Mortgage Questions, Answered Plainly

You may have heard an old rule: refinance when rates drop 2%, or 1%. That rule is retired. The real answer is one piece of honest math: the break-even point.

Also watch the term reset: refinancing a loan you've paid on for seven years into a new 30-year loan restarts the clock. Sometimes the better move is a shorter term, and sometimes the best move is keeping the loan you have. We'll tell you when that's the case — it's the whole point of an honest review.

A point is 1% of your loan amount, paid up front. On a $300,000 loan, one point is $3,000. Discount points buy down your interest rate — you're prepaying some interest in exchange for a lower rate for the life of the loan.

Whether that's worth it is the same break-even question as refinancing: how long until the monthly savings repay the up-front cost, and will you keep the loan that long? Staying put for years — points can be a quiet bargain. Likely to move or refinance soon — they're money you won't get back. There's no universal answer, only your timeline.

Your interest rate determines your monthly payment. The APR (annual percentage rate) is your rate plus most of the loan's fees, expressed as a yearly cost — a tool designed to keep lenders from advertising a low rate while hiding fees.

Useful, but here's the honest caveat: a lower APR doesn't automatically mean a better loan, because lenders don't all include identical fees in the calculation and your timeline changes which loan wins. The better comparison: ask each lender for a Loan Estimate — the standardized three-page disclosure every lender must provide — for the same loan type at the same rate, then compare the actual loan fees side by side. Same form, same format, no hiding.

Rates move between the day you apply and the day you close. A rate lock freezes your rate for a set window — commonly 30 to 60 days — so a market jump mid-process can't raise your payment. Locks can sometimes carry a fee, especially for longer windows.

When to lock is a judgment call about your closing timeline, not a prediction about rates — nobody honest predicts rates. We'll talk through it when your file is live.

Private mortgage insurance applies to conventional loans with less than 20% down. It protects the lender, not you — but it's not the villain it's made out to be. PMI is usually a modest monthly cost, and it's what makes buying possible years before a 20% down payment would be saved. Waiting years to avoid PMI often costs more than PMI does.

The honest framing: PMI is temporary. Once you reach 20% equity — through payments, appreciation, or both — it can typically be removed from a conventional loan. If you're already a homeowner wondering whether yours is removable, that's a five-minute question. Ask us.

A structure for avoiding PMI without 20% down: an 80% first mortgage, a 10% second mortgage, and 10% down. The second loan fills the gap that would otherwise trigger mortgage insurance.

The trade-off, stated plainly: the second mortgage carries a higher rate and its own payment, so it isn't automatically cheaper than just paying PMI — sometimes it wins, sometimes it loses. It's a compare-the-math decision, and we'll run both versions with real numbers before you choose.

Mostly through your credit score — a number from 300 to 850 (FICO is the model mortgage lenders use) that summarizes your track record: payment history, how much of your available credit you're using, the age of your accounts, recent applications, and the mix of account types. Payment history and balances carry the most weight.

Before applying for a mortgage, check your reports for errors — they're more common than you'd hope, and fixing one can move your score. You're entitled to free reports every week from all three bureaus at annualcreditreport.com — the official site, no card required.

No tricks, just levers — in rough order of power:

• Pay everything on time. Payment history is the heaviest factor, and one recent late payment hurts more than people expect.
• Pay balances down. Scores respond to how much of your credit limits you're using — below 30% helps, below 10% helps more.
• Don't open new credit before or during a mortgage. New accounts and hard inquiries nudge scores down at exactly the wrong moment.
• Keep old accounts open. Age of credit works in your favor; closing your oldest card shortens your history.

And the one that saves deals: once you're under contract, nothing new on credit until you have keys — not the furniture, not the truck, not even a store card for the mattress. Your file gets re-verified before closing, and new debt is one of the most common ways home purchases fall apart late.

For most files, the core list is short: a month of pay stubs, two years of W-2s, two or three months of bank statements, and photo ID. Self-employed borrowers add two years of tax returns. Unusual situations add a document or two — and if we ask for something extra, it's because underwriting will, so fast beats perfect.

We built a full page for exactly this — where to find each document, how to download statements from the major banks, and how to send everything securely: the Mortgage Document Collection Guide.

An independent, licensed appraiser's opinion of the property's fair market value. Your lender requires it because the home is the collateral — the loan can't exceed what the property is actually worth.

For buyers, it's also quiet protection: the appraisal is a professional check that you're not dramatically overpaying. If it comes in below the purchase price, that's not the end of the deal — it's a negotiation moment, and how it gets handled is one of the places a good agent and a responsive lender earn their keep.

Closing is the day ownership officially transfers. In Michigan, it typically happens at a title company: you'll review and sign the final documents, your funds and the loan funds are disbursed, and you leave with keys. Plan for about an hour.

Two things worth knowing in advance: do your final walk-through shortly before closing (confirm agreed repairs were done and included items are still there), and review your Closing Disclosure — you'll receive it at least three business days before closing, and those three days exist so you can ask questions. Ask them. We answer.

Then keep every document you sign — they matter for taxes, insurance, and the day you eventually sell. Our clients get a place to keep all of it: the Compass Home Portfolio, handed over at the closing table.

A bank loan officer can offer you that bank's products. A broker shops your file across many wholesale lenders — at Bastien Mortgage, that's dozens — and matches you to the lender whose products and pricing fit your situation, with one accountable person guiding the whole file.

The honest trade-offs, both directions: brokers add product breadth, pricing competition, and one point of contact — and a disorganized broker is worse than a good bank, so hold any broker (including us) to the standard of proving responsiveness. If your situation is simple and your bank's offer is genuinely strong, we'll say so. Trust is demonstrated, never claimed.