Question 1

What is a mortgage?

Accepted Answer

A mortgage is a loan used to purchase real estate, where the property itself serves as collateral for the loan. When you take out a mortgage, you agree to repay the borrowed amount plus interest over a set period, typically 15 or 30 years. Each monthly payment includes a portion that goes toward reducing the principal balance and a portion that covers interest charges. Most mortgages also include an escrow component that covers property taxes and homeowners insurance. At National Mortgage Home Loans, we help borrowers understand the full picture of homeownership costs so there are no surprises. The mortgage process involves application, processing, underwriting, and closing. Our team guides you through every step to make the experience as smooth as possible.

Question 2

How long does the mortgage process take?

Accepted Answer

The typical mortgage process takes between 30 and 45 days from application to closing, though timelines can vary based on several factors. The initial application and document gathering usually takes a few days. Processing and underwriting can take two to three weeks, depending on the complexity of your financial situation and how quickly documents are provided. The appraisal typically takes one to two weeks to schedule and complete. At NMHL, we prioritize efficient processing and clear communication throughout. Factors that can speed up the process include having your documents ready upfront, responding quickly to requests from your loan officer, maintaining stable employment and finances during the process, and avoiding new credit inquiries. We offer pre-approval services that can significantly reduce your timeline when you find the right property.

Question 3

What is the difference between pre-qualification and pre-approval?

Accepted Answer

Pre-qualification and pre-approval are both preliminary steps in the mortgage process, but they carry different levels of weight. Pre-qualification is an informal estimate of how much you might be able to borrow based on self-reported financial information. It typically does not involve a credit check or document verification and can often be done quickly online or over the phone. Pre-approval is a more rigorous process where a lender verifies your income, assets, employment, and credit history. You will submit documentation such as pay stubs, tax returns, and bank statements. The lender runs a hard credit inquiry and issues a conditional commitment for a specific loan amount. Sellers and real estate agents take pre-approval letters much more seriously because they demonstrate that a lender has actually reviewed your finances. At National Mortgage, we recommend getting pre-approved before you start house hunting so you know exactly what you can afford and can make competitive offers.

Question 4

What documents do I need to apply for a mortgage?

Accepted Answer

To apply for a mortgage, you will typically need several categories of documentation. For income verification, lenders require your two most recent pay stubs, W-2 forms from the past two years, and federal tax returns for the past two years. If you are self-employed, you will also need profit-and-loss statements and possibly business tax returns. For asset verification, provide two months of bank statements for all accounts, retirement account statements, and documentation for any gift funds being used for the down payment. You will also need a valid government-issued photo ID and your Social Security number for the credit check. Additional documents may be required depending on your situation, such as divorce decrees, bankruptcy discharge papers, or landlord contact information for rental history. At NMHL, your loan officer will provide a personalized checklist based on your specific circumstances to ensure nothing is missed.

Question 5

What is an escrow account?

Accepted Answer

An escrow account is a special account managed by your mortgage servicer that holds funds for property taxes and homeowners insurance. Each month, a portion of your mortgage payment is deposited into this account in addition to your principal and interest payment. When your property tax bill or insurance premium comes due, the servicer pays it from the escrow account on your behalf. This arrangement ensures that these important obligations are paid on time, protecting both you and the lender. Your escrow payment is recalculated annually based on anticipated tax and insurance costs, which means your total monthly payment can fluctuate slightly from year to year. Some loan programs require escrow accounts, while others may allow you to waive them if you meet certain criteria such as having significant equity. At National Mortgage Home Loans, we explain your escrow obligations clearly so you understand every component of your monthly payment.

Question 6

What is the difference between interest rate and APR?

Accepted Answer

The interest rate is the percentage charged on the principal loan amount and directly determines your monthly payment calculation. The Annual Percentage Rate, or APR, is a broader measure that includes the interest rate plus other costs associated with the loan, such as origination fees, discount points, mortgage insurance premiums, and certain closing costs. The APR gives you a more complete picture of the total cost of borrowing over the life of the loan. For example, a loan with a 6.5 percent interest rate might have an APR of 6.8 percent once fees are factored in. When comparing loan offers from different lenders, the APR is often a more useful comparison tool because it accounts for the varying fee structures each lender may charge. At NMHL, we provide transparent breakdowns of both your interest rate and APR so you can make informed comparisons and choose the best option for your financial situation.

Question 7

Can I get a mortgage if I am self-employed?

Accepted Answer

Yes, self-employed borrowers can absolutely qualify for a mortgage, though the documentation requirements differ from traditional W-2 employees. Lenders typically require two years of personal and business tax returns, a year-to-date profit-and-loss statement, and possibly business bank statements. Your income is generally calculated by averaging your net income over the past two years after business deductions. This means that while higher deductions reduce your tax burden, they can also reduce your qualifying income. Some loan programs are specifically designed for self-employed borrowers. Bank statement loans, for example, use 12 to 24 months of bank deposits to calculate income instead of tax returns. DSCR loans for investment properties qualify based on the rental income of the property rather than your personal income. At National Mortgage Home Loans, we specialize in working with entrepreneurs, freelancers, and business owners to find the right loan program that maximizes your purchasing power.

Question 8

What happens if I miss a mortgage payment?

Accepted Answer

If you miss a mortgage payment, the consequences escalate over time. Most lenders provide a grace period of 15 days after the due date before charging a late fee, which is typically 4 to 6 percent of your monthly payment. After 30 days past due, the late payment is reported to credit bureaus and can significantly impact your credit score. After 90 days, your lender will likely send a demand letter requiring you to bring the loan current. After 120 days of missed payments, the lender may begin foreclosure proceedings, though this timeline varies by state. The most important thing to do if you anticipate difficulty making a payment is to contact your lender immediately. Most lenders, including NMHL, offer loss mitigation options such as forbearance, loan modifications, or repayment plans. These options are much more accessible before you fall significantly behind. Communication with your servicer is key to protecting your home and your credit.

Question 9

What is private mortgage insurance (PMI)?

Accepted Answer

Private mortgage insurance, or PMI, is an insurance policy that protects the lender if you default on your loan. PMI is typically required on conventional loans when your down payment is less than 20 percent of the purchase price. The cost usually ranges from 0.3 to 1.5 percent of the original loan amount annually, depending on your credit score, down payment size, and loan type. PMI can be paid as a monthly premium added to your mortgage payment, as an upfront lump sum at closing, or as a combination of both. The good news is that PMI on conventional loans is not permanent. You can request cancellation once your loan balance reaches 80 percent of the original home value, and it automatically terminates when the balance reaches 78 percent. FHA loans have their own version called mortgage insurance premium, or MIP, which has different rules. At NMHL, we help you understand the true cost of PMI and explore strategies to minimize or eliminate it.

Question 10

How do mortgage points work?

Accepted Answer

Mortgage points, also called discount points, are upfront fees you can pay at closing to reduce your interest rate over the life of the loan. One point equals one percent of the loan amount. For example, on a 300,000 dollar loan, one point would cost 3,000 dollars. Each point typically reduces your interest rate by about 0.25 percent, though this varies by lender and market conditions. The decision to buy points depends on how long you plan to stay in the home. You can calculate your break-even point by dividing the cost of the points by your monthly savings. If it takes five years to break even and you plan to stay for ten years, buying points makes financial sense. Points are also generally tax-deductible in the year they are paid for a purchase loan. At National Mortgage Home Loans, we run the numbers with you to determine whether buying points aligns with your long-term financial goals.

Question 11

What is a rate lock and should I get one?

Accepted Answer

A rate lock is an agreement between you and your lender that guarantees a specific interest rate for a set period, typically 30 to 60 days, while your loan is being processed. This protects you from rate increases during that window. If rates drop during your lock period, you are generally locked into the agreed rate unless your lender offers a float-down option. Rate locks are especially valuable in volatile interest rate environments where rates can change daily. The length of your rate lock matters because longer lock periods may come with slightly higher rates. At NMHL, we monitor market conditions closely and advise you on optimal timing for your rate lock. We also offer extended lock options for new construction or situations where closing may take longer. Getting a rate lock gives you peace of mind and makes it easier to budget for your monthly payment with certainty.

Question 12

Can I pay off my mortgage early?

Accepted Answer

Yes, most modern mortgage loans allow you to make extra payments or pay off the loan early without penalty. Making additional principal payments can save you thousands of dollars in interest and shorten your loan term significantly. For example, adding just 100 dollars per month to a 30-year loan can cut several years off the repayment period. Some borrowers make biweekly payments instead of monthly, which results in one extra full payment per year. Others apply bonuses, tax refunds, or windfalls directly to their principal balance. Before making extra payments, verify that your loan does not have a prepayment penalty, which some loan types may include, particularly certain adjustable-rate or non-qualified mortgages. At National Mortgage Home Loans, we structure loans that give you flexibility to pay ahead when your finances allow it while keeping your required monthly payment manageable.

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General Mortgage Questions

Frequently Asked Questions

What is a mortgage?

Still Have Questions? We're Here to Help

All General Mortgage Questions Questions

How long does the mortgage process take?

What is the difference between pre-qualification and pre-approval?

What documents do I need to apply for a mortgage?

What is an escrow account?

What is the difference between interest rate and APR?

Can I get a mortgage if I am self-employed?

What happens if I miss a mortgage payment?

What is private mortgage insurance (PMI)?

How do mortgage points work?

What is a rate lock and should I get one?

Can I pay off my mortgage early?

Can't Find Your Answer?

Our Clients' Experience

Related Resources

Our Presence

Your Dream Home Starts Here

Lower Your Rate Today

Build Your Portfolio

General Mortgage Questions

Frequently Asked Questions

What is a mortgage?

Still Have Questions? We're Here to Help

All General Mortgage Questions Questions

How long does the mortgage process take?

What is the difference between pre-qualification and pre-approval?

What documents do I need to apply for a mortgage?

What is an escrow account?

What is the difference between interest rate and APR?

Can I get a mortgage if I am self-employed?

What happens if I miss a mortgage payment?

What is private mortgage insurance (PMI)?

How do mortgage points work?

What is a rate lock and should I get one?

Can I pay off my mortgage early?

Can't Find Your Answer?

Our Clients' Experience

Related Resources

Understanding Mortgage Basics

How to Prepare for Your Mortgage Application

Common Mortgage Mistakes to Avoid

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