With a fixed rate mortgage, the interest rate and payment remains constant over the life of the loan. With an adjustable rate mortgage, the interest rate can either increase or decrease, based upon the terms of the loan. This could cause the monthly payments to increase in order to have the loan paid in full by maturity.
A conventional loan is one not guaranteed by the Federal government. Instead, conventional loans are purchased on the secondary market by the Federal Home Loan Mortgage Corporation (FHLMC), the Federal National Mortgage Association (FNMA) or the Government National Mortgage Association (GNMA). FANNIE MAE (FNMA) and FREDDIE MAC (FHLMC), which are quasi-governmental agencies, buy and sell large quantities of mortgages and work with financial institutions to obtain necessary capital
Conventional loans follow certain guidelines of government sponsored entities such as Fannie Mae. A conventional loan can be fixed or adjustable.
Jumbo, or non-conforming, is a term used to describe a loan that does not conform to Fannie Mae or Freddie Mac guidelines. The typical Jumbo loan exceeds the maximum loan limits of conforming and conforming plus loans. The threshold for determining a loan to be a Jumbo loan varies depending on state and sometimes counties.
Initially, the only fee that is legally allowed to be collected is the cost of a credit report. Any other up-front fees, such as an appraisal that may apply to your request will be disclosed to you as part of the application process and collected following your receipt of the initial Truth-in-Lending disclosure, Good Faith Estimate and your approval to continue with the application.
The loan approval and funding time frames vary depending on the type of transaction and the complexity of your personal finances. On average, the process can take from 20 to 45 days.
A locked rate represents the interest rate you choose and will be the interest rate used to factor your monthly payment. When the rate is locked, it secures the interest rate during the process of your loan approval as long as your loan is processed and closed prior to the rate lock expiration date. This date is given to you when you lock-in the rate.
You can lock or float your interest rate at any time during the process of your loan. Your loan officer will discuss these options with you upon taking your loan application.
You can make principal payments at anytime during your loan term or pay the loan in full. You can also pay a set amount each month above the normal payment due or make lump sum payments periodically. There is no penalty for doing this unless your particular loan program has a prepayment penalty. Currently, most programs have no penalty for prepayment.
An escrow account is maintained by the lender to collect funds from the borrower as part of their monthly payment so that the lender can pay the property taxes and hazard insurance on the property as they become due.
Review your current situation and future goals, and then answer these questions with your loan officer to help determine the route you may want to take:
How long do you expect to stay in the house?
Which is more important: lower monthly payments or lower closing costs?
Will my income increase or decrease in the next three years?
How comfortable are you with your monthly payment potentially increasing?
PMI stands for Private Mortgage Insurance. On a conventional loan, PMI is required if you borrow over 80% of your appraised value. This protects the lender against financial loss if the loan is defaulted.
Points represent an origination fee charged by the lender and/or loan discount points sometimes charged to lower the interest rate. One point is equal to 1% of the loan amount.
A buy-down is a fee paid to lower the interest rate on a mortgage. Typically, the buyer, seller or any other interested party may pay it. A permanent buy-down would lower the rate for the entire term of the mortgage, while a temporary buy-down lowers the rate for a specified shorter term, generally three years or less.
Having credit problems doesn’t automatically mean you can’t become a homeowner or refinance your existing home loan. Our loan officers will help you to determine if you can qualify for a loan now or if you need to take steps to improve your credit rating.
Required by federal law, the Good Faith Estimate (GFE) is a written list of the estimated closing costs associated with your mortgage transaction, such as broker & lender's charges, appraisal fee, escrow/closing charges, etc. It also includes estimated amounts for real estate property taxes and homeowner's insurance. A GFE disclosing all the fees that pertain to your program will be provided within 3 days of your application.
Required by federal Law, the Truth-in-Lending statement provides detailed information about the total charges that you will incur over the life of the loan. It includes the Annual Percentage Rate (APR), the amount of interest you'll pay, the amount financed and schedule of payments, the total of your payments, late payment charges and whether or not the program has a prepayment penalty.
The annual percentage rate is intended to reflect the total cost of your mortgage loan. To calculate the APR, lenders consider the interest rate on your mortgage loan, the term of the loan, and other loan fees such as closing costs, points, mortgage insurance, etc. Your APR represents the total cost of credit on a yearly basis after all applicable financed charges are taken into consideration. Your monthly payment is calculated based on the mortgage note rate, not the APR. It is typically higher than your actual interest rate, because it includes these additional items and assumes you will keep the loan for the full term.
Your credit score plays a significant role when you apply for a loan. Higher credit scores allow you more loan options and better interest rates. If you've had credit difficulties in the past, you may still qualify, but it may mean higher cost &/or rate, depending on the severity of your credit problems.
When you pay a discount point, you are essentially paying part of your interest to the lender up front. This will lower your interest rate — as well as your monthly payment — over the life of the loan. One discount point is equal to 1% of the loan amount. Generally speaking, the longer you plan to remain in a property or hold your mortgage, the more advantageous it is to pay points. There is no requirement to pay discount points.
Traditional loans usually require documents that verify your employment, income and assets. Some documents you may need when applying for a mortgage loan include:
Your Social Security number
Pay stubs for the last two months
W-2 forms for the past two years
Bank statements for the past two or three months
One to two years of federal tax returns
A signed contract of sale (if you've already chosen your new home)
Information on current debt, including car loans, student loans and credit cards
Your down payment requirement is most affected by whether your purchase will be owner or non-owner occupied. If you are buying your primary residence, it is still possible to purchase a home for a low or no down payment. We can help you determine based on variety of criteria which program will require the least amount down, if this is your main priority. For first-time homebuyers, there may be specialized programs that can reduce or eliminate your cash requirements, depending on where or what you are purchasing and the details of your particular situation. In contrast, for someone looking to purchase an investment property, a greater down payment is currently required, typically a minimum of 20% down.
This decision is based on both financial and lifestyle choices. From a lifestyle standpoint, consider whether or not you want to commit to living in a home for several years. Compare the cost of renting to the after-tax cost of owning to determine whether it makes financial sense to buy. Use our Rent vs. Buy calculator for a quick comparison of scenarios. These may help your decision-making.
With a fixed rate mortgage, the interest rate and payment remains constant over the life of the loan. With an adjustable rate mortgage, the interest rate can either increase or decrease, based upon the terms of the loan. This could cause the monthly payments to increase in order to have the loan paid in full by maturity.
A locked rate represents the interest rate you choose and will be the interest rate used to factor your monthly payment. When the rate is locked, it secures the interest rate during the process of your loan approval as long as your loan is processed and closed prior to the rate lock expiration date. This date is given to you when you lock-in the rate.
You can lock or float your interest rate at any time during the process of your loan. Your loan officer will discuss these options with you upon taking your loan application.
Having credit problems doesn’t automatically mean you can’t become a homeowner or refinance your existing home loan. Our loan officers will help you to determine if you can qualify for a loan now or if you need to take steps to improve your credit rating.
Most refinance loan programs require some equity in your home to refinance. But, there are special programs, such as Making Home Affordable, that may offer more flexible requirements.
Yes. We have a variety of options that allow you to tap into your home's equity and take cash out. Consult your loan officer for the best cash-out refinancing option for you.
You may want to consider refinancing if you are interested in paying off high-interest-rate debt; shortening the length of your loan repayment term; rates have dramatically decreased, therefore lowering your monthly mortgage payment; you want to change your adjustable rate to low, fixed rate; or your home has significantly appreciated in market value.
With a fixed rate mortgage, the interest rate and payment remains constant over the life of the loan. With an adjustable rate mortgage, the interest rate can either increase or decrease, based upon the terms of the loan. This could cause the monthly payments to increase in order to have the loan paid in full by maturity.
A locked rate represents the interest rate you choose and will be the interest rate used to factor your monthly payment. When the rate is locked, it secures the interest rate during the process of your loan approval as long as your loan is processed and closed prior to the rate lock expiration date. This date is given to you when you lock-in the rate.
You can lock or float your interest rate at any time during the process of your loan. Your loan officer will discuss these options with you upon taking your loan application.
Having credit problems doesn’t automatically mean you can’t become a homeowner or refinance your existing home loan. Our loan officers will help you to determine if you can qualify for a loan now or if you need to take steps to improve your credit rating.
Traditional loans usually require documents that verify your employment, income and assets. Some documents you may need when applying for a mortgage loan include:
Your Social Security number
Pay stubs for the last two months
W-2 forms for the past two years
Bank statements for the past two or three months
One to two years of federal tax returns
Current copy of your existing mortgage statement(s)
Information on current debt, including car loans, student loans and credit cards
