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Frequently Asked Questions
We provide numerous types of mortgages to best suit the needs of our clients. Therefore it’s normal to have questions about the loan process or which loan is best for a particular situation. So, feel free to contact us anytime and our friendly staff will be happy to answer all of your questions. Here’s some common questions that we receive:
- What is the difference between a Mortgage Broker and a Mortgage Banker? (click here)
- What is the difference between Mortgage Insurance and Homeowner's Insurance?
(click here)
- Is it true that a seller can pay the buyer's closing costs? (click here)
- What are the advantages of Owning vs. Renting? (click here)
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1. What is the difference between a Mortgage Broker and a Mortgage Banker?
Loan officers who work in a bank are usually considered Mortgage Bankers. They can provide you with a number of programs which are available only through their bank. Unfortunately, if they cannot fit you into one of their programs (due to problems with credit, income, or other circumstances), you are usually left with a denial.
On the other hand, Mortgage Brokers are loan officers who usually have access to several hundred different banks. Even if they are connected with a specific bank, they have the ability to broker out your loan to any bank they feel will give you the best rate and program for your situation. This offers you more flexibility and options for your loan.
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2. What is the difference between Mortgage Insurance and Homeowner's Insurance?
Mortgage Insurance is usually required anytime a borrower puts less than 20% down, but not in every case. This is the bank's way of insuring that the loan will be protected in case a borrower defaults on their loan payments.
Hazard insurance, or as it is more commonly called, homeowner’s insurance, is required on every loan. Whether it is included in your payments, homeowners dues, or you pay it separately, you must have it to protect your property in case of a natural act occurring and causing damage to the home.
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3. Is it true that a seller can pay the buyer's closing costs?
YES! If a borrower does not have enough money for closing costs, it is very common to negotiate within the sales price of the home to have the seller pay the borrower's closing costs. Some banks limit the amount that a seller can contribute to 3% of the sales price, while others limit it to 6%. It really depends on the bank and the particular program. If the loan is an FHA or VA loan, there are limits on what the seller and buyer can pay for. Make sure to get accurate information from your broker on this.
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4. What are the advantages of Owning vs. Renting?
Home ownership is surprisingly affordable! You may be able to purchase a home for no more than you are currently paying in rent.
For example, let's assume that the value of your home will increase, at a minimum, by an average of 3% per year. Compounded, a home currently valued at $120,000 will be worth over $275,000 in 30 years! Therefore, in 30 years, a $120,000 home will be free of mortgage payments and will be worth $275,000 in equity. Compare that to renting for 30 years (assuming 3% inflation) and the rent will have increased from $950/mo. to more than $2,364/mo. with no equity.
The table below provides an example of the difference between Owning and Renting (based on a 7.25% interest rate and a 30-year amortization period):
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Rent for $950 (monthly)
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Own for $950 (monthly)
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Purchase Price
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$ 0
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Purchase Price
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$ 120,000
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Down Payment (1st & last month)
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$ 1,900
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Down Payment ( 3% )
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$ 3,600
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Total Down
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$ 1,900
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Total Loan
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$ 116,400
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Monthly Rent
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$ 950
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Principal & Interest
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$ 794
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Property Tax
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$ 0
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Property Tax
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$ 120
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Mortgage Insurance
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$ 0
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Mortgage Insurance
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$ 40
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Monthly Cost of Renting
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$ 950
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Monthly Cost of Owning
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$ 954
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