Frequently Asked Questions

Do you want to understand closing costs, or a specific loan program?

Maybe you have a special circumstance and want to see if you can qualify for a mortgage.

Getting a mortgage for a new home can be a confusing process.

The Rome Team at Fairway Independent Mortgage Corporation is a collection of mortgage lending experts. We have decades of experience in Kansas City mortgage lending.

Here you will find answers to some of our most common questions. 

Still have mortgage questions? We’re here for you!

How much house can I afford?

To determine how much house you can afford, you will want to consider your financial picture. Look at your monthly income, monthly debts, and how much you have in savings for your down payment.
Next, consider your DTI or debt-to-income ratio. This is how much money you spend on debt each month, divided by your monthly income (before taxes). A good rule of thumb is for your monthly debt to be 28% or less than your monthly income.
It is a good idea to talk to your mortgage broker before starting the house buying process. That way, you’ll know exactly what you can afford and won’t waste precious time on houses that don’t match your criteria. Get started here!

What are the closing costs?

Closing costs are the fees associated with purchasing your home. This includes fees for processing your mortgage, and legally transferring ownership to your name. Typically, you will pay these fees up-front with a certified check at closing.

  • Loan origination fees
  • Appraisal fee
  • Homeowners Insurance for the first year
  • Property taxes, prorated 
  • PMI or Private Mortgage Insurance, if applicable
  • Title Insurance
  • Closing fee, to the title company that prepares the documents for closing
  • Other small fees that may apply to your mortgage

These fees will generally total 2%-3% of the purchase price.

Who pays what closing costs?

In most cases, the buyer pays the fees to process their loan and protect their interests. That includes loan origination fees, buyer’s title insurance policy, discount points, etc.
The seller pays the fees that protect their interests. Realtor commissions, repairs, and the seller’s title insurance policy are a few examples. Sometimes, the buyer will ask the seller to pay part of the buyer’s closing costs. This isn’t required and is simply a negotiating point.

How long does it take to close on a house?

It usually takes 30-40 days to get to closing. But, it could be shorter or longer depending on the situation.

What is the interest rate?

The interest rate is the amount charged by your lender for the use of their money. Fairway Mortgage is a mortgage brokerage. That means you are not locked into a specific interest rate when you work with us. We will “shop” the market on your behalf to find the best loan for your particular situation.

What is APR?

APR stands for Annual Percentage Rate and measures the cost of a mortgage over the life of the loan (15 years, 30 years, etc.). It combines the interest you pay each year with other costs like origination fees and points then converts it into an interest rate.

What are points on a mortgage?

Points, or discount points, are an extra cost you can choose to pay at closing. When you pay points, you are paying a percentage of your loan amount to further lower the interest rate. A discount point usually costs the buyer 1% of the total loan amount and will reduce the interest rate ⅛ to ¼ of a peercent. The points are tax-deductible in the same tax year.

What is a fixed-rate mortgage?

If you have a fixed-rate mortgage, your interest rate will stay the same throughout the term of the loan. This protects borrowers from fluctuations in the market that affect the interest rate.

With a fixed-rate mortgage, borrowers can also choose various terms (10, 15, 20, 25, or 30 years.) A shorter term will increase the monthly payment, but will help you build equity more quickly.

What is an ARM loan?

An ARM (Adjustable Rate Mortgage) is a loan that starts with a low introductory interest rate. After the introductory period, the rate will adjust based on market conditions.

An ARM is a great option for borrowers who don’t expect to be in the house long-term.

What is a mortgage broker?

A mortgage broker is a middleman between you and the lenders. They work on your behalf to find the best rates and terms. Working with a mortgage broker rather than going directly to a lender can save you time and money. The broker will work with you to gather documents and will lead you through the loan process.

What credit score is needed to buy a house?

The credit score needed to buy a house will vary depending on the loan program. Those who qualify for a VA or FHA loan need a credit score of at least 600. But those applying for a conventional loan will need a score of at least 620.
Your credit score will affect your interest rate and the down payment required. A better score will mean a lower interest rate and could mean a lower down payment.
For more information about how to determine your credit score, and how we can help you raise your score, check out our Mortgage Prequalified page.

How much should you put down on a house?

A good rule of thumb is to put down 20%. This improves your chances of approval, and often removes the mortgage insurance requirement. The down payment requirements will vary depending on the loan program you choose. With good credit, you could put down as little as 0% on a VA loan or 3.5% on an FHA loan. If you’re coming in with a lower credit score, that minimum will increase based on the lender’s guidelines.

What is the out-of-pocket cost for buying a house?

The out-of-pocket costs will include your down payment and other fees associated with buying the home. Some fees include loan origination, appraisal fee, and discount points. You can expect these fees to be around 2%-3% of the mortgage amount.

How do I get a mortgage pre-approval letter?

The best way to get a pre-approval letter is for you to submit an application along with recent paycheck stubs, bank statements, and tax documents to your lender so they can review your situation and help you make the strongest offer on a new home.

How is the interest rate determined?

The baseline for a mortgage rate considers many factors. The economy, inflation, and the Federal Reserve among other indicators all play a part.

To determine your rate, the lender determines how much of a risk for repayment you appear to be. That part of the equation looks at your credit score and loan to value ratio.

Learn more about how the interest rate affects your payment in this article: How a Change in Mortgage Rate Impacts Your Homebuying Budget

Who qualifies for a physician home loan?

Physician loans are available to medical doctors who have M.D., or D.O. degrees. Some programs also include doctors with D.P.M. degrees. Others also include dentists and orthodontists with D.D.S or D.M.D. degrees.
Mortgage Insurance is not always needed for these loan programs. They may also have a more lenient debt to income requirements. This is to allow for medical school debt.

What is a VA loan? Who qualifies for a VA loan?

VA loans are for US military veterans. Veterans do not have to put money down or pay mortgage insurance. The government guarantees part of the loan, so lenders can often provide more favorable terms.

To be eligible for a VA loan, you must meet the income and credit criteria. You also must meet at least one of the following conditions:

  • Served 90 days of active duty during war-time
  • Served 181 days of active duty during peace-time
  • Served six years in the National Guard or Reserves
  • Spouse of a veteran who died in the line of duty, or from a disability sustained in the line of duty

How long after a foreclosure can you buy a house?

If you have a foreclosure in your past, you may still be able to qualify for a new mortgage. It will depend on the reasons for the foreclosure, and how you’ve done with credit since then.
If you had a conventional mortgage, the waiting period to get a new mortgage is seven years. But if there was a major medical issue or death of the main wage earner, it could be as little as three years.

Other loan programs are a bit less strict. For FHA or USDA loans, the waiting period is 3 years or one year with extenuating circumstances. Or for a VA loan, the waiting period is two years or one year with extenuating circumstances.

How long do you have to be at a job to buy a house?

To qualify for a conventional or FHA mortgage, you must be able to show two years of employment history. This doesn’t necessarily have to be with the same company. As long as there were no gaps in your employment and you have been in the same industry you could still qualify.

If there are gaps in your work history, you must be able to show at least six months in your current position.

There are some factors that may allow for less work history, such as completing a four-year degree. Check with your loan officer if your circumstances are different to find out if you can still qualify.