Home Purchase FAQ’s

Can I apply for a mortgage before I find a home?  Absolutely, and we recommend it.  Applying for a pre-approval with Bank of Ann Arbor Wholesale will give you absolute assurance of exactly how much you can spend on a home.

What determines if my loan is approved?  There are many factors that are considered by lenders approving a mortgage loan. The main factors are:  the value of the home, your monthly debts and income, your assets and your credit history.

What is a down payment?  A down payment is the difference between the purchase price of the home and the amount of the mortgage loan.

I don’t have much money available, can I buy a house with no down payment?  Yes, there are loan programs that do not require a down payment. You will still be responsible for closing costs and prepaid items or have them covered fully or in part with a seller concession.

What if I don’t have great credit?  We have helped many people with credit challenges! There are programs for those with a less-than-perfect credit history, including mortgages with no required down payment. See our Credit Center for more information on credit scores and improvements.

What is getting pre-approved mean?  After your credit and financial situation are reviewed, we will issue a pre-approval letter. This letter will show the sellers of a prospective home that you are a serious buyer. Getting pre-approved lets you know exactly what you can afford with assurance. Union Financial can get your pre-approval letter to you within hours.  Click here for more details.

What is Private Mortgage Insurance or PMI?  PMI is sometimes required for mortgages when there is less than a 20% down payment. It is protection for the lender on these types of loans. See our PMI page for more information.

What are closing costs?  Closing costs normally include lender fees (credit report, underwriting, processing), third party fees (title insurance, appraisal, survey, recording fees) and prepaid items (setting up an escrow account, property taxes, prepaid interest). It is important when shopping for a mortgage to look at not only the interest rate, but the closing costs as well.

What are “points?”  A point is 1% of the mortgage loan amount. They may come in the form of origination or discount. Paying points will reduce the interest rate of the mortgage, but do mean higher closing costs. Click here to see if it makes sense for you.

Does it make sense to pay points?  It may, depending on several factors, like how long you intend to live in the home, if you need to in order to qualify for a mortgage or if you need to lower the amount of your monthly payment. It is important to compare payments with and without paying points to see if saving money on the monthly payment is worth paying the points.

What will I need to pay the lender each month?  Most often, your payments will be composed of principal, interest, your monthly amount of property taxes and your monthly amount of homeowner’s insurance.