Frequently Asked Questions

How do I determine which type of loan is best for me?

So, what kind of mortgage program is best for you? Fixed rate? Adjustable rate? Government loans? The truth is, there is no one correct answer. Given the many different types of loans and term lengths, the choice can be difficult. It is an extremely important choice and you can definitely benefit from research before you make your decision. Some time and effort right now can save you thousands of dollars in the long run. If you'd like an Allstate Mortgage & Loan Corp. professional to assist you, simply complete our Short Application and someone will contact you promptly to review your scenario.

Your personal situation will determine the best kind of loan for you. By asking yourself a few questions, you can help narrow your search among the many options available and discover which Home Loan suits you best:

• Do you expect your finances to change over the next few years?
• Are you planning to live in this home for a long period of time?
• Are you comfortable with the idea of a changing mortgage payment amount?
• Do you wish to be free of mortgage debt as your children approach college age or as you prepare for retirement?

As your mortgage lender, we can help you use your answers to questions such as these to decide which loan best fits your needs. Below is a general guideline that may be useful in selecting a mortgage:

Should I get pre-qualified?

Getting a pre-qualification or 'pre-qual' means your mortgage company has reviewed limited information and identified a program in which you meet the minimum underwriting guidelines. This is not, however, a loan commitment, which requires a full underwriting process. A pre-qual is ideal to have when shopping for a home. As part of your pre-qual process, we will review your credit and finances, and even give you the amount we believe you are able to qualify for based upon the Mortgage Program you've selected. This pre-qualification letter shows sellers and real estate professionals that you're a qualified buyer. The pre-qual process is very simple and quick. Give us a call today at 1-800-701-1186 to pre-qualify for a home loan or complete our online Short Application to begin the pre qualification process.

What if my credit isn't as good as it could be?

While a good credit history is helpful, there are many other factors considered when qualifying for a loan. Home ownership is not out of reach for those with credit challenges. At Allstate, we have access to hundreds of lenders who offer a wide variety of programs to fit the needs of many credit challenged borrowers. Most importantly, as a HUD approved Lender, we can utilize the FHA Loan Program to facilitate the successful financing of a home, or Mobile Home with land, at nearly conventional A credit interest rates! If you're an eligible Veteran, many of the same standards that apply to the FHA program will also work with the VA mortgage program. To see if you can qualify for the FHA or VA Mortgage Program, simply call 1-800-701-1186 for additional information.

What are "points" and is there a benefit to paying them?

Discount points are prepaid interest. You can pay points to the lender at closing in in order to get a lower interest rate on your mortgage. Each discount point is equal to 1% of your loan amount.

The benefit to paying points depends on your individual situation. The longer you live in your home, the greater the benefit. To determine whether it's right for you, figure out how much your payment will be if you pay points. Compare this amount to your payment without points. Determine how many months it will take to break even. If you plan to be in your home for at least that amount of time, then paying points up front could save you a significant amount of money in the long run. If you need assistance calculating these figures, just give us a call at 1-800-701-1186. We'd be more than happy to help you work through the comparisons.

How do I choose between fixed-rate and adjustable-rate loans?

Fixed-rate mortgages have a guaranteed interest rate that will not change; your payments remain stable throughout the life of your loan. Adjustable Rate Mortgages (ARMs) are subject to rate changes at regular intervals, generally on an annual basis, which is determined by a specific market index.

If you plan to own your home for a long time, and the rates are relatively low, a fixed-rate Conventional Loan Program is typically the better choice for everyone. If you plan to move before the rates adjust, an adjustable rate mortgage may work best for your situation, but you must always consider market changes and economics when making a decision. An Allstate Mortgage & Loan Corp. mortgage professional can help you sort out these options. Just give us a call at 1-800-701-1186 to speak with a loan officer today.

What's the benefit in locking my rate?

By locking your interest rate, you are asking us to guarantee the rate on your loan, even if market rates change before closing. Most lenders will allow you to lock your rate for 30 to 60 days, with the option to extend the rate-lock period for a fee.

You can benefit from a rate lock if the interest rates go up before your closing. Conversely, if the rates fall, you can miss out on a potentially lower rate. So how do you decide? There is no way to predict whether the interest rates will rise or fall, but you can watch for announcements from the Federal Reserve Board, talk to a trusted financial advisor, and make your best educated guess.

What is PMI, and do I have to pay it?

PMI is Private Mortgage Insurance. It protects your lender in the event that you are unable to repay your loan. It is generally required if your mortgage amount is more than 80% of the home's value. That means that if your down payment is less than 20%, you will probably have to pay for PMI. It is possible to get around the PMI requirement (even without a down payment) by using an 80/20 program that combines a first mortgage with Home Equity Line of Credit.

What are the differences between pre qualification, pre approval and final loan approval?

For pre qualification, the lender will look at a basic copy of your credit report and the financial, banking and employment information you provide to determine how much mortgage you can afford based on your income. Pre approval occurs when your credit and employment is verified and the mortgage amount is approved, subject to the appraisal of the property you have chosen to buy. When the property has been appraised, all documentation is in the hands of the lender and all contingencies have been met, you will have final loan approval and mortgage commitment letter can be obtained.