Frequently Asked Questions

Should I refinance?
Should I consolidate my debt?
What are points?
What does it mean to lock in a rate?
What is an ARM?
What is a mortgage?
What is a FICO score?
What are closing costs?
What is a Loan-to-Value ratio?
What is PMI?
What is an appraisal?
What is title insurance?
What is a loan origination fee?
Helpful Hints: What NOT to do

Q: Should I refinance?
A: There are two main benefits to refinancing your home. First, it can save you money on your monthly payments and cut years off the remaining term of your loan, saving thousands in interest payments. The longer the remaining term on your loan, the more interest you have to pay. Even if rates are just a half point lower than your current mortgage, refinancing can save you a lot of cash.

Also, you can leverage the equity in your house and get immediate cash in your pocket. You can use that money towards a new car, that vacation you’ve been talking about or home improvements to increase your home’s value. Refinance your mortgage today and free up the money you need to do the things you want.

Request a call from one of our loan professionals to lock in and cash in today.

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Q: Should I consolidate my debt?
A: Consolidating your credit card, auto loan and student loan payments into one low rate and payment through your home loan can be a smart financial decision. You can save hundreds or even thousands of dollars in interest by taking advantage of consolidating into one low mortgage rate.

Request a call from one of our loan professionals to find out how much you can save today.

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Q: What are points?
A: Points are fees added on to a loan and are paid when the loan closes. One point equals one percent of the loan amount. There is an inverse relationship between the interest rate and the number of points paid. In other words, you can lower your monthly mortgage payments by paying more money up front through points.

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Q: What does it mean to lock in a rate?
A: When you lock in a rate, you are asking the lender to guarantee the current interest rate for a certain period of time. By locking the rate you are guaranteed that rate for your loan regardless of whether or not the rates go up the next day or not.

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Q: What is an ARM?
A: ARM stands for Adjustable Rate Mortgage. With this type of loan, your interest rate is not fixed so it will change periodically. An ARM can be a good option when you are planning on selling your home in a few years as it may provide the lowest initial monthly payments. If you intend to keep your home for a long period of time, an ARM may not be the best option as your interest rate may increase.

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Q: What is a mortgage?
A: A mortgage is a legal document you sign pledging your property as security for a loan that the lender makes to you. A mortgage is executed along with the note, which is your obligation to repay the loan on a timely basis. At closing, the borrower signs both the note and the mortgage deed of trust. Without a mortgage the lender would not have the ability to foreclose against the property in the event of default.

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Q: What is a FICO score?
A: A FICO score is a credit score developed by Fair Isaacs Company as an aid to help determine a consumers overall credit quality and ability to repay a loan.

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Q: What are closing costs?
A: Closing costs are the costs charged by the lender and other third party vendors in order to complete the loan transaction.

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Q: What is a Loan-to-Value ratio?
A: The Loan-to-Value ratio, or LTV, is simply the loan amount divided by the value of the property. The LTV is important because it determines your equity in the property.

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Q: What is PMI?
A: PMI stands for Private Mortgage Insurance and is used to protect the lender in the event of borrower default. Generally, the borrower is required to pay a fee for mortgage insurance when the down payment is less than 20%.

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Q: What is an appraisal?
A: An appraisal is a report created by a qualified appraiser that is an estimate of the value of the property being financed.

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Q: What is title insurance?
A: There are two types of title insurance policies. A lender's policy insures that the lender holds an unencumbered first lien position. This coverage is required when obtaining a mortgage loan. An owner's policy is a separate policy that ensures that the borrowers hold a marketable title to the subject property. An owner's policy would ensure against ownership claims against the property that were not identified during the title search.

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Q: What is a loan origination fee?
A: This is the fee that covers the lender's costs for processing your loan. It is usually applied as a percentage of the loan amount.

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Helpful Hints:

What NOT to do:

1. Refinancing with your existing lender without shopping around. Your existing lender may not have the best rates and programs. There is a general misconception that it is easier to work with your current mortgage company. In most cases, your current mortgage company will require the same documentation as other companies. This is because most loans are sold on the secondary market and have to be approved independently. So even if you have been very good at making payments to your existing lender, they will still have to do their verifications all over again.

2. Not providing documents to your mortgage company in a timely manner. When your mortgage company asks you for additional paperwork, jump on it! Do not complain. They are trying to get you approved, not trying to hassle you unnecessarily! Jump through the hoops as quickly as possible. Borrowers who do not respond to requests for documentation quickly enough run the risk of paying higher rates if the rate lock expires.

3. Pulling cash out of your credit line before you refinance your first mortgage. Many lenders have "cash-out" seasoning requirements. This means that if you pull cash out of your credit line for anything other than home improvements, they will consider the refinance to be a "cash-out" refinance. This leads to much stricter requirements and can in some cases break the deal!

4. Assuming that your home-equity loan is tax deductible. In some instances, your home-equity loan is NOT tax deductible. Perhaps you make too much and fall into the AMT trap, or perhaps you have pulled out more than $100,000 cash from your home. Do not depend on your mortgage company for information regarding this matter, check with an accountant or CPA.

5. Getting a home-equity line to pay off your credit cards if your spending is out of control! When you pay off your credit cards with your equity line, don't go out and charge up those credit cards again and put your house on the line!

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