Why should I finance with Century Mortgage Lending (a broker/lender) instead of a Bank?
In essence, by getting your mortgage through Century Mortgage Lending you are indirectly still getting your mortgage from a bank. The difference is, we represent many banks, and can therefore search all of our banks to assure that you are getting the best rate and program to fit your individual needs.
How can you do a no cost loan? What's the catch?
No catch. It's a combination of a number of things we do:
1. At the rate quoted, a credit from the lender pays all of your closing costs...and nothing is rolled into the loan amount.
2. We do very little advertising, which keeps costs down. Most of our business is by referral
3. We do a large volume of business keeping our overhead low per loan.
4.We're able to negotiate good rates with the best lenders because of the quantity and quality of our loans.
Closing Costs? These are costs associated with processing and closing your loan; such as the appraisal, underwriting, processing, title insurance, recording fees, or points.
Prepaids? These are not costs. They are any one or more of: interest, property tax and homeowners insurance expenses you owe or need to put into escrow at closing.
Prepayment Penalties? These are assessments for paying off the loan in full prior to a pre-agreed upon time frame. In some cases more than 20% principal reduction paid off within any one year incurs a penalty.
Why could my rate decrease if I want an escrow account?
Lenders' benefit in two ways:
The more reserves they have the more they can loan.
If there is a foreclosure or loss of home to fire, etc. they're assured the property taxes and insurance are paid.
What happens at the end of the fixed term; 3, 5, 7, & 10 year ARM?
Each becomes a 1 year arm at the end of the fixed rate term. The new rate is determined for the next year by adding the agreed upon margin to the 1 year Treasury, or Libor Index (which ever was used) on the anniversary date. (example: margin 2.75% + index .25% = New Rate 3%). Of course there are always caps to consider and your rate may just increase or decrease by the cap amount.
How is a balloon different from an ARM?
The balloon adjusts to the current 30 yr. Fixed rate, plus a small increase, at the end of the initial term, for the remainder of the loan. Certain conditions apply that must be met by the borrower at that time.
Why do I have to pay money at closing?
If you decide not to roll in any prepaids (taxes, insurance and interest) into the loan amount, those monies are due at close.
If I pay extra on my principle how many years will that cut down on my mortgage?
That depends on how much you pay. Your loan executive can calculate that for you. If you make (1) extra mortgage payment per year, it will shorten your amortization by approximately 7 years.
What is PMI?
Private Mortgage Insurance. You'll need greater than or equal to 20% equity to avoid PMI. PMI can be rolled into your rate with Lender Paid Mortgage Insurance (LPMI).
Why should I take an ARM versus a Fixed Rate or vice versa?
ARM's provide lower interest rate savings. The reality is we generally don't stay in our house for thirty years, and definitely not in a mortgage that long. The average life of a loan is under 5 years. The savings can be used to pay off principle, pay down higher interest rate, non tax deductible loans, or invest. There are a number of strategies. Our goal is to help you manage your mortgage to fit your needs and preferences.
Do I need to put 12 months of taxes and insurance in the escrow account?
No. All escrow accounts are calculated by a formula that tells the lender exactly what the beginning balance escrow amount needs to be to pay the taxes and insurance when they are due. The lender, by law, is allowed to carry a small cushion for increases in taxes and insurance from year to year. All escrow accounts are required to have an escrow analysis annually to assure that no more than necessary is accumulating in your account.
Is there a better, more advantageous time of the month to close?
Generally, on a refinance the sooner you close the more money you save on the new lower interest rate. On a purchase, the closer you are to the end of the month the less prepaid interest is due at close.
When should I make my payment during the process of refinancing?
Check with your loan executive. It may conflict with the payoff statement we receive if your payment is in process. If you have recently made your payment and it has not been credited by your bank yet, it may cause delays at closing.
If I lock in a rate am I obligated in any way?
Not financially. But the lender you're locking with is making a commitment, and they're trusting that you're doing the same.
If rates go down do I automatically get the best rate?
Not automatically. But you can discuss options different lenders offer with your loan executive.
When will my first payment begin?
Always the 1st of the month, after the following month you close. For example, if you close May 15th your first payment would begin July 1st. Because interest is paid in arrears, your June interest is paid by your July 1st payment.