No! Not anymore. We offer one product that only requires a 1% downpayment - and that can be a gift! The lender then gifts you another 2% toward the downpayment, so that you'll have a total of 3% down. This program isn't available for all loans; however, for conventional financing, you may only need 3% down. And of course, FHA and VA offer minimal and no down payments as well. Call us and we'll help you work through the different options.
There is no simple formula to determine which mortgage is right for you. This depends on a number of factors, including your current and future financial circumstances and the plan for the home you are purchasing or refinancing. We can help you evaluate the choices so that you can make the decision that's best for you and your family.
It's generally a good time to refinance when mortgage rates are lower than the current rate on your loan, or when your ARM loan adjusting to a higher rate than is otherwise available on a fixed rate loan. It's also a good time to refinance if your credit has improved or if you're just looking for certainty in fixed payments from an ARM. For example, only using principal and interest, assume your existing loan is a $100,000 Adjustable Rate loan at 4.5% interest. Your payment would be $1,248. If rates drop to 4%, your payment would be $1,119 and you'd save $128/month! Alternatively, if Fixed Loan rates are also 4.5%, it still may be a good time to refinance so that you reduce your risk of higher payments when interest rates rise. Call us today to know what your options are.
A point is a percentage of the loan amount (1-point = 1% of the loan), so one point on a $100,000 loan is $1,000. Points are costs that need to be paid to a lender to get mortgage financing under specified terms. Points can be paid in cash or often times rolled into your loan amount. The points are generally paid when borrowers want a lower interest rate.
Yes, if you plan to stay in the property for a least a few years. Paying discount points to lower the loan's interest rate is a good way to lower your required monthly loan payment, and possibly increase the loan amount that you can afford to borrow. However, if you plan to stay in the property for only a year or two, your monthly savings may not be enough to recoup the cost of the discount points that you paid up-front. We can help you determine the costs/benefits of paying points.
The annual percentage rate (APR) is an interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage, because it takes into account points and other credit costs. The APR allows homebuyers to compare different types of mortgages based on the annual cost for each loan. The APR is designed to measure the "true cost of a loan." It creates a level playing field for lenders. It prevents lenders from advertising a low rate and hiding fees.
The APR does not affect your monthly payments. Your monthly payments are strictly a function of the interest rate and the length of the loan.
Because APR calculations are impacted by the various different fees charged by lenders, a loan with a lower APR is not necessarily a better rate. The best way to compare loans is to review all of the individual costs associated with the Loan Estimate provided by the lender(s).
The following fees are generally included in the APR:
The following fees are normally not included in the APR:
Mortgage rates usually change often from the day you apply for a loan to the day you close the transaction. They even change sometimes mid-day. If interest rates rise during the application process it can increase the borrower’s mortgage payment unexpectedly. Locking the interest rate means that the lender will hold that interest rate for you for a specified period of time (typically 30-45-60 days). Your loan must close by the end of the lock-in period in order for the lender to guaranty the rate.
Technology has really advanced in the last few years. We work with a variety of lenders that require differing levels of documentation. One of our lenders offers an option for borrowers to log into their accounts through the lender's website and give your approval for the lender to verify directly with the institutions. This drastically reduces the amount of paperwork that you need to chase down. But because it doesn't work in all situations, below is a very generic list of documentation that you'll want to be able to provide shortly after the application process:
If self-employed or receive commission or bonus, interest/dividends, or rental income:
If you will use Alimony or Child Support to qualify:
If you receive Social Security income, Disability or VA benefits:
Source of Funds and Down Payment
Debt or Obligations
Credit scoring is a system creditors use to help determine whether to give you credit. Information about you and your credit experiences, such as your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report. Using a statistical program, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points -- a credit score -- helps predict how creditworthy you are, that is, how likely it is that you will repay a loan and make the payments when due.
The most widely use credit scores are FICO scores, which were developed by Fair Isaac Company, Inc. Your score will fall between 350 (high risk) and 850 (low risk).
Because your credit report is an important part of many credit scoring systems, it is very important to make sure it's accurate before you submit a credit application. To get copies of your report, contact the three major credit reporting agencies:
Equifax: (800) 685-1111
Experian (formerly TRW): (888) EXPERIAN (397-3742)
Trans Union: (800) 916-8800
These agencies may charge you up to $9.00 for your credit report.
You are entitled to receive one free credit report every 12 months from each of the nationwide consumer credit reporting companies – Equifax, Experian and TransUnion. This free credit report may not contain your credit score and can be requested through the following website: https://www.annualcreditreport.com
Credit scoring models are complex and often vary among creditors and for different types of credit. If one factor changes, your score may change -- but improvement generally depends on how that factor relates to other factors considered by the model. Only the creditor can explain what might improve your score under the particular model used to evaluate your credit application.
Nevertheless, scoring models generally evaluate the following types of information in your credit report:
Scoring models may be based on more than just information in your credit report. For example, the model may consider information from your credit application as well: your job or occupation, length of employment, or whether you own a home.
To improve your credit score under most models, concentrate on paying your bills on time, paying down outstanding balances, and not taking on new debt. It's likely to take some time to improve your score significantly.
An Appraisal is an estimate of a property's fair market value. It's a document generally required (depending on the loan program) by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property. The Appraisal is performed by a state licensed professinal who is trained to render expert opinions concerning property values, its location, amenities, and physical conditions.
Fannie Mae and Freddie Mac have collected much data in their years of existence. So much so, that often, they have confidence in a range of values for certain properties. When this happens, they allow you and the lender to decide if you want to exercise the Property Inspection Waiver, which simply means that you don't have to obtain an appraisal in order to close the loan because they have confidence in the loan amount and value estimate that was submitted on the loan application. Exercising this option saves time and money - there is no cost of obtaining an appraisal.
On a conventional mortgage, when your down payment is less than 20% of the purchase price of the home mortgage lenders usually require you get Private Mortgage Insurance (PMI) to protect them in case you default on your mortgage. Much has changed in this area as well over the last years. Borrowers can choose to roll the cost of the PMI into the loan and have the lender pay for the policy up front. Or, you can split the upfront and monthly option and do a combination of both.