Why use a Mortgage Broker?
A Mortgage Broker Saves You The LegworkThe alternative to working with a broker is to call up dozens of lenders and compare their mortgage terms and rates on your own. A broker saves you the time and headache of having to do that. Mortgage brokers have regular contact with a wide variety of lenders, some of whom you may not even know about.
A Mortgage Broker Protects YouA Mortgage Broker can steer you away from certain lenders with onerous payment terms buried in their mortgage contracts.
A Mortgage Broker May Have More AccessSome lenders work exclusively with mortgage brokers and rely on them to be the gatekeepers to bring them suitable clients. You may not be able to call some lenders up directly to get a retail mortgage.
Special RatesA Mortgage Brokers may also be able to get special rates from lenders due to the volume of business generated that might be lower than you can get on your own.
Save Money on Some FeesThere are different types of services and fees that can be involved in a new mortgage or working with a new lender including application fees, origination fees, and appraisal fees. In some situations, mortgage brokers may be able to negotiate with lenders to waive some or all of these service fees which can save you hundreds to thousands of dollars.
Why should I refinance my property?There are numerous reasons to refinance loans you may already have on real estate. Some of these are:
- To lower the interest rate.
- To change the remaining term of the loan.
- To switch from an adjustable rate loan to a fixed rate loan, or vice-versa.
- To lower the monthly payment of the loan.
- If the property's appraisal value has increased, you may want to refinance based on the current value in order to access some of the equity. Often, this equity is used to pay off other, higher rate loans such as credit card debts.
Why do I pay pre-paid interest?When you close your mortgage loan, interest accrues in between the closing date and the last day of that calendar month. This interest amount is added to the closing costs for your loan rather than making your first monthly payment larger in order to absorb the extra cost that would be due.
Which amounts are included in my monthly payments?
- Interest-only first lien mortgage payments include only the interest that is due on the outstanding principal balance.
- If you have a fully amortizing first lien mortgage, portions of your monthly mortgage payment go toward loan principal and interest.
- If your first lien mortgage carries mortgage insurance, a portion of your monthly mortgage payment will pay this also, unless the lender has paid your mortgage insurance or you have paid your mortgage insurance upfront.
- If you have set up an escrow account for your first lien mortgage, then portions also go toward your property taxes and homeowners insurance.
What will my mortgage rate be?Mortgage rates are based on a variety of factors such as the loan purpose, the borrower's credit history and ability to repay the loan, the amount of the down payment, the value of the collateral, the total loan amount and more. It is prudent to get pre-approved for a mortgage loan before shopping for a real estate property. You can start the approval process with our short, online mortgage application.
What is title insurance?A title insurance policy protects a lender against any loss resulting from a title error or dispute. A title insurance policy also protects a home buyer if a home buyer purchases a separate policy, called owner's coverage.
What is the difference between APR and interest rate?
- The APR is the total cost of the loan over its life, including costs, points and fees.
- The interest rate is the cost to borrow the money disbursed in the loan.
What is the difference between “locking” and “floating” loan rates?
- Locking ensures that your loan pricing will be unaffected during the lock-in period by giving you a specified period of protection from financial market fluctuations in interest rates.
- Locking sets the range of pricing available to you; it doesn’t guarantee that a specific rate will apply.
- Floating – or not locking – means your rate will fluctuate with the up and down movements of the market.
What is PMI?PMI stands for Private Mortgage Insurance. PMI protects lenders against losses that can occur when a borrower defaults on a mortgage.
- PMI is required on first mortgage purchase transactions when the borrower has less than a 20% down payment.
- Likewise, PMI is required on first mortgage refinance transactions when the borrower has less than 20% equity in the property being refinanced.
What is LTV and why does it matter?LTV stands for loan-to-value ratio. This is calculated by the total amount of loans (liens) on the property divided by its fair market value. The higher the LTV, the riskier the loan is for a lender.
- If the subject property is a purchase transaction, fair market value will be based on the lower of purchase price or estimated market value as established by the appraisal.
What is an origination charge?An origination charge is the amount charged for services performed on the initial mortgage loan application and loan processing. This includes all charges (other than discount points) that lenders and brokers involved in the transaction will receive for originating the loan. It includes any fees for application, processing, underwriting services, and payments from the lender for origination.
What is a mortgage rate lock?
- A rate lock on a mortgage gives you protection from financial market fluctuations that could affect your interest rate range.
- You can choose to lock or not lock your interest rate range. On the date and time you lock, that interest rate range remains available to you for a set period of time.
- If there are no subsequent changes to your loan and your interest rate range is locked, the interest rate range on your application generally remains the same.
- If there are changes to your loan, your final interest rate at closing may be different.
What is a CEMA?CEMA is short for - Consolidation, Extension and Modification Agreement.
- Mostly used for refinances, but in some circumstances purchases, it is possible to avoid paying mortgage tax by modifying a mortgage note to become an extension of the original note for which mortgage tax was previously paid.
- When a CEMA is completed, the customer pays the mortgage tax for difference between the existing mortgage and the new mortgage and not the tax on the entire amount of the new loan.
What are the closing costs?The closing costs on a real estate loan include items like pre-paid interest and documentation fees, title insurance fees, attorney fees and the cost of an appraisal – to name a few. Closing costs are usually different for each customer due to differences in the property, the property location, the type of mortgage loan and many other factors.
- You will receive a good faith estimate of your closing costs in advance of your closing date for your review.
What are some borrower scenarios of a Pick A Term?
- STAY ON TRACK: Borrower has paid a loan for 8 years on a 30-year fixed mortgage and does not want to go back up to a 30-year term. PICK A TERM allows you to refinance at 22 years to stay on track. PICK A TERM offers you this kind of flexibility!
- FAST TRACK: Borrower pay extra towards his/her mortgage every month to pay it off as soon as possible, but you’re unhappy with your high mortgage interest rate. PICK A TERM is your answer! Now you can choose a lower term, with a potentially lower interest rate, to help you pay off your loan in less time.
- BUDGET MINDED: Tell us how much you can afford and Amerimutual Mortgage will find a term to fit your financial needs. PICK A TERM terms can be tailored to match your budget, and can potentially shave off years of the life of your loan and thousands in interest!
- Match Your Term to Life Events: Retiring soon?, Child going to college? and want to free up some money by paying off your home loan early, the PICK A TERM is a great option for you! Use the PICK A TERM to help you eliminate the financial burden of a monthly mortgage payment at the time when you’ll need that extra money the most.
What are points?Points are a one-time fee that a borrower pays to lower the interest rate or compensate the broker for services rendered.
- One point equals one percent of your loan amount.
Should I pay my fees out of pocket?If you are purchasing a property, first lien mortgages typically do not permit fees to be included in the loan amount. If you are refinancing, you can either pay the fees in advance or roll them into the closing costs.
For refinance loans only
- If you have the funds, then it makes sense to consider paying fees out of pocket (for example, like you would pay a down payment on a car). This allows you to have a lower monthly payment.
- If you don't have the extra funds, it makes sense to roll the fees into the closing costs of the loan. The difference in payment and total cost of the loan is usually nominal.
Is title insurance mandatory?Yes. All mortgage lenders require lender’s title insurance coverage for an amount equal to the loan. It lasts until the loan is repaid. Similar to mortgage insurance, the borrower pays the title insurance premium at closing.
Is my interest tax deductible?If a property is your primary residence, the interest you pay on a loan may be tax deductible. You should always consult with a qualified tax advisor to determine whether this applies to your situation.
Is an adjustable rate loan wise to take for anyone? Why?An adjustable rate loan can result in a lower payment in the short term but carries a risk that the rate could rise during the long term and produce significantly higher payments. If you do not expect to keep the loan for a long time, then a adjustable rate may be the better choice. In addition, a adjustable rate loan may allow you to borrow a larger amount of money if your credit is less than perfect. As with all loans depending on your specific needs this product may be optimal choice. We have dealt with the following scenarios in which the Adjustable Rate Mortgage was the prudent choice:
- Borrower was going to relocate within 5 years.
- Borrower was going to start a family and upgrade to a bigger home within 5 years.
- Borrower is expecting a Lump Sum Payment in the short term and will be paying off the loan early.
- Investor flipping the home and needed the money only on a short term basis.
Is a fixed rate loan the best option?While this product is very popular amongst many homeowners in NY, determining whether a fixed rate loan is the best loan for you is based on your personal needs and goals. The following scenarios should be considered in making the proper mortgage loan choice:
- How long do you plan on living in the home?
- Will you be upgrading soon?
- What is your monthly income? Will this change in the near future?
- What is the interest rate environment?
- How much discretionary income would you like to keep available?
How soon will I get my money?When you purchase a home, your funds are available on the day you close your loan. When you refinance a property, funds are normally disbursed on the fourth business day after you sign your loan documents. This is because federal regulations require a 3-day rescission period during which time you have the right to cancel your loan outright.
How much of a money can I get?The amount you money you can get on cash-out refinance real estate property loan depends on two main factors:
- Your debt-to-income ratio.
- The amount of equity you have in your home.
How is the lending decision made?When reviewing your mortgage loan application, an underwriter reviews all the information you submitted and carefully examines your credit history, your property value, and your debt-to-income ratio. These are the main factors which describe you as a mortgage applicant. This perceived level of risk determines your loan approval decision and, in some cases, the rate of interest you will be charged on the loan.
How are mortgage interest rates determined?Interest rates on mortgages are influenced by the financial markets and can change daily – or multiple times within the same day. The changes are based on many different economic indicators in the financial markets.
Do I need an adjustable rate or a fixed rate mortgage loan?Adjustable-rate mortgage loans are linked to an index, Prime, and therefore the rate can change over time based upon fluctuations of the index. If rates are low and you do not plan on staying in your home for a long time, an adjustable rate mortgage could be advantageous. Consider factors that could affect your decision, such as how a higher monthly payment would impact your budget if the rate were to increase and the length of time you plan to stay in your home. Fixed-rate mortgage loans have interest rates that don't change. Hence, your monthly mortgage payment will remain the same during the life of the loan.
Do I need a home appraisal?Sometimes a home appraisal is not always needed; other times we have to conduct a full appraisal, and there are levels in between. Only after reviewing your mortgage application and collateral information will it be determined whether a home appraisal is needed for your situation.
Do I need a down payment?When purchasing a home or any real estate property, a down payment is generally required. For first mortgage financing, Amerimutual Mortgage is able to offer products with low down payment financing. Opportunities are dependent on the loan purpose, loan product, credit profile and occupancy of the property.
- Loans may be up to 95% of a property's current appraised value.
- A loan officer will assist you in understanding how this affects your loan.
Do I have to have perfect credit?Credit is only one factor in the underwriting process, so don't think that your credit score alone will stop you from getting a loan; however, your credit history needs to demonstrate both willingness and ability to repay on time. While it is true that a high credit score is might receive better rates and offer more financing options to the borrower, this doesn't mean you cannot obtain a real estate mortgage if you've had some credit problems in the past. At Amerimutual Mortgage in Astoria, Queens, NYC New York, our brokers are here to help you fulfill your home ownership dreams, advising you on the proper loan products and loan amounts that best suit your needs. Call us. You will be glad you did.
Can I get pre-approved for a loan?Yes, it is actually wise to get pre-approved for a loan. Once you are pre-approved, you can search for your new home with confidence, and sellers will feel more comfortable dealing with you. The mortgage loan pre-approval process is simple. Your information is reviewed and a decision is made as to whether you qualify. Contact us to see what information you need to provide.
Can I finance my rental property?Yes, you can finance a rental property, however, the interest rate is typically a bit higher. This is because there is more risk for the bank when lending on a property that is not the customer's primary residence.