Q: How do I find out how much homes cost in the neighborhood I chose?

Q: What are the tradeoffs in buying a new home versus an older home?

Q: What should I think about when looking at a house?

Q: What does a home inspector do?

Q: What else should I think about before I buy my home?

Q: What is earnest money?

Q: Should I check my credit history before applying for a mortgage loan?

Q: When should I apply for my mortgage?

Q: What information must I provide when I apply for my mortgage?

Q: How do I know what my loan rate will be?

Q: What are points and how many do I have to pay?

Q: What are closing costs?

Q: What is PMI?

Q: What is amortization?

Q: What is an ARM mortgage?

Q: What is locking-in?

Q: What is floating?

Q: What is a FHA mortgage?

Q: What is a VA mortgage?

Q: What is a sub-prime or non-conforming mortgage?

Q: If I am not comfortable with the security of your Web site, is there another way I can apply for a loan?

Q: Can I make extra principal payments so I can pay off the loan more quickly?

Q: Do I get a tax advantage from having a mortgage:

Q: How do I know how much equity I have in my property?

Q: What is the difference between an equity line of credit and a second mortgage?

Q: How do I start the process of buying a home?

A: Start by thinking about your circumstances. How large a monthly payment can you afford? How much space do you need? What neighborhoods do you like? Would you like a home with a yard or would you prefer living in a condominium? Start researching home listings in the newspaper, exploring neighborhoods, and talking with family and friends.

Q: How do I decide on a neighborhood?

A: Choose a neighborhood based on how you wish to live your daily life. If you have children, the school system and activities for kids will be important considerations. Maybe you want to live near work or relatives. Some people choose a community with cultural or athletic events or with easy access to good medical facilities, shopping, and public transportation. Others choose a rural environment where they can enjoy the beauty of nature. Visit the communities you are considering and talk with residents. Ask what they like and don’t like about living there.

Q: How does Bridgeview Mortgage Company decide how large a loan I can afford?

A: We consider your job stability, what cash you have available for a down payment, your credit history, and the ratio of the size of the loan to the value of the property. We will pre-qualify you before you shop for your new home. That way you will know how much you can afford to spend plus you will have a stronger negotiating position when the seller knows that you are a qualified buyer.

Q: How do I find out how much homes cost in the neighborhood I chose?

A: If you are working with a realtor, he or she may have access to a database showing comparable sales or may be able to give you a ballpark figure by showing you listings on similar properties. You may be able to find some helpful information on the Internet.

Q: What are the tradeoffs in buying a new home versus an older home?

A: New homes tend to have architecture that is more modern. They generally have newer heating and cooling systems and plumbing and are generally more energy efficient. When you buy a new home, initially you should not have to worry about maintenance and repairs. Older homes may have more ambiance and be in more established neighborhoods. They may have millwork and architectural details that would be prohibitively expensive today. Your maintenance, repair, heating, and cooling costs are apt to be higher in an older home.

Q: What should I think about when looking at a house?

A: Some things to think about include:

• Do you like the floor plan? Are there enough bedrooms, bathrooms, and living space for your family?
• Do you like the kitchen and bathrooms?
• Do you like the ambiance?
• Where will the sun rise and set? Will you have sunshine where you want it as the day progresses?
• Will your furniture fit in the rooms and will it go with the color scheme?
• Is there enough storage space?
• Is the house structurally sound?
• Do the mechanical systems and appliances work?
• Is the yard big enough for your entertaining, recreational, and gardening interests?
• Are there steep driveways or outdoor stairs that pose winter hazards?
• Are there necessary repairs or replacements? If so, will the seller take care of it.

Make a list of what is important to you. Take your time when you tour a home and make notes. Use all your senses. Ask your realtor for a professional opinion.

Q: What does a home inspector do?

A: An inspector checks the safety of your potential new home by examining the electrical system, plumbing and waste disposal, the water heater, insulation and ventilation, the HVAC, water source and quality, the potential presence of pests, the foundation, doors, ceilings, walls, floors, and roof.

Q: What else should I think about before I buy my home?

A: Check to see if the house is in a low-lying area prone to flood, in an area at risk for natural disasters like earthquakes, hurricanes, or tornadoes, or in a hazardous materials area. Be sure the house meets building codes. Check how local zoning laws could affect remodeling or future additions to the home.

Q: What is earnest money?

A: Earnest money is money put down to show your seriousness about buying a home. It is usually between 1% and 5% of the purchase price. If your offer is accepted, the earnest money becomes part of your down payment. If the offer is rejected, your earnest money is refunded. If you back out of the deal, you lose the entire amount.

Q: Should I check my credit history before applying for a mortgage loan?

A: Bridgeview Mortgage Company will run a free credit report for you which shows the debts you owe and your ability to pay them and any items on public records including liens, bankruptcies, or foreclosures. Sometimes there are errors in credit reports. Bridgeview Mortgage Company will help you fix any discrepancies with the credit bureaus before a potential lender asks for your credit history. The three main credit bureaus in the United States are Equifax, Trans Union, and Experian.

Q: When should I apply for my mortgage?

A: We urge you to work with one of our Mortgage Consultants to get pre-qualified before you shop. We will help you fill out a loan application for later filing and run a free credit check. From this information, we will be able to tell you how much you can afford. You will be in a stronger negotiating position because the seller knows you are a serious, qualified buyer.

Q: What information must I provide when I apply for my mortgage?

A: In most cases, your Mortgage Consultant will ask you to supply the following documents:

• Your most recent pay stub plus prior year’s W-2 form, or if self-employed, a complete copy of your last year’s tax return,
• Your most recent bank statements,
• A copy of last month’s investment statements, and
• The Purchase and Sales Agreement if you are buying a home.

Q: How do I know what my loan rate will be?

A: Rates vary with the type of loan, your credit history and income, loan amount, value of the property, and the number of points you are willing to pay. At Bridgeview Mortgage Company, one of our Mortgage Consultants will explain your options.

Q: What are points and how many do I have to pay?

A: You can pay points to buy down or lower your mortgage interest rate. One point is equal to 1% of your loan amount. The lower rate will save you money if you keep the mortgage long enough.

Q: What are closing costs?

A: Closing costs are money paid by the borrower to close a mortgage loan and normally include a loan origination fee, title insurance, attorney’s fees, and some prepaid items such as taxes and insurance escrow payments. Many of the same costs apply to refinancing, but closing costs can often be included in the loan amount on refinances.

Q: What is PMI?

A: PMI stands for Private Mortgage Insurance and is required by lenders for a loan where you make a down payment of less than 20% of the home purchase price. The insurance will cover a percentage of your mortgage should there be a default. Mortgage insurance is included in your monthly payment. You must keep the insurance until your equity in the property rises to 20%.

Q: What is amortization?

A: This is how your payments break down during the life of the loan. It involves dividing the principal and total interest charges into equal payments and will completely pay off the debt at the end of the term.

Q: What is an ARM mortgage?

A: ARM stands for Adjustable Rate Mortgage. An ARM has an interest rate that can adjust over time and typically will have rate caps. This means that after a given number of payments, the rate can only increase by a certain percentage, usually no more than 2%. There are also lifetime caps, usually 6%, which will indicate the highest possible rate for that mortgage. ARM mortgages are usually taken out by borrowers who plan to stay in the property a limited time, or by borrowers who need a lower rate to qualify for more mortgage money.

Q: What is locking-in?

A: Locking will guarantee your interest rate for a given period regardless of market fluctuations.

Q: What is floating?

A: Floating means that there is no guarantee what the interest rate will be on your loan. You are gambling that the market will improve so you can take advantage of a lower rate during the time your loan is processed.

Q: What is a FHA mortgage?

A: The FHA (Federal Housing Authority) is a government agency that insures lenders against default by borrowers. The FHA generally has more liberal credit guidelines and allows lower down payments. You must carry mortgage insurance for the life of the loan with FHA, which can add to the cost of credit. FHA mortgages help people who might not be able to get conventional mortgages to own their homes.

Q: What is a VA mortgage?

A: The VA (Veterans Administration) enables US Military Veterans to buy homes under more liberal credit guidelines and with no down payment. The Veteran must get a Certificate of Eligibility from the Veterans Administration to qualify.

Q: What is a sub-prime or non-conforming mortgage?

A: These are categories of mortgage loans for those with difficult credit, for borrowers who can not verify income, or for those presenting other unusual circumstances. The interest rates in sub-prime or non-conforming mortgages are typically higher but the credit and underwriting guidelines are more flexible.

Q: If I am not comfortable with the security of your Web site, is there another way I can apply for a loan?

A: Yes, phone (800) 804-5560, and one of our Mortgage Consultants will take your application over the phone. If you would like to apply in person, phone for an appointment.

Q: Can I make extra principal payments so I can pay off the loan more quickly?

A: Depending on the loan, and what your state allows, it is possible for you to make extra payments on the loan. These will effect the amortization schedule over the remaining term of your loan.

Q: Do I get a tax advantage from having a mortgage:

A: Interest on a mortgage is usually tax deductible. Interest on a home equity loan or a second mortgage is usually tax deductible as well. Interest on credit cards or a car loan is not normally tax deductible. We recommend that you check your situation with your tax advisor.

Q: How do I know how much equity I have in my property?

A: You can figure your equity by subtracting the unpaid mortgage balance and any liens or other debts against your property from the fair market value. Your equity increases both as you pay off the mortgage and as your property appreciates. You have 100% equity when you have paid off the mortgage and all other debts against your property.

Q: What is the difference between an equity line of credit and a second mortgage?

A: An equity line of credit is money in an account that you can use as you need it and pay back at any time. The interest rate is usually variable and tied to the prime rate. For a second mortgage, you borrow a lump sum and pay it back over a period of years at a fixed interest rate.