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09.18.18

10 Reasons to refi with FHA
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Frequently Asked Questions

Purchasing
Refinancing
Truth-In-Lending Statement


Purchasing
1) Do I have to pay a realtor a commission for showing me houses?
No, the realtor is paid a commission, from the seller, upon closing a real estate transaction.
2) What are points?
Points are optional charges that you can pay to reduce your rate. One point typically reduces your rate by 1/4 of 1%. For Instance, a market rate may be 5.25% with zero pts, but if you pay 1 point you could reduce your rate to 5.00%. One point is 1% of your loan amount, so if you had a $100,000 loan, this point would cost you $1,000 to reduce your rate to 5.0%.
3) Can I get a loan with bankruptcy?
Yes, typically you need to wait 2 yrs. from the discharge date; however, some allowances are made if you have paid back a chapter 13 bankruptcy for 1 year to be eligible for a home loan.
4) How long does it take to close on a home?
With the most recent industry changes, loans can be closed in a 3 - 4, but typically takes 4 - 5 weeks.
5) How much do I need to put down to buy a home?
This depends upon your unique qualifications. For example, credit history and income and how recently you owned a home. These are loans that are offer zero to 3.5% down payments.
6) Do I need to be employed for 2 years at the same employer?
Not necessarily anymore. A two year work history is required to be verified. Many mortgage investors realize that people change jobs frequently in todays work environment; however, if it's to make more money and the borrower shows income stability, it's typically viewed favorably.
7) What do I do if my credit report contains errors?
The Fair Credit Reporting Act gives you recourse. You have a right to file a dispute form with the 3 major credit bureaus. If within 30 days the creditor doesn't respond to your dispute, then the questioned line of credit is corrected. If the creditor challenges your dispute, then you have to prove your point to the satisfaction of the creditor. Dispute link available here Equifax, Trans Union, Experian
8) What advantages does serving in the military offer?
If the Veteran's Administration verifies that you qualify for VA financing, you don't have to have a down payment and you're not required to carry monthly mortgage insurance. Additionally, the seller can pay your closing costs, so you can actually get money back at closing to the extent that you pre-paid for services prior to closing!
9) What is PMI?
Private mortgage insurance is a monthly fee that is added to your monthly payment. Some investors require this if you dont put 20% down, If your house is foreclosed, it protects the lender's rights and minimizes their exposure
Refinancing
1) When the Federal Reserve lowers rates does that lower mortgage rates?
Not necessarily, it may cause some movement in the mortgage rates, but there is not a direct correlation. For example, the Fed recently lowered rates by a 0.50%, however, the mortgage rates only dropped by 0.125%.
2) I have heard that a rule of thumb is that you should only refinance if you can save 2% off your old rate. Is this true?
That was true in the past when there were commonly points charged by lenders. Today many mortgage companies offer programs with reduced costs, so it can make sense to refinance with as little as 0.50% of a difference. You need to analyze how long you will be in the house, the expense of the refinance and your monthly savings. I help you to analyze your situation.
3) I have heard that rates will go lower. Should I wait to refinance later?
The best time to refinance is when you can save a significant amount per month. This amount varies by client. Sometimes it is $50 per month for one person or $100 for another. I believe it is best to take the sure thing, because a lot of the time, that lower rate never comes around.
4) Is there a limit as to how many times I can refinance my home?
No, I have had clients refinance a couple of times in one year. It depends on how quickly rates are dropping. That is why I advocate locking in your monthly savings now, and if rates drop again, you can refinance again.
Truth-In-Lending Statement
Federal law provides that you receive a "Truth-in-Lending Disclosure Statement." Study it carefully as well as other information about your loan we gave you. Your loan is an important transaction. Following are some of the most frequently asked questions about the Truth-in-Lending Statement and their answers.
1) What is a Truth-in-Lending Disclosure Statement and Why Do I Receive It?
Your Disclosure Statement provides information which Federal law requires us to give you. The purpose of the statement is to give you information about your loan and help you shop for credit.
2) What is the ANNUAL PERCENTAGE RATE?
The Annual Percentage Rate, or A.P.R., is the cost of your credit expressed in terms of an annual rate. Because you may be paying "points" and other closing costs, the A.P.R. disclosed is often higher than the interest rate on your loan. The A.P.R. can be compared to other loans for which you may have applied and give you a fair method of comparing price.
3) What is the AMOUNT FINANCED?
The amount financed is the mortgage amount applied for MINUS prepaid finance charges and any required deposit balance. Prepaid finance charges include items such as loan origination fees, commitment or placement fee (points), adjusted interest, and initial mortgage insurance premium. The Amount Financed represents a NET figure used to allow you to accurately assess the amount of credit actually provided.
4) Why is the ANNUAL PERCENTAGE RATE different from the interest rate for which I applied? Why is the AMOUNT FINANCED different?
The Amount Financed is lower than the amount you applied for because it represents a NET figure. If someone applied for a mortgage of $50,000 and their prepaid finance charges total $2,000, the amount financed would be shown as $48,000, or $50,000 minus $2,000. The A.P.R. is computed from this LOWER figure, based on what your proposed payments would be. In a $50,000 loan with $2,000 in prepaid finance charges, and an interest rate of 14%, the payments would be $592.44 (principal and interest) on a loan with a thirty year loan term. Since the A.P.R. is based on the NET amount financed, rather than on the actual mortgage amount, and since the payment amount remains the same, the A.P.R. is higher than the interest rate. It would be 14.62%. If this applicant's loan were approved he would still receive a $50,000 loan for thirty years with monthly payments @ 14% or $592.44.
5) How will my payments be affected by the Disclosure Statement?
The Disclosure Statement only discloses your estimated payments. The interest rate determines what your monthly principal and interest payment will be.
6) What is the FINANCE CHARGE?
The Finance Charge is the cost of credit. It is the total amount of interest calculated at the interest rate over the life of the loan, plus prepaid finance charges and the total amount of mortgage insurance charged over the life of the loan. This figure is ESTIMATED on the disclosure statement given with your application.
7) What is the TOTAL OF PAYMENTS?
This figure indicates the total amount you will have paid, including principal, interest, prepaid finance charges, and mortgage insurance if you make the minimum required payments for the entire term of the loan. This figure is ESTIMATED on the Disclosure Statement and is estimated in any adjustable rate transaction.
8) My statement says that if I pay the loan off early, I will not be entitled to a refund of part of the finance charge. What does this mean?
This means that you will be charged interest for the period of time in which you used the money loaned to you. Your PREPAID finance charges are not refundable. Neither is any interest which has already been paid. If you pay the loan off early, you should not have to pay the full amount of the "finance charges" shown on the disclosure. This charge represents an estimate of the full amount the loan would cost you if the minimum required payments were made each month through the life of the loan.
9) Why must I sign the Disclosure Statement?
Lenders are required by law to provide the information on this statement to you in a timely manner. Your signature merely indicates that you have received this information, and does not obligate either you or the Lender in any way.