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REFINANCE: FREQUENTLY ASKED QUESTIONS
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Why should I consider working with a Mortgage Broker?
Choosing a mortgage broker means receiving an expert mentor through the complex mortgage lending process. A mortgage broker offers you extensive choices and access to information while balancing your financial interests and goals. Read more about why working with a Mortgage Broker can help you get the best deal.
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How often do interest rates change?
Interest rates change daily and sometimes several times daily. Rates are also dependent on the type of mortgage loan, the loan balance, loan to value ratio, credit worthiness of the customer and other factors. Find out how interest rates are expected to move today by visiting our Daily Rate Lock Advisory...
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Should I lock in an interest rate now?
You always have the option to lock in an interest rate or float. Since no one person can accurately predict what rates will do, the decision to lock or float must be yours. Caution should be exercised, once you lock in your rate you have a deadline to finish your loan or the locked interest rate will not be honored by the new lender. Seek the advice of your mortgage consultant. Read more about Rate Lock Periods or access our Daily Rate Lock Advisory...
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What is a point?
Points are prepaid interest which may be charged by the lender for the purpose of reducing the interest rate. If points are paid, they are normally payable at the time of closing. Each point is equal to 1% of the principal loan amount. For example, $1,500 equals one point on a $150,000 mortgage. By paying points, your interest rate will be reduced, resulting in lower monthly payments. Read more about paying points to Buydown your rate.
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Do I need to pay an Origination Fee?
The origination fee is a negotiated percentage of the loan amount to cover the cost of originating the mortgage loan. The origination fee may be paid at closing as an out-of-pocket cost, it may be rolled into the loan amount on refinance transactions (finance closing costs), or it may be paid by the lender as a "rebate" or "yield spread premium" in return for a higher interest rate. The choice is up to the consumer and the costs of the refinance should always be presented up front to the loan applicant in the form of a good faith estimate.
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Can I finance all of my closing costs?
In today's home loan market, most of the products allow you to finance closing costs into your new mortgage loan as long as there is enough equity in your property.
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How much are closing costs?
Closing costs vary from state to state, and title insurance varies from area to area. These variances, along with your loan balance, will affect your final closing costs. Upon completion of your application, your Mortgage Loan Originator will send you a Good Faith Estimate. Your Good Faith Estimate will give you an estimated breakdown of closing costs related to your refinance. Remember, a Good Faith Estimate is only an estimated guess at the present time of what your closing costs may be in the future.
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Can I make extra payments on my mortgage?
You can always make extra payments towards your principal loan balance. With some interest only mortgage programs you may have to split your extra principal payments and normal monthly interest payments on sperate checks, but for most loans, any amounts paid over and above your monthly payments should go towards principal reduction (It should be noted that some lenders may require specific instructions on what to do with extra payments).
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Will you sell my loan?
We are not a direct lender, so we will not be servicing your mortgage. It really depends on which lender you choose to take out a loan with as some lenders are portfolio lenders, meaning they service most of their loans, while others are mortgage bankers and will end up selling your loan on Wall Street. The transfer of servicing is a common business practice in the mortgage industry and is not based on personal or payment history reasons.
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What is the best way to compare rates from lender to lender?
When shopping for rates, we suggest that you get a Good Faith Estimate from all lenders you are shopping and compare rates and fees (i.e. apples to apples). This ensures that there are no hidden costs or fees and allows for a fair comparison between lenders. You may also want to compare the APR on the Truth in Lending Statement. This indicates the total cost of doing the loan. Read more about Rates and APR...
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How long will the loan process take?
On average the loan process takes around 20-30 days to complete, depending on several differnet factors. This process may take 2 weeks to 2 months depending on what lender you are applying to, whether or not you have returned all your paperwork and if an appraisal of the collateral property is required. Once we receive your loan application, one of our team members will be in continual communication with you during the loan process to keep you current on your loan status. Read more about the Loan Process...
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What is an Escrow / Impound Account?
An 'escrow/impound account' is an account set up with your lender so that your lender will pay your property taxes and hazard insurance on your behalf. These accounts are not always required by lenders but they can make it easier for homeowners to budget for their housing expenses. Read more about Impound & Escrow Accounts...
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Can I pay my own taxes and insurance?
For FHA and VA loans the government requires the lender to escrow for those fees. On Conventional loans at 80% or below, you may pay your own taxes and insurance. However, there may be an additional fee if you do not maintain an escrow account. Read more about Impound & Escrow Accounts...
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Will I be required to pay Mortgage Insurance (PMI)?
For Conventional loans where the loan-to-value raio is greater than 80%, most lender will require borrowers to pay a monthly mortgage insurance premium included with their monthly mortgage payments. For FHA loans the government will also require the borrower to pay mortgage insurance, partially in a one-time upfront mortgage insurance premium paid at closing as well as in additional monthly amounts included with the mortgage payments. Read more about Mortgage Insurance...
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Why do I need new title work; I live here already?
A new title search is required to ensure there are no obstacles (liens or lawsuits) to obtaining clear title to the property. Your new lender will also require a re-newed title policy insuring thier position as first lienholder to your property. Read more about Title Insurance...
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How do I know what loan program is best for me?
As a mortgage professional we make every effort to provide you with enough information on a wide variety of mortgage programs to allow loan applicant the ability to make an informed decision. The following questions should be aswered with the help of your loan officer to better help you decide which route to take:
- How long do you expect to stay in your home?
- Which is most importnant to you - low monthly payments OR low closing costs?
- Will your income be increasing or decreasing over the next three years?
- How comfortable are you with your monthly payment potentially increasing?
- Which is most important - a temporarily lower interest rate and mortgage payments OR higher payments with a long-term fixed rate mortgage?
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What if I make less money than I did or have changed jobs since I first obtained my mortgage?
There are a variety of refinance products available that require limited or no income qualification.
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I want to borrow more money to use for repairs to my home. Can I do that?
Yes, you may finance the repairs and even remodel of your home with a refinance. You may simply pull cash out of your home for the repairs as long as there insufficient equity in the property to cover the cost of the repairs and the property must appraise at an acceptable value before the repairs have been completed. Or, if the repairs and/or remodeling of the home are structural in nature and will exceed $50,000, then you may want to apply for a remodel or rehab loan.
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