Mortgage answers
Straight answers to mortgage questions.
Start with using your equity, fixed-rate options, debt consolidation, renovations and ADUs. Each answer explains the trade-offs and links its sources. Buying and refinancing questions are here too.
HELOCs and home equity
- Can I use a HELOC to build an ADU?Existing home equity may help finance an accessory dwelling unit, such as a backyard home or garage conversion.
- Can I use a HELOC to renovate my home?A second-lien HELOC can fund a renovation while leaving your existing first mortgage in place.
- Can I use my home equity and keep my low mortgage rate?Yes. Adding a second-lien HELOC or home equity loan leaves your first mortgage’s contract in place.
- HELOC or cash-out refinance: which should I choose?A HELOC adds a second loan and leaves your first mortgage, and its rate, in place.
- How do fixed-rate HELOC options work?“Fixed-rate HELOC” can describe different structures.
- Should I use a HELOC to consolidate debt?A HELOC or home equity loan can be used to pay off other balances while leaving an existing first mortgage in place.
Rates, points and costs
- How do I compare Loan Estimates?Get Loan Estimates for the same loan amount and type, ideally on the same day.
- How much are mortgage closing costs?Freddie Mac estimates closing costs at about 2% to 5% of the purchase price.
- Should I pay points on my mortgage?Pay discount points only if you expect to keep the loan longer than the break-even point: the upfront cost divided by the monthly savings.
- What is a par rate on a mortgage?A par rate is the interest rate a lender offers with no discount points and no lender credits.
Refinancing and home equity
Buying a home
- How long does it take to close on a mortgage?Closing time depends on how fast your file moves through underwriting, the appraisal and title work, plus federal timing rules.
- How much house can I afford?How much house you can afford depends mostly on your debt-to-income ratio: your total monthly debts, including the new housing payment, divided by your gross monthly income.
- Prequalification vs. preapproval: what's the difference?The CFPB notes that lenders use prequalification and preapproval differently; ask what the lender actually verified.
- What should I prepare before talking to a loan officer?Know where and when you hope to buy, a monthly housing payment you're comfortable with, how much cash you have, how you earn your income and what you owe each month.
Qualifying and documentation
- Denied for a mortgage? What to do nextStart by getting the lender's reason in writing; you're entitled to it.
- How do I get a mortgage when I'm self-employed?Being self-employed doesn't automatically require a special mortgage.
- What is a bank statement loan?A bank statement loan is a non-QM mortgage for self-employed borrowers.
Loan types
- DSCR loan or conventional loan for a rental property?A conventional investment-property loan qualifies you on your own documented income and debts, counting eligible rent.
- FHA vs. conventional loan: which is better?Neither is better for everyone. An FHA loan allows 3.5% down with a 580 credit score, but you pay a 1.75% upfront premium plus annual mortgage insurance, often for the life of the loan.
- VA home loans: who qualifies and what do they cost?VA home loans are for veterans, service members, and some surviving spouses who meet service requirements and get a Certificate of Eligibility.
- What is a jumbo loan?A jumbo loan is a mortgage larger than the conforming loan limit that Fannie Mae and Freddie Mac can buy.
Working with a broker
Talk to Shawn
Talk it through with Shawn.
Bring the goal, the property’s state and your current loan. He’ll tell you what’s worth comparing.