skip to main content

Web Accessibility Statement

Good faith efforts have been made to ensure that our site complies with Federal and New York state standards on website accessibility and with Web Content Accessibility Guidelines 2.0, set forth by the World Wide Web Consortium to the best of our technical ability. If you are unable to access any pages on our site, please contact us toll free at 800-447-3386 or compliance@spmc.com with information on the portions of the website that are inaccessible to you. Please provide your name, telephone number, and email address so that we may contact you to provide our information in another format.

The Sierra Pacific Mortgage sign on the building.

Ask Sierra

Buying a home is often one of the largest purchases we will make in our lifetime. Because of this, we want to make sure our clients fully understand what's happening during their transaction. That is why we have collected our most common questions and answered them for you, to help give more clarity on your home buying experience!

We love to share our knowledge and are happy to answer any questions you may have. Don’t hesitate to Ask Sierra and contact us today!

1. Do I always need a 20% down payment to purchase a home?

The common thought process behind this question is that, by making a 20% down payment, you avoid needing to pay the additional Mortgage Insurance (MI) fee. This does not, by itself, cause you to be eligible or ineligible to purchase a home.
 
In most cases, you do NOT need to put down 20% to qualify for a home. There are many options to consider that require a much lower down payment.
 
In some cases, you may be eligible for a loan with a down payment as low as 3.5% or even no down payment at all!

2. Should I check my credit score before looking to purchase a home?

If you are looking to purchase a home, you should absolutely check your credit before you begin the mortgage process. Know your credit score, as well as what is being reported, so you can correct any inaccuracies quickly.
 
Correcting issues on your credit report may actually allow you to be eligible for programs you may have not have been considered for previously because lenders will analyze your credit report to determine which programs you qualify for.

3. Can I still purchase a home without having a perfect credit score?

While having a low credit score will not allow you to get the best possible rates, it is absolutely not the be-all-end-all! A credit score is not the only qualifying factor we use to determine your eligibility. In fact, there are many programs that aim to help those with lower credit scores to be eligible to purchase a home.
 
If you aren’t looking to purchase a home quickly, it is always wise to try to increase your credit score as much as possible before starting the process. This may help save money in the future.
 
To help improve your credit score, try to pay your bills on time and lower your debt-to-credit ratio. Lenders like to see you owing only about 10% to 30% of your available credit. You can also get free copies of your credit report once a year from each of the main credit reporting agencies. Make sure to correct any discrepancies to ensure your report is an accurate reflection of your actual credit history.

4. Is the best mortgage the one with the lowest interest rate?

Although important, there are many other factors that you will want to consider other than going with the lender with the lowest interest rate. For example, you may want to consider professionalism, and the loan officer’s availability, reputation, and knowledge. All these things are worth considering and can be invaluable throughout the mortgage process.
 
After all, you will want to ensure you are working with a professional lender that will not make a costly mistake for you later on in the process.

5. When should I start the mortgage process?

In order to set realistic expectations about your budget, consider starting the loan process and finding a loan officer before you have settled on a home.
 
There may be some things to consider, that you haven’t thought of yet, that could affect your home-buying budget, so it is best to know what price range you want to be in before choosing your dream home.

6. Is renting always cheaper than buying a home?

Not always. When deciding whether to rent or buy, make sure to factor in how frequently you will want to move in the near future, and whether you want to build equity in your home by purchasing.
 
Factors such as rent increases and property appreciation sometimes make purchasing a home the smarter move, especially combined with low interest rates.

7. Can I estimate my mortgage payment with just principal and interest?

When trying to determine what your monthly mortgage payment may be, there is more to consider than just principal and interest.
 
Mortgage calculators are great tools to use for getting a ballpark estimate of what your monthly mortgage payment may be, but it is important to know that most do not factor in specific variables, such as taxes, insurance, and HOA fees. This could mean your estimate may be off by a large amount. If you would like to get a general idea of what your monthly payment could look like, check out our mortgage calculator here.

8. Is it too late to refinance my home loan?

Just because you may see those interest rates rise, don’t assume it’s not worth refinancing your mortgage. Generally, if current interest rates are lower than those on your current loan, refinancing may be worth pursuing, especially if you have a Mortgage Insurance (MI) payment that you are able to remove. Keep in mind, you will want to remain in your home long enough to offset the closing costs.

9. Is it true that lending requirements are too tight to be eligible for a mortgage?

Requirements to buy a home may not be as limited as you think. Looking into low down payment plans and other programs that you may qualify for are always options to consider. You may be surprised at the variety of options available to you.

10. Should I pay off my mortgage as soon as possible?

Although you may think it makes sense to pay off a mortgage as soon as you can, sometimes this isn’t the best option.
 
Variables like using that money in retirement accounts, paying off high-interest rate debt (such as credit cards), or the fact that mortgage interest payments are deductible, means there are some situations where this is not the best option for you.
 
Of course, paying off your mortgage isn’t all bad, but it is always best to seek advice in determining what the best financial goal is for you.

11. Aren't adjustable-rate mortgages (ARMs) only for risk takers?

Because Adjustable-Rate Mortgages (ARMs) offer you a lower interest rate for a fixed initial period, but are then subject to change based on market conditions, these mortgages can seem risky to some.
 
However, an ARM may be a better choice for you if you are planning to move within five years. You may appreciate an ARM since the rate will not start adjusting until after you have planned to leave. Since ARM interest rates are typically lower than fixed rate mortgages, this can mean much lower monthly payments.

12. Should my mortgage payment be exactly 28% of my income?

When considering how much you can afford for a monthly mortgage payment, take a look at your regular monthly expenses, debt, and goals you have set for your savings.
 
A simple percentage is not always what is true for each and every one of us. We all have unique circumstances and priorities, so don’t be discouraged if your calculations aren’t measuring up to 28%.

Disclaimer:
Rates and terms subject to change based on market conditions and borrower eligibility. Not all borrowers will qualify. Mortgage solutions offered are subject to verification of borrower qualifications, property evaluations and credit approval. This is not a commitment to lend. The interest on the portion of the credit extension greater than the fair market value of the dwelling is not tax deductible for federal income tax purposes. Consult a tax advisor for further information regarding the deductibility of interest and charges as well as seek advice regarding the tax implications of homeownership. Market conditions may impact the value of the property and could result in no or negative equity. Seek professional advice from your mortgage professional and/or tax advisor regarding your individual circumstances and financial obligation when purchase a home. Monthly payments vary due to a variety of assumptions. A monthly mortgage payment may be higher than a monthly rent payment.