Q&A With Ellen Wilson, Senior Mortgage Banker at Atlantic Union Bank

Ellen Wilson relocated to Middleburg from Arlington just over a year ago for work and for love. She’s been in the mortgage business since 2005. Before that, she was in Corporate Wellness with Gannett Newspapers for 10 years. 

“I strive to incorporate health and wellness into my client relationships since the process can tend to be tedious, stressful and overwhelming by providing hands-on personalized service,” she said.

Wilson enjoys working with first time homebuyers or someone who may have purchased a home a very long time ago and has forgotten how it all works. She explained that new buyers are eager to learn and understand the process, which allows her to regularly refresh her knowledge of the mortgage process. 

ML: How much mortgage can I afford?  

EW: A mortgage qualification is based on debt to income ratio (DTI, one of many acronyms in this business).  We use a calculation taking total monthly debt (including the new housing payment) and divide it by gross monthly income. However, I also find out what a client’s comfort zone is for a total monthly payment. It is typically well under what they will qualify for. I also remind clients to allow three percent of the purchase price for closing costs. Often, a client does not factor in the closing costs when they determine how much money they want to put into their transaction.

What do I need to qualify for a loan?  

The credit score is the foundation for qualifying for a mortgage. The higher your score, the better your interest rate. You also need some sort of regular and continuing income. Self-employed individuals must demonstrate a two-year minimum history of self-employment to qualify for a mortgage. 

What if I have bad credit or it’s not great?  

A 620-credit score is the minimum score requirement. Interest rates are dictated by credit score and a 740 score or higher will give you the best rate. I am able to assist with credit rescoring when necessary.

Should I get a fixed rate or adjustable rate mortgage?  

Most people are interested in having the lowest monthly payment possible. A 30-year fixed rate loan will give them the lowest monthly payment. An ARM product (adjustable rate mortgage) will occasionally have a lower rate, but the majority of my clients are risk adverse and worry the rate will rise after the fixed rate period to a level that will make their payment over their budget and no longer affordable.

When is a good time to buy? 

To get the best deal you should purchase in July/August or December/January. In the other months, prices are higher, demand is higher, and it is much more competitive. 

Should I get a 15 or 30-year mortgage? 

This depends on your mortgage payment budget comfort zone. A longer-term loan will give you the lowest monthly payment. Some people prefer to pay their loan off in 15 years, however they will lose the mortgage interest and property tax deduction on their taxes. However, you will pay much less mortgage interest and build equity much quicker with a 15-year loan.

How much should I put down? 

A 20 percent down payment will eliminate the need for Private Mortgage Insurance (PMI). There are several loan programs that will allow for no money down with no PMI but these will be based on certain criteria (income, military service, location of property).

What are mortgage points? 

Mortgage points, also known as discount points, are paid in exchange for a reduced interest rate. One discount point equates to one percent of your loan amount.

What is refinancing, and when should I do it?  

Refinancing is the replacement of an existing debt with another debt obligation under different terms. The standard rule of thumb is if you can reduce your current interest rate by one percent, it might make sense to refinance. However, refinancing costs can run three percent or more, so typically it will take five to seven years to recoup the cost of the refinance. ML

This article first appeared in the January 2020 issue of Middleburg Life.