Buying a home is one of the most exciting times in our lives.
We work hard to make sure the experience is positive, secure, exciting, and overall amazing.
Knowledge is power, so here is some key information.
The loan approval process generally begins with an initial interview where you and your Loan Consultant will discuss your income and long term debts. This step is called pre-qualification* and it can help you shop for affordable properties in the correct price range. When a lender makes a decision about a mortgage application, they consider many basic factors: all based on your ability to repay the loan.
To ensure your loan is truly affordable, a lender will verify your employment and income. Your monthly Debt to Income ratio – your total income, minus monthly credit payments and other debts — will also be considered.
Total Monthly Payments
Your monthly mortgage payment typically is made up of four components: principal, interest, taxes, and insurance, together known as PITI. The principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. The interest is the fee charged for borrowing money. Taxes refer to property taxes your community levies which are generally based on a percentage of the value of your home. The insurance amount is collected and paid much like the taxes.
Principal and interest comprise the bulk of your monthly payments in a process called amortization, which reduces your debt over a fixed period of time.
Closing costs are the actual expenses incurred in the origination of a new home loan. Some of the costs are related to your loan application, such as the expense of a credit report on all applicants. Other fees are related to the house itself, such as the property appraisal. Others are payment to the lender for processing your application, such as the loan origination fee.
Common closing costs can include processing and underwriting fee, mortgage insurance premium, appraisal fee, the cost of a credit report, tax service fee and other fees. Escrow accounts are required for many loans and require cash deposits at closing.
*A pre-qualification is not an approval of credit and does not signify that underwriting requirements have been met.
What are some reasons that make the most sense to refinance your current mortgage with us?
Well, here are a few! Our team will tailor the best option to achieve what you are looking to do with your home.
DECIDING TO REFINANCE
Traditionally, the decision on whether or not to refinance has meant balancing the savings of a lower monthly payment against the costs of refinancing as well as the possibility of lowering your loan term and saving money on interest in the long run.
We can help establish a mortgage plan that makes sense and benefits you.
You may qualify to refinance for more than the balance remaining on your old mortgage — in effect, tapping your home equity, or "cashing out," in mortgage speak.
Another use for the extra cash is to pay off any higher rate loans you may have.
TRADE YOUR ADJUSTABLE FOR A FIXED
By switching to a fixed rate loan, you can lock in an attractive rate for as long as you own your home.
There are certain cases, however, where an ARM makes sense. If you are fairly certain you'll be moving within five years, you may save some money — and avoid rising payments — with a five year ARM.
BUILD HOME EQUITY FASTER
Many borrowers use a refinance to shorten the term of the mortgage. This offers two advantages: you may build up equity faster, and pay far less in total interest over the life of the loan.