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Frequently Asked Questions

Why use a mortgage broker as opposed to a bank or a private lender?
Mortgage brokers have access to a variety of wholesale lending institutions not available to the general public and they can also peruse every possible lending program. Banks are limited to only the specific financial institution's bureaucratic lending programs making it difficult to work outside the box.

What is the difference between fixed and adjustable rate mortgages?
Adjustable rate mortgages (ARMs) offer a lower initial interest rate than most fixed rates. The interest rate can change periodically (usually in relation to an index) and your mortgage payment will go up or down accordingly. With a fixed rate mortgage, your monthly mortgage payments will stay the same for the life of your loan.

How do I know if it's best to lock my rate or let it float?
Mortgage interest rates fluctuate daily so no one can know for certain whether they'll go up or down. If you have a hunch that rates are on an upward trend, then you'll want to consider locking in your rate as soon as you are able. Before you lock make sure that your loan will close within the lock period. It is always a good idea to discuss rate locks with your loan officer who is also an excellent resource for rate information.

What is a Home Equity Loan?
A Home Equity Loan, also known as a second mortgage, allows you to borrow a one-time amount of funds, using the equity in your current home or property as collateral. Your interest rate is fixed and the loan is amortized over a fixed term.

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What is a Home Equity Line of Credit?
A Home Equity Line of Credit allows you to periodically access an account of funds using the equity in your current home or property as collateral. You are only charged interest on the outstanding balance.

Will my first mortgage be affected by a home equity loan?
No. Your first mortgage balance is used to determine your borrowing options, but your loan/line is totally separate and has no effect on your first mortgage.

What is included in closing costs?
Closing costs are expenses over and above the price of the property. Closing costs included fees, taxes, prepaid insurance, points, title insurance and survey fees. Closing costs are usually between 2 and 6 percent of your mortgage. A complete list of your closing costs will be on your HUD 1 Settlement Statement, and your closer will go over your closing cost items in detail.

What is Private Mortgage Insurance or PMI?
PMI is a type of insurance provided by a private mortgage insurance company that protects the lender in the event that you default on the loan. Mortgage insurance is usually required on a conventional loan when your down payment is less than 20%

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How do I pay for mortgage insurance?
Mortgage Insurance premiums can be paid annually from an escrow account, paid up-front or financed in your loan amount and paid monthly as part of your mortgage payment.

How can I avoid mortgage insurance?
The easiest way to avoid PMI is to make a down payment of at least 20% of the purchase price, however, if you do not have the funds you can consider a second loan called a piggyback loan.

When can I cancel my mortgage insurance?
PMI will no longer be required once your loan balance falls below 80% of the loan amount either by 1) paying off enough of your loan over time to reduce the balance, 2) your home has increased in value enough that your loan balance is 80% or 3) a combination of the two.

 

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