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Mortgage
Information
Fixed
Rate Mortgages
You
plan to be in your home for a number of years and want the same
monthly payment.
Features
- Good
for purchase or refinance, with tems of 15 and 30 years.
- The
interest rate and monthly payment stay the same for the life
of the loan.
- No
penalty for prepaying your loan.
- Use
your loan to buy a primary residence, invest in a second home
or buy an income property.
Why
choose a fixed-rate mortgage?
- You
want a stable monthly payment.
- You
believe interest rates could rise in the next few years.
- You
plan to stay in your home for many years.
Adjustable
Rate Mortgages
You're
looking for lower initial monthly payments, while qualifying for
the most home you can buy.
Features
- Good
for purchase or refinance, with terms of 15 and 30
years.
- Initial
fixed interest rate for 1 year, 3 years, 5 years and 7 years.
- Protection
against unlimited interest rate increases.
- Many
of our ARMs are assumable.
- Use
your loan to buy a primary residence, invest in a second home
or buy an income property.
Why
choose an ARM?
- You
want lower initial monthly payments than a fixed-rate mortgage
usually offers.
- Lower
initial monthly payments means you can buy more home.
- You
plan to own your own home for the initial fixed rate period.
- You
think interest rates may be headed down in the next few years.
SHOPPING FOR A HOME LOAN?
The Wrong Choice Can Cost A Lot!
Purchasing
a new home is an exciting and rewarding endeavor. Making that important decision to buy a home is the first of
many decisions you will be asked to make.
As
you shop for a home loan for your purchase transaction, there are
three very important decisions you will need to consider: 1) Type
of Loan, 2) Shopping
for a Rate, and 3) Shopping for a Mortgage Company.
DECISION
#1 - TYPE OF LOAN
There
seem to be an endless number of loan programs in the marketplace
today. With so many
different loan programs available to you, it can be a very confusing process. It is important to have the information you need to help you
decide which mortgage loan is best for you.
The
key here is to ask yourself these important questions:
1) How long do I plan on staying in this home?
2) Do I feel more comfortable with a Fixed Rate or
Adjustable Rate?
3) Would
a pre-payment penalty be a problem for me?
4) How
much of a down payment do I have?
The key
here is to select a mortgage representative who cares enough and
is patient enough to take the time to explain and analyze your
options with you.
This is a decision you may be living with for the next
twenty to thirty years.
DECISION
#2 - SHOPPING FOR A RATE
Shopping
for an interest rate. Sounds
like a very simple thing - right? You
pick up the telephone and simply ask, AWhat
is your 30 Year Rate?@
If it
is as simple as that, something is wrong.
In order for a correct rate to be quoted, the loan officer
or mortgage broker should first ask you several
questions.
If you are not asked questions, but are simply quoted a
rate, you are
strongly urged to move on to the next lender.
Rates
often vary depending upon occupancy - Primary Residence, Second
Home, or Investment
Property. They vary
based upon loan amount. A
AConforming
Loan@
is a loan up to a maximum of
$333,700
and a AJumbo
Loan@
is a loan over this amount. Typically,
a rate on a Jumbo loan will be a little higher than a Conforming
Loan. Also, most
Lenders charge a little higher rate on very small loan amounts.
Another factor affecting rate is the credit worthiness of
borrower (very clean credit, slow pay, or credit problems
including bankruptcies or judgments).
These are just a few of the issues or questions that should
be raised prior to a rate being quoted.
In
order to be an educated shopper, it is important to compare apples
to apples. This means
that you must also ask questions. Interest rates are quoted for a specified lock term (i.e.: 7
days, 15 days, 30, 45, or 60 days). Obviously, a 60 day price is going to be a little higher than
a 7 day price.
If you call for a rate - always ask what lock term you are
being quoted.
The
next question should be - AWhen
can I lock my loan?@
If your lender or broker will only allow you to lock after
the loan is approved, then you must consider whether the rate
quote is really legitimate.
A Lender can quote whatever rate they want if they are not
going to allow you to lock. Beware
of this practice.
When
shopping rates, you need to know what APoints@
(if any) are charged. A
APoint@,
also known as a ADiscount
Point@,
is a one-time charge paid to the lender at closing to
obtain a lower interest rate on the mortgage.
Each point is equal to 1 percent of the loan amount.
The payment of points to a Lender is simply Aprepaid
interest@
and is a way of buying down your interest rate. Depending upon your future plans, it may be wise to pay
points up front to receive a lower rate, or it may be better to
request a ANO
POINT@
loan. This
is something that you may want to discuss with your accountant or
financial advisor.
DO
NOT STOP THERE - ASK IF THERE IS AN AORIGINATION
FEE@.
Often, a lender or broker will quote a rate at NO POINTS or
l POINT (that may
only refer to Discount Points). There may also be an
additional origination
fee of l point, etc. Do
not assume - ask the question.
Remember
that rates change daily. Actually,
rates may change more than once a day.
Economic issues affect mortgage rates just like the stock
market. If you shop
rates with one lender/broker today, and another two days later -
you may not be comparing apples and apples.
Finally,
IF THE RATE SOUNDS TOO GOOD TO BE TRUE - IT PROBABLY IS!!!
DECISION
#3 - SHOPPING FOR A
MORTGAGE COMPANY
Without
a doubt, the most important choice you will be asked to make when
shopping for a home loan is your source of financing. Traditionally,
your local bank or Savings & Loan was the place to go.
Today, your local bank is still a good
option. Another
option that you should consider is a mortgage broker.
This is often a good way to really shop market rates and
programs. A mortgage
broker does not work for a specific mortgage lender, but typically
has a relationship with a number of different lenders nationwide.
Nationwide, about 60% of all mortgages are originated by
mortgage brokers.
Whether
your choice is a bank or broker, you should consider the
following:
1.
Does this company have a good reputation?
2.
Did you get referrals? (Neighbors & Realtors are
wonderful sources.)
3.
Does this company have an
office location? (Would you go to a doctor working out of his/her
home?)
4.
Is this company familiar with property in the Keys?
(Remember, it=s
different down here.)
5.
Does the broker belong to professional trade organizations
who adhere to ethical codes of conduct? (FAMB - Florida
Assoc. of Mtg. Brokers & NAMB -
Natl. Assoc. of Mtg. Brokers are two such organizations.)
6.
Are your telephone
calls returned promptly?
7.
Does the loan officer/broker appear to be knowledgeable &
professional?
8.
Finally, beware of Internet inquiries and on-line loan
applications. There is real concern and great opportunity
for fraud here.
The
information above is provided courtesy of Choice Mortgage,
305-451-4822.
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