FAQs about Midwest mortgage refinancing.
Answers to all your Midwest mortgage refinancing questions.
What is a mortgage check-up?
Similar to a health check-up, a mortgage check-up reveals the overall financial health of your current mortgage and other household debts. Like most families, your mortgage is probably your largest debt and your home equity is possibly your largest investment. Clearly, it makes sense to evaluate this at least annually.
What is your household APR?
United Home Loans Inc. defines your household APR as the average interest rate across all of your household debts. This simple but important calculation matters because it provides a quick answer as to whether or not you should refinance some or all of your outstanding loans, which in turn can save you money.
Is it still possible to pull equity out of your home to pay for crucially important items or necessities, such as college education or home improvement?
While lending guidelines have certainly been restructured, there are still multiple loan programs that allow qualified homeowners to take cash out of their primary residence. Typically, lenders will require that the borrower have an above average credit score, have full-time employment and have an acceptable equity position in their home.
United Home Loans is both a mortgage bank and a mortgage lender. How does this benefit your clients?
As both a mortgage bank and lender, United Home Loans has the ability to shop dozens of banks and lending institutions to ensure that our clients receive the best possible combination of interest rate, program and service. We search for the lowest rates, so you don't have to.
What will my mortgage payments include?
For most borrowers, each monthly mortgage payment goes toward the following: Principal, which is the total outstanding balance of the loan; Interest, which is the cost of borrowing money; Taxes, which are levied on the property by the local government; Insurance, which protects the owner and the lender from losses caused by fire and natural hazards. To find out how much your monthly payments may be, use our Monthly Payment Calculator
Should I lock my rate?
Locking your interest rate means your lender guarantees the rate on your loan even if market rates change before closing. Most lenders will allow you to lock your rate for 30 to 60 days, with the option to extend the rate-lock period for a fee. So how do you know whether to lock your interest rate? It depends on whether you expect rates to rise or fall before you close on your home. No one knows for sure which direction rates will go at a given time, so it's difficult to make a reliable prediction. It helps to keep track of announcements from the Federal Reserve Board, whose monetary policies have an effect on mortgage rates, and to talk to your financial advisor about what may happen in the near term.
What mortgage is best for me?
Most mortgage loans have either a fixed interest rate or an adjustable interest rate. With a fixed-rate mortgage, the interest rate never changes and your payments remain stable throughout the life of your loan. With an adjustable-rate mortgage (ARM), the interest rate changes at regular intervals - usually once every year - based on a formula that uses a market index. For most ARM options, rate adjustments begin after an initial period - usually between three months and ten years - during which the rate is fixed.
A fixed rate is usually best if you plan to stay in your home for the long term and are buying at a time when rates are relatively low. An ARM is usually best if you plan to move before the rate adjustments begin, or if you are buying when rates are relatively high. We also offer a large amount of other programs that increase flexibility for our clients. For more details please feel free to contact one of our mortgage bankers
Should I pay discount points?
Discount points are prepaid interest, which you can pay to your lender at closing in exchange for a lower interest rate on your mortgage. Paying discount points, each of which is equal to 1% of the loan amount, is often called "buying down" your rate.
So does paying points make sense for you? The answer depends primarily on how long you plan to stay in your home. First, find out how much lower your monthly payments will be if you pay points. Then, calculate how long it will take for those monthly savings to add up to the cost of the points. If it would take five years to break even and you're planning to live in your home for 10, paying discount points may be a smart move.
What closing costs will I have to pay?
Closing costs vary based on a number of factors - including the lender, mortgage type, purchase contract, and location - but they usually include the following:
Lender fees: your mortgage company may charge for expenses related to making the loan, including an appraisal fee, a credit report fee, origination points, and discount points.
Third party fees: charges for services not provided by your lender often include the settlement fee, title insurance, and attorney's fees.
Prepaid items: certain mortgage costs must be paid to your lender in advance.
The most common of these are pre-paid interest, hazard insurance, and deposits to set up an escrow account.
Will I have to pay for Private Mortgage Insurance?
Private Mortgage Insurance (PMI) provides your lender with a way to recoup its investment if you are unable to repay your loan. PMI is usually required when the mortgage amount is higher than 80% of the home's value. That means that if you buy a home with a down payment of less than 20%, you will probably have to pay for PMI. One common way of bypassing PMI without making any down payment at all is to use an 80/20 program, which combines a first mortgage with home equity financing. Learn about the 80/20 loan from United Home Loans »
What if I've had credit problems?
Your credit history is only one factor in qualifying for a loan, and having made some late payments doesn't ruin your chances. There a variety of mortgage options to help people with less-than-perfect credit become homeowners and leave credit challenges behind.
What will a lender look at when I apply for midwest mortgage refinancing?
Lenders consider many factors in evaluating your loan application, but they usually focus on four areas:
Income and debt: How much money you make and what other bills you have to pay helps the lender determine whether you can afford to make mortgage payments.
Assets: The lender needs to make sure you have enough money to cover the costs of buying a home.
Credit: Whether you've met other financial obligations helps the lender predict whether you will repay your mortgage.
Property: The home you want to buy has to be worth enough to act as collateral for the mortgage.
What costs are involved in mortgage refinancing?
You may pay an application fee as well as the appropriate closing costs. You may also choose to pay discount points if you want to buy down the interest rate.
Should I refinance my existing home loan?
People refinance their existing loans for a number of reasons including obtaining a lower interest rate, to save on monthly payments and to change the term of the loan. People also choose to refinance if they want to switch from an adjustable rate to a fixed rate or to consolidate debt by refinancing for a higher loan amount and using the difference to pay off other debt. To see if it makes sense to refinance your loan, try our Home Loan Payment Calculator
For more information on mortgage refinancing, contact United Home Loans