Frequently Asked Questions
What is a mortgage?
A mortgage is a loan taken to finance the purchase of a home.
Mortgages are a major part of most Americans’ home buying experience and there is a lot of information to absorb throughout the process of obtaining a loan approval.
Interest rates and costs are important. The internet is full of ads promising shockingly low rates, which is tempting to many buyers. However, it’s never quite that simple. Terms and conditions, Annual Percentage Rate (APR) actually trump the rate in importance. While a rate may be low for the first year in the case of an Adjustable Rate Mortgage, for example, it might balloon up after that initial year. This is spelled out in the terms and conditions. Paying attention to the fine print here will ultimately save you a lot of headaches down the road.
How to do start the application process with Capstone Direct?
You may get started with your mortgage application in a number of ways:
- By phone: 866.427.4827
- Via Secure Online form: click Apply Now.
- In person: visit our company headquarters: 3285 Old Conejo Rd. Thousand Oaks, CA 91320
What are the main types of mortgages?
The most common mortgages are fixed- and adjustable-rate mortgages.
Fixed-rate mortgages offer the stability of regular monthly payments over a given length of time, or term. Many people feel these are ideal because they make it easy to budget family finances and there is no rate risk.
Adjustable-rate mortgage (ARM) programs offer you the flexibility of an initial interest rate and payment lower than a standard fixed-rate mortgage. ARM mortgages may also be a great option for home buyers who do not plan to stay in their current home for a long period of time.
What information do mortgages lenders need from me to qualify for a mortgage loan?
To help you get a mortgage loan, mortgage lenders require information related to your employment, finances and information about the home you wish to purchase. They will ask you specific, detailed information about these topics so that they can arrive at a monthly payment that you can afford and will be able to sustain.
Why choose Capstone Direct?
You have a lot of options out there when it comes to choosing a lender. Once you look around, you’ll see that Capstone Direct is a unique company. Our Customers come first. You’ll have an advocate on your side when you work with us, and you’ll always know who to ask when you have questions. It comes down to our commitment to an exceptional customer experience.
What does a Realtor do?
A realtor helps you sell or buy a property. But there’s more to it than that. A good realtor has at least 90 different functions within the home-buying process that they complete for a seamless transaction.
If you’re in the market to buy, a realtor will do the digging to find homes that fit your needs. A good realtor will not only take you to see properties that interest you, but provide insight into neighborhood, surrounding home values and nearby schools. Your realtor should keep you informed of every step of the process and act as a negotiator and advocate for you.
Realtors typically work on commission and earn a percentage of each sale that he or she helps complete.
What is a title? And why do I need title insurance?
Title is the formal document that shows ownership of a property. When you buy a home without getting title insurance, you run the risk that the seller is not the actual owner. And that can mean big potential trouble for you if someone shows up with a claim to your property or its ownership later. A title company will search public records to look for any issues with the property’s title. If a problem is found, the title company will fix it before you close and your interests will be safe and secure.
What is an FHA mortgage?
FHA loans are government-insured loans through the U.S. Department of Housing and Urban Development, also called HUD. FHA loans offer an excellent start to first-time home buyers, with options such as a low down payment or a low closing cost option.
- Low down payment is required
- Your own personal savings are not required to pay down payment or closing costs. Gift funds may be used instead
- You can buy an existing home, or build a new one
- Some geographic limitations apply
What is a VA mortgage?
The Veteran’s Administration (VA) loan program is sponsored by the U.S. Government’s Department of Veteran’s Affairs. VA loans are available to credit-worthy individuals who are or were:
- an honorably discharged veteran
- an active duty service member
- an un-remarried surviving spouse of a military service member
- a Reservist, or
- a National Guardsperson
- 0% down payment required
- Gift funds may be used to pay for closing costs
- Maximum loan amount: $417,000 or the geographic VA maximum mortgage limit
How does my escrow account work?
An escrow account is a separate account that holds funds for the purpose of paying bills such as homeowner’s insurance and property taxes when they come due. Funds are collected monthly to be deposited into the account along with your monthly payment and then pays the bills for you when they come due. By taking the annual amounts charged for homeowner’s insurance, property taxes and other annually paid items and dividing them by 12, the escrow department establishes a payment amount that is added to your monthly principal and interest payment. Spreading the cost of these expenses over 12 months makes it easier for you to budget those expenses, and you won’t have to come up with additional cash when bills are due. For some loans, escrow accounts are a requirement.
What is Private Mortgage Insurance (PMI)?
Private Mortgage Insurance is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Private Mortgage Insurance is generally required for a loan with an initial loan to value (LTV) percentage in excess of 80%. In most cases, this will mean that you will have to pay Private Mortgage Insurance if your down payment is less than 20% of the value of the home you are purchasing or refinancing.
Title insurance protects you from any problems that were unable to be located in a public record search from the time of closing and as long as you own the home, for a one-time fee. For example, if 10 years into owning your home an undisclosed heir shows up, the title company will back you monetarily and legally if necessary to protect your title. With title insurance, you can rest easy knowing that your title company has your back.
Why do I need Hazard insurance?
If you want a mortgage, you have to have hazard insurance which covers your home and property against losses from theft, bad weather and fire. This is required because your home is the collateral for your mortgage loan and the lender needs your shared investment to be protected.
You are required to take this step independently, and while it is a requirement for getting a mortgage, it is not a built in step in the process. If you find that you need assistance with the insurance process, please contact us and we’ll be happy to help.
Remember that typical hazard insurance does NOT cover everything. Typically, it covers damage or loss from fire, wind, hail and theft. Flood and earthquake damage are covered in separate policies, so if you live in an area where these are a concern, your lender will likely require you to seek out these additional policies.
Home insurance also covers liability, so if something happens to a neighbor’s property and you are found at fault, you will be covered.
Even if you aren’t required by a lender to have it, hazard insurance should be considered an essential for as long as you plan on owning your home. At the end of the day, a relatively small certain cost in the short run is worth being protected from a major uncertain cost in the future.