Question 1

What is the difference between a Pre-Qualification and a Pre-Approval?

Accepted Answer

A Pre-Qualification is an informal estimate. A Pre-Approval is a formal commitment based on verified income, assets, and credit, carrying significant weight with Florida sellers.

Question 2

What is the absolute minimum down payment required for a home?

Accepted Answer

VA and USDA loans offer 0% down. FHA loans require 3.5%, while conventional loans for first-time buyers start as low as 3% down.

Question 3

How exactly does the lender calculate my Debt-to-Income (DTI) Ratio?

Accepted Answer

DTI is calculated by dividing total monthly debt payments (including the new mortgage) by gross monthly income. Most programs cap DTI at 43%, though exceptions exist.

Question 4

What are the major benefits of a VA Loan?

Accepted Answer

VA Loans offer 0% down, no monthly mortgage insurance (PMI), and competitive rates for eligible veterans and service members.

Question 5

What is the Loan Estimate (LE), and when do I receive it?

Accepted Answer

The LE is a 3-page document summarizing loan terms and costs. Lenders must provide it within three business days of receiving your formal application.

Question 6

What is Private Mortgage Insurance (PMI) and how is it removed?

Accepted Answer

PMI is required on Conventional loans with less than 20% down. It can usually be removed when your LTV reaches 80% of the original home value.

Question 7

What is a Cash-Out Refinance?

Accepted Answer

It involves taking a new loan for more than your current balance and receiving the difference in tax-free cash for home improvements or debt consolidation.

Question 8

What is the purpose of RESPA?

Accepted Answer

The Real Estate Settlement Procedures Act protects consumers from excessive costs and prohibits illegal kickbacks among settlement service providers.

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