FAQs
Below we have listed the most frequently asked questions we
receive. Please feel free to
contact us if your questions are
not answered below and we will be more than happy to provide you
with answers.
What is a
Mortgage Broker vs. a Mortgage Lender or Banker?
Will I
save money with a mortgage lender?
What is
a Good Faith Estimate (GFE)?
What are
Points?
What is a rate lock
and how does it work?
What is
a pre-qualification vs. pre-approval?
What is the
difference between a conforming and jumbo loan?
What is APR and
why is it not the same as loan rate?
Should I
consolidate my debt?
When is it
right to refinance?
What is the
worst thing we can do regarding home financing?
A MORTGAGE
BROKER counsels you on loans available from a number of lenders,
works through the application process with you and follows you
through to closing. A
mortgage lender generally has just their own products to offer.
Generally
the MORTGAGE BROKER will save you money.
They specialize in only one function – Finding you the best
loan for the best price. By
dealing with multiple lenders the broker can shop for the very best
terms at any given moment.
GOOD
FAITH ESTIMATE is
the list of settlement charges that the lender charges at
closing (based upon information known at application) Lenders must
provide the “GFE” within 3 days of application.
POINTS are
upfront payment of finance charge – paid at closing generally
expressed as a percentage of the loan amount.
1 point is 1% of the loan amount.
A RATE LOCK is an
agreement between the borrower and the lender guarantying a specific
rate at closing. There
are four components to a rate lock – Loan program, rate, points
and length of lock. Generally
the lock should be in writing between parties.
A
PRE-QUALIFICATION results after a discussion between your loan
originator and you. During
the discussion, you determine if you have enough cash, income and
meet the general loan guidelines.
A PRE-APPROVAL involves the same information plus the
analysis of credit through your credit report
CONFORMING and
JUMBO refer to the dollar size of the loan.
These limits are set annually and are different by property
living units. 2003 conforming loan limits are: 1 unit, $333,700 – 2 unit,
$427,150 - 3 unit, $516,300 – 4 unit, $641,650
A.P.R. stands for annual
percentage rate. It is
generally a rate higher than the loan or note rate.
The A.P.R. takes into account fees that are considered
finance charges (such as points and others) as well as the note rate
of interest. The larger
the difference between the note rate and A.P.R. the more fees being
charged. Comparing
A.P.R. rates is a good way to shop for a mortgage providing the same
information is used by all for the calculation.
Think long and
hard about CONSOLIDATING long and short-term debt into a home
mortgage. The thought
of financing a car for thirty years is not necessarily a pleasant
one. Possibly a Home
Equity Loan / Line is more appropriate?
We can arrange one for you if you like.
You need to do
a COST / BENEFIT and pay-back analysis.
Determine the total cost of refinancing.
Next, calculate the savings per month you will receive from
refinancing and then divide the total costs by the savings to
determine the number of months to break even.
If you plan on living in the home more months than the
break-even, it may be a good idea to refinance.
I teach home
financing to new homeowners each month.
The single most important message I hope they leave class
with is to COMPARE before making a commitment.
Shop a number of lenders and brokers before making a
decision. Failure to do
so could cost you thousands of dollars.
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