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Whether you’re weighing the benefits of refinancing or purchasing a home, we’re here to answer your questions and help you find the best option for your needs.
How much is an appraisal fee?
A home appraisal fee typically ranges from $400 to $700 for a standard single-family home in the U.S. Costs can vary depending on the property size and value, location, loan type, and the complexity of the appraisal. For an investment property, appraisal fees are typically $150 to $250 higher.
What’s the minimum down payment needed for a first-time homebuyer?
In many cases, you can buy a home with as little as 3% down using conventional first-time buyer programs. Some government-backed loans may require even less:
FHA loans: as low as 3.5% down
Conventional loans (first-time buyer programs): typically 3% down
VA loans (for eligible veterans and service members): 0% down
USDA loans (for eligible rural areas): 0% down
Can I get a mortgage with bad credit?
Yes, you can still get a mortgage with bad credit, but the options, costs, and requirements may be more limited.
FHA loans are often the most flexible, allowing credit scores as low as around 580 with a 3.5% down payment (and sometimes lower scores with higher down payments).
Non-traditional or portfolio loans may be available for lower credit scores down to 500, but they often come with higher interest rates and stricter terms.
When should I refinance?
It’s often a good time to refinance when current rates are about 2% lower than your existing mortgage rate, but even a 1% drop (or less) can still make it worthwhile. Even a small rate reduction can lower your monthly payment.
For example, on a $100,000 loan, lowering your rate from 8.5% to 7.5% could reduce your payment from about $770 to $700, saving you around $70 per month (not including taxes and insurance).
Your actual savings will depend on your loan amount, income, budget, and interest rate changes. A lender can help you review your options and see what makes sense for your situation.
What are points?
A “point” is 1% of your loan amount—for example, 1 point on a $100,000 loan equals $1,000. Points are fees paid to the lender at closing in exchange for specific loan terms. One common type, called discount points, lets you lower your mortgage interest rate by paying some interest up front. Lenders may also describe costs in “basis points,” where 100 basis points equals 1 point (or 1% of the loan).
Should I pay points to lower my interest rate?
Yes—this can be a good option if you plan to stay in the home for at least a few years. Paying discount points to lower your interest rate can reduce your monthly payment and may even help you qualify for a higher loan amount. However, if you only plan to stay in the home for a year or two, the monthly savings may not be enough to offset the upfront cost of the points.
What is an APR?
APR, or Annual Percentage Rate, is the total yearly cost of a loan, shown as a percentage. It includes not just the interest rate, but also certain fees and costs, giving you a more complete picture of what the loan will really cost you. The APR does not affect your monthly payments. Your monthly payments are strictly based on the interest rate and the length of the loan.
What is PMI (Private Mortgage Insurance)?
On a conventional mortgage, if your down payment is less than 20% of the home’s purchase price, lenders usually require Private Mortgage Insurance (PMI). This protects the lender in case you are unable to repay the loan. In some cases, you may need to pay up to a year of PMI upfront at closing, which can add several hundred dollars to your costs. One way to avoid PMI is to put at least 20% down. You can also ask your lender about other loan programs that may offer different options.
What happens at closing?
The property is officially transferred to you at closing. At closing, ownership moves from the seller to the buyer. This process usually involves the buyer, seller, real estate agents, and a title or escrow company. If you can’t attend, someone like an attorney can often sign for you. Before closing, you’ll do a final walk-through to make sure any repairs were completed and everything included in the sale is still there. During closing, most of the paperwork and payments are handled by professionals. Once everything is finished, the seller is paid and you receive the keys to your new home.