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Your Location: Home - Mortgage Loan Mortgage LoanUse: mortgage calculator, mortgage rate, mortgage loan, mortgage interest rate, home mortgage, refinance mortgage, mortgage company, second mortgage, online mortgage application.
Mortgage Refinance Questions and Answers
Q. What are points? A. Points are costs that need to be paid to a lender in order to receive mortgage financing under specified terms. A point is a percentage of the loan amount (one point = one percent of the loan). One point on a $100,000 loan would be $1,000. Discount points are fees that are used to lower the interest rate on a mortgage loan (you are discounting the interest rate by paying some of this interest up-front). Lenders may express other loan-related fees in terms of points. Some lenders may express their costs in terms of basis points (hundredths of a percent). 100 basis points = 1 point (or 1 percent of the loan amount). Q. Should I try to pay as many discount points as possible to lower my loan's interest rate? A. If you plan on staying in the property for at least a few years, paying discount points to lower the loan's interest rate can be a good way to lower your required monthly loan payment (and possibly increase the loan amount that you can afford to borrow). To find low interest rates online go to LoanWeb.com If you only plan to stay in the property for a year or two, your monthly savings may not be enough to recoup the cost of the discount points that you paid up-front. Ask your lender how long it would take for your monthly savings to recoup the costs of the discount points. Q. What does it mean to lock the interest rate on a mortgage loan? A. Due to the nature of interest rate movements, mortgage rates can change dramatically from the day you apply for a mortgage loan to the day you close the transaction. If interest rates rise sharply during the application process, it could make a borrower's mortgage payment larger than he/she previously thought. To protect against this uncertainty, a lender can allow the borrower to 'lock-in' the loan's interest rate, guaranteeing the borrower the prevailing loan rate for a specified period of time (often 30-60 days). A lender may or may not charge a fee for this service. Q. Should I lock-in my loan rate when I apply for a mortgage loan? A. No one knows for sure how interest rates will move at any given time, but your lender may be able to give you an estimate of where it thinks mortgage rates are headed. If interest rates are expected to be volatile in the near future, you may want to consider locking your interest rate if rising rates will no longer allow you to qualify for the loan. Find lowest interest rates If your budget can handle a higher loan payment or if the lenders lock fee seems excessive for your means, you might want to consider allowing the interest rate to 'float' until the loan closing. Q. I've had credit problems in the past. How does this impact my chances of getting a home loan? A. Obtaining a home loan is possible even with extremely poor credit. If you have had credit problems in the past, a lender will consider you to be a risky borrower to lend to. To compensate for this added risk, the lender will charge you a higher interest rate and usually expect you to pay a higher down payment on your home purchase (typically 20-50% down). The worse your credit is, the more you can expect to pay for an interest rate and a down payment. Not all lenders choose to lend to risky borrowers, so you may have to contact several before finding one that will. Q. I've only been late a couple of times on my credit card bills. Does this mean I will have to pay an extremely high interest rate? A. Not necessarily. If you have been late less than three times in the past year, and the payments were no more than 30 days late, you probably have a pretty good chance at getting a home loan at a competitive interest rate. Shop low interest rates at LoanWeb Lender guidelines will vary, but most lenders will excuse a couple of minor 'late-pays' as long as the borrower can provide a reasonable excuse explaining them (i.e. job transition, illness). If the late-pays were 60+ days late and cannot be explained, you may have to settle for a higher interest rate.
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