Frequently asked questions

A mortgage is a loan used to buy a home. Once approved for a mortgage, you make monthly payments with interest until you pay off the loan. There are a variety of mortgage options, each with different benefits and features designed to fit your unique needs.

• Learn about different loan types
• Find out how much you may be able to borrow

A jumbo loan (also known as a nonconforming loan) is a mortgage typically used to finance properties where the price exceeds the limits of a conventional conforming loan.

• See rates for jumbo and conforming loans
• Learn about different loan types

Eligible veterans may qualify for the Veterans Affairs (VA) home loan program, designed to help veterans get favorable mortgage terms and a competitive interest rate when buying a home.

The benefits of a VA loan include:

• Up to 100% financing, which means low or no down payment for qualified borrowers
• No origination fee on VA loans (plus you may be able to finance the VA funding fee)
• Gifts or grants that can help cover down payment and closing costs
• Flexible guidelines up to VA loan limits
• The option to refinance your current VA loan with minimal out-of-pocket expenses

Choosing when to buy a home is a very personal decision that will depend on many factors. The following questions can help determine if you’re ready to become a homeowner:

The following questions can help you determine if you’re ready to make the leap:

• Do you have a stable source of income?
• Are you budgeting for your monthly bills?
• Do you know how much you can afford for monthly mortgage payment?
• Once purchased, how long do you plan to stay in your home?

A down payment is the portion of your home’s purchase price that you pay in cash up front to get your loan.

Some borrowers assume a 20% down payment is required, but many loan options allow you to put down less. In fact, Wells Fargo offers a 3% down payment option on a fixed-rate loan and low or no down payment for qualified borrowers.

Talk with a home mortgage consultant about loan amount, loan type, property type, income, first-time homebuyer, and homebuyer education requirements to discuss eligibility.

Mortgage underwriting is done by your lender to ensure the loan is the right fit for you. This evaluation is completed by an underwriter who reviews your application and supporting documentation, focusing on four key areas:

• Income — Look at your employment history and proof of income to make sure you can comfortably afford the loan’s payments
• Property — Assess the value and condition of the property you plan to purchase to ensure your loan amount is appropriate
• Assets — Verify you have the funds for the down payment, closing costs, and any unexpected initial home expenses
• Credit — Review your credit report to gauge your creditworthiness and borrowing history

Learn about the importance of credit, debt, and savings when buying a home.

An appraisal is performed by a professional appraiser to provide an estimate of the home's market value and a description of the property. The lender uses the appraisal to verify the property meets their underwriting criteria and the value supports the mortgage application.

If the appraisal comes back with a value less than the sales price, then terms of the mortgage may need to change to qualify.

The cost of an appraisal is generally paid for by the buyer.

Once your offer is accepted, you’ll want to schedule an inspection with a professional home inspector. This is usually at your expense and may be included in your closing costs.

A home inspector looks at aspects of a property — inside and out — and completes a report that reveals valuable information about its condition. This inspection can help you spot issues that should be fixed, such as worn-out roofing or heating and air-conditioning systems that may require replacement. Once completed, your home inspector will provide a detailed report, usually a day or two later.

Based on the inspection report, you can decide to negotiate repairs into the sales contract and ask the seller to make them or adjust the sales price to compensate the costs. As a condition of the sale, your lender may require a final inspection to ensure that repairs have been made.

The origination charge is the amount charged for services performed on the initial loan application and loan processing. This includes all charges (other than discount points) that lenders and brokers involved in the transaction will receive for originating the loan. It includes any fees for application, processing, underwriting services, and payments from the lender for origination. Learn more about closing costs.

Homeownership can affect what you’ll pay in taxes. That includes having to pay property taxes, which are based on the value of your home and paid to your local government.

But property taxes, as well as the interest you pay on your mortgage, may be tax-deductible, meaning they may reduce your taxable income for your federal and state returns.

Consult with a tax advisor, accountant, or financial advisor regarding the impact of homeownership on your specific tax situation.

• Read more about homeownership and taxes
• Visit the Wells Fargo tax center

When you refinance a mortgage, you’re taking out a new loan at a new interest rate to pay off your original mortgage. Refinancing your mortgage may help you lower your interest rate and monthly payment amount. If approved, you’ll have a new loan with a new loan number, new repayment term, and a new loan balance.

There are other reasons why you may want to consider refinancing, including:

• Use the home equity you’ve built for remodeling or improvement projects.
• Free up cash to pay off your loan faster.
• Eliminate mortgage insurance.
• Switch from an adjustable-rate to a fixed-rate mortgage to avoid an interest rate increase.

Home equity is essentially the difference between the value of your home and the principal amount you owe on your mortgage. If you have enough equity in your home, it may allow you to borrow money for home improvements or other expenses with a home equity loan or cash-out refinance.

If you have equity in your home you may be able to get a cash-out refinance, which allows you to borrow the equity you’ve built to pay off debt or fund things like home improvements.

However, there are important factors to consider. Since a cash-out refinance requires you to take out a new, larger loan with terms that may differ from your original loan — including new closing costs and other fees — you’ll want to think carefully about how you use the money and whether the short-term benefits outweigh the long-term costs. 

Get a personalized rate quote to see how much you may be able to borrow with a cash-out refinance.

Yes. There are costs related to processing any new loan application; they can include fees paid to third parties, such as an appraiser and the title company, and other closing expenses.