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.
Mortgage brokers are able
to find the lowest rates.
Banks and private lenders
are confined to the institutions
interest rates even though
they may be lower elsewhere.
Mortgage brokers are much
more flexible. During
your transaction if rates
get lower, your rate may
get lower. With banks
and private lenders, once
your rate is locked, the
rate cannot be changed
even if the rates drop
substantially during your
loan process.
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.
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%
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.
|
