Please
click on a question below.
Why are there so many different rates
and how should I choose one?
What does PMI mean?
What is an Adjustable Rate Mortgage
(ARM)?
What are Hybrid ARMs?
What is a balloon payment or mortgage?
What are closing costs and how can
I anticipate what they will be?
Is it possible to get a home loan
with little or no money to put down?
What does pre-approval involve and
should I consider it?
What does it mean when you “lock
in” a rate and is it a good idea?
What is an Escrow Account?
What is PITI?
With so many interest rates on so
many different kinds of loans out there, it is
hard to know which is right for you. You shouldn’t
take a rate just because it’s low. In fact,
a lower rate on the wrong loan can cost you thousands
of dollars. That’s why we discuss your financial
goals with you and help you access the best rate
on the right loan to help you achieve financial
freedom.
PMI stands for Private Mortgage Insurance. PMI
protects lenders from losing money should a loan
default or foreclosure occur. PMI is required
on loans where 80.01% or more of the property
is being paid for by the loan.
With an ARM loan, your interest rate may move
up or down every year as market conditions change.
ARM loans have rate caps that prevent the interest
rate from raising or falling too much. ARM loans
are usually amortized over 30 years and typically
have the lowest monthly payments.
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A hybrid or intermediate-term ARM
has a fixed interest rate for the first 3 to 10
years of the loan and then converts to an ARM
that adjusts every year. Typically amortized over
30 years, they have a lower monthly payment than
fixed-rate loans, but higher payments than ARMs.
A balloon mortgage has a fixed interest rate
and is amortized over 30 years. However, with
a balloon mortgage, the loan must be paid in full
in 5 or 7 years. Balloon mortgages feature fixed
monthly payments that are typically lower than
fixed-rate mortgages.
When the purchase or refinance of a property
is finalized, various closing costs are collected,
including:
- Discount Points, or fees paid to lower the
interest rate
- Processing Fees
- Escrow Deposit
- Title Insurance
- Appraisal
- Lender Fees
- Credit Report
- Courier Charges
- Miscellaneous Closing
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It is possible to get a loan with little or no
money down. However, this may not be the best
strategy to help you meet your goals. We will
work with you to get into the home you need, plus
achieve financial freedom. A great way to get
started is by completing the Financial
Freedom Planner.
Pre-approval allows you to obtain loan approval
before you buy a home. It helps direct you to
homes you can comfortably afford, and expedites
the loan process when you find the home of your
dreams.
With First Mortgage Company, getting pre-approval
is a simple, 3-step process:
First…Start by gathering the following
documents that you will need when you meet with
a First Mortgage Company loan officer:
- Tax returns from the last two years,
- Your business tax returns from the last two
years if you are self-employed,
- W-2 forms from the last two years,
- Your most recent pay stub(s) to include at
least 30 days of year-to-date earnings,
- The most recent two months of checking/savings
account statements,
- The most recent investment statements (stocks,
mutual funds, IRA, 401(k), etc.),
- If applicable, a copy of divorce decrees
and property statements, and/or
- For VA loans, a copy of your Certificate
of Eligibility and/or Form DD214. If you are
currently in service, you will also need a Statement
of Service from your Commanding Officer and
your most recent LES statement.
Second…Complete the Personal Financial
Statement.
Third…Contact
us to set up an appointment to get started!
Interest rates fluctuate based on a variety of
factors, including inflation, the pace of economic
growth, and Federal Reserve policy. While interest
rates are hard to predict, if you think rates
are on an upward trend, you may want to consider
locking in your interest rate. (Before you decide
to lock in, make sure that your loan can close
within the lock in period. If it can’t,
it won’t do you any good to lock in your
rate.)
If you think interest rates might drop while
your loan is being processed, you may want to
“float” your interest rate instead
of locking it in. You can lock in at least 5 days
prior to your loan closing.
First Mortgage Company offers a variety of lock
in programs:
- Hard Lock - This is a guarantee
that your loan will close at a specified interest
rate if you are able to close your loan within
the lock in period. Hard locks are available
for 15 to 120 days. The longer the lock in period,
the more discount points you have to pay.
- Lock In With a Float-Down Option -
With this option, your interest rate will improve
as market rates improve. If interest rates go
up, your interest rate may go up. However, a
“cap” limits the amount your rate
can go up, and range from 1/2 to 1%. The lower
your cap, the more discount points you will
pay.
- Lock In While You Shop For Your Home
- This program lets our pre-approved
customers lock in today’s interest rate
while shopping for a home, giving them the peace
of mind that their interest rate and monthly
payments will remain affordable.
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Lenders put a portion of your monthly mortgage
payment into an escrow account – a holding
bin of funds to cover hazard and fire insurance
and property taxes. When these payments are due,
the lender pays them from the escrow account on
your behalf. Escrow accounts are required for
loans that cover 80.01% or more of the value of
the property.
PITI is the acronym (Principal, Interest, Taxes,
and Insurance) used to cover what’s included
in your monthly payment. Principal is the portion
of your payment that goes toward the repayment
of the money you borrowed. Interest is the portion
of your payment that goes toward the interest
you’re being charged on your loan amount.
Taxes and Insurance are the portions of your payment
held in an Escrow account to cover real estate
tax and hazard and fire insurance when they come
due.
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