FAQ

What is the difference between a fixed rate and an adjustable rate mortgage?

For a fixed rate mortgage both of your interest rate and payments will remain the same for the life of the mortgage loan. For an adjustable rate mortgage (ARM) your interest rate will increase or decrease after the specified term. This can in turn increase or decrease your monthly payment.
The advantage of a fixed rate mortgage is that your payments will remain the same throughout the life of the loan thus it is predictable. The disadvantage is if interest rates decreases in order to have this benefit you will have to refinance your loan. Typically with an ARM you begin the term of the mortgage with a lower interest rate thus lowering your payment. After the term of an ARM it can be advantageous if the rate decreases but a disadvantage if the rate increases.

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What kind of information will be needed to do my mortgage?

Normally a customer will need to supply standard information such as birth-date, social security number, home address, employment, length of employment, proof of income (last two years of W-2’s and last 30 days of pay-stubs), bank account information for asset verification, and homeowners information. Some programs may allow certain qualified customers to by-pass certain information.

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What is Private mortgage insurance (PMI)?

Private Mortgage Insurance is a premium paid monthly, yearly or included in the loan by the homeowner. This insures the lender against homeowners going into default on the loan. Mortgages that have less than 20% of equity when the mortgage is obtained will have PMI attached. Sometimes it is advantageous for the client to then take a 1st mortgage at 80% and then obtain a second mortgage to cover the difference, avoiding PMI.

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How much of a down-payment will I need?

Your down-payment amount is mainly score driven. A higher score will allow for more programs to be offered at the premium interest rate. However, there are many programs for less then perfect credit that allow clients to bring in less money to purchase their homes.

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What is an escrow?

An escrow means including all of your taxes and insurance in your monthly mortgage payment. Sometimes when refinancing and choosing to escrow you may have to contribute any past due amounts or an initial amount to be sure that at the end of the year you have the appropriate amount escrowed.

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Should I escrow?

Some loan programs will allow you to make a choice. The choice depends on if you would rather have the flexibility in making the payment yourself at the end of the year or pay it monthly with your mortgage payment.

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What closing costs are associated with closing a mortgage?

Typical closing costs associated with a mortgage are: title fees, appraisal fees, underwriting, originating, and processing fees.

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What is included in a monthly mortgage payment?

In each mortgage payment there is the monthly amount to pay both your mortgage and the interest that you are being charged to have the loan. Sometimes if you opt to escrow it will also include your yearly taxes & insurance.

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What are discount points?

Discount points are charges to the customer for buying down the interest rate.

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What factors affect the interest rate that I will receive?

There are many different factors that affect the interest rate on a loan. Some of which are the amount of equity that is in the mortgage, the amount of debt that you carry versus your income (DTI), assets that you have, and your credit score.

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Can I get a mortgage if I am self employed?

In today’s marketplace, there are many products to fit the self employed borrower. Some of these products allow the self employed borrower to have an interest rate that is the same as if he were not self-employed.

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What if I don’t have good credit?

There are many non-conforming products that may fit the less than perfect credit score.

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What if I have filed bankruptcy in the past?

There are numerous non-conforming products that will fit the needs of most clients that have previously filed bankruptcy. Some of these mortgages are available to individuals who have been out of bankruptcy for one day.

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When does an Adjustable Rate Mortgage (ARM) make sense?

If you plan on being in the home for only a set period of time then an ARM makes more sense as the interest rate will be lower which will lower your payments. It also makes sense if you need the savings per month.

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What are advantages of fixed terms?

A fixed rate is advantageous because their will be no adjustments of your interest rate. You will not have to worry about market conditions. The mortgage is fixed until you sell your home or refinance or pay the mortgage off.

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Can I pay off my loan ahead of schedule?

Most loans can be paid off at any point, some non-conforming loans may have a prepay penalty attached. A prepay penalty states that if the loan is paid off within a certain amount of time the customer may have to pay a fee. Check your mortgage note or ask your mortgage professional.

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