Below, we review some of the most commonly asked questions, hence “frequently asked.”
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Frequently Asked Questions
Below, we review some of the most commonly asked questions, hence “frequently asked.”
Fixed Rate Mortgages
Typically either on a 15 year or 30-year amortization or repayment schedule, these programs can be stable options, as the required monthly principal and interest payments will not change for the life of the loan. (The reason being the interest rate is fixed for the entire life of the loan.)
Adjustable Rate Mortgage
All of USA Mortgage’s ARM programs are based on a multiple-year amortization. These loans are referred to as adjustable-rate mortgages (ARM’s) because the interest rate will change or adjust on a predetermined schedule – ARM’s have an initial fixed period during which the interest rate will not change or adjust.
After this initial period, the interest rate will change or adjust based on a market index plus a margin. The market index for ARMS may be an average one-year treasury bill index as published in the Wall Street Journal. The margin is predetermined and is typically between 2.75% and 3%. So, if the one-year treasury bill index is 5.5% and your margin is 2.75% on the date of your first adjustment, your new rate would be 8.25%.
There are limits to how much your interest rate can adjust in any given adjustment and over the life of your loan. A periodic rate cap would limit the amount of any single adjustment which is 2% in rate on USA Mortgage’s loan programs. A lifetime rate cap limits the cumulative amount of any adjustments over the life of the loan, 6% in rate on USA Mortgage’s loan programs.
A mortgage broker is a company that markets other lenders products, similar to independent insurance or travel agent and they are offered mortgage products and services at wholesale prices and market these products and services to consumers. The advantage of this is that a broker can offer the lowest rates because they can utilize the lender offering the best prices that particular day. Also, a broker has the option to operate on lower margins than other banks or lenders.
Another advantage is that a broker has access to many different programs than anyone lender will provide. A loan that one lender cannot do, could possibly be done by a broker because they may have a lender that offers programs for your situation.
USA-Mortgage.com is a full-service mortgage broker. The only way this impacts you is that your loan will be owned and serviced by the lender (not USA-Mortgage.com) who makes the loan. USA-Mortgage.com does all of the processing and customer services of your loan all the way through closing. It is our name and reputation on the line every day and we want to provide a single source for you to work with. That way we can have control of the service you receive and we can assure your satisfaction. Many other internet mortgage providers just pass your name off to another lender in exchange for some broker fees or marketing fees.
The cons of using a mortgage broker are that often their level of service is influenced by their interactions and service levels provided by the lenders. That is why we chose to partner with only a few of the top national lenders to work on providing seamless customer service to you the customer.
At USA-Mortgage.com an interest rate lock guarantees your interest rate for 30 days from the date your application is received (unless you have specifically asked your loan officer for a 15-day lock). A lock does not obligate you to a loan, as technically you are not obligated to any loan until it closes. It just eliminates the risk of interest rates increasing. If interest rates fall, we cannot re-lock with the lender at the lower rate, so if you are comfortable with an interest rate you can be assured that the interest rate will be available when you close.
The purpose of a lock is to provide an opportunity for you to arrange to complete your mortgage and real estate transaction before the lock expires. This allows you to budget, plan your affordability, and purchase a home without having to worry about it changing before you actually close on your loan. Otherwise, interest rates may increase and by the time you close on your home, you may not be able to afford or qualify for the loan on your home. Interest rate locks provide needed security. Since lenders are absorbing interest rate risk they charge for taking on this risk. For instance, typically a 60-day lock interest rate is slightly higher than a 30-day lock interest rate. Therefore, when you shop for mortgages, a 7% interest rate with a 60-day lock is a better deal than a 7% interest rate with a 30-day lock.
Yes, once you submit and we receive your application a lock for that interest rate is established. If you submit your application electronically or via fax, you will be locked in at the rates published on the site at the time you submit your application. If you mail your application, your rate will be locked at the rate that is published on this site at the time we receive your application. You will receive a confirmation via email and in your loan approval package.
Your interest rate will be guaranteed as long as you are approved and submit your information prior to any deadlines to complete your loan. We typically require that you submit the requested information within 10 days from the time you receive your approval package. If this is not possible to submit your information within this time frame, just make arrangements with our customer service department via live conference, email, or our 800 number.
Mortgage insurance was created to allow consumers to purchase a home without a large down payment. Many homebuyers do not have savings or reserves that are equal to 20% of the value of the home they wish to purchase. Lenders do not like to lend money at low-interest rates for more than 80% of the home value. This is because lenders need to be protected in the event of default or foreclosure. They are most wanting protection against decreases in the housing values and to assure that they could sell the property quickly, still recouping their loan amount.
In addition, borrowers who have at least 20% equity in their homes default less often than borrowers with less equity. Mortgage insurance assumes the lender’s risk on the loan amount above 80% of the home value. This insurance has a cost associated with it, which is your monthly PMI or MI payment that is included in your mortgage payment if your loan requires PMI or MI. Mortgage insurance has served its purpose by providing more people the ability to purchase homes at low-interest rates by decreasing the risk to lenders.
Yes, you can cancel mortgage insurance and save the amount equal to your monthly premium without refinancing. Typically, after you have paid down your mortgage (or your property has appreciated) to the point that you have 20% equity in your home, home prices are not falling in your area and you haven’t missed a payment in the past 12 months, you can get your mortgage insurance requirement removed from the lender. Here is what you should do to assure that you don’t pay for mortgage insurance after it is necessary:
Contact the company that you send your monthly payment (“servicer”). Request a letter from them explaining your lender’s policies and procedures regarding the cancellation of mortgage insurance. This letter should explain when they no longer will require this insurance and what specific steps you must take to cancel the insurance.
Once you have met the lender’s requirements to eliminate your mortgage insurance, send a letter to them explaining your desire to have it canceled. Most lenders will require a new appraisal to be done so that you can establish the current value of your property. If your loan amount is 80% or less of this appraised value, you have met major criteria for the elimination of this requirement. Appraisals are approximately $300 to $400 depending on your area. This will be money well spent if you can eliminate your monthly mortgage insurance premium. This should provide a payback of your appraisal costs in less than 8 months.
At the time you are shopping for a property, the seller and/or your Realtor will be able to provide the current property taxes for that property. Every property you look at may have different property taxes due to the assessed value and county where it is located. Also, title charges can vary by county and by company.
You can shop for a title company, allow your Realtor to order your title, or allow USA-Mortgage.com to arrange for your title and closing. If you shop for a title company ask each one what their fees are. Some states are regulated and require all title companies to charge the same rates.
If your Realtor orders your title, ask him/her what the charges are. If USA-Mortgage.com orders your title we will disclose the charges on the good faith estimate that we send to you. We make a title charge estimates throughout our site, but again charges often vary by state, county, company, day. In some states, it may be negotiable to define who pays these charges between the buyer and seller. Our explanation of our title charge estimates for your state is in our Quick Rates section.
This is because the APR includes some of the closing costs associated with acquiring the terms of your loan. The APR is the cost of credit expressed as an annual rate. You may be paying “points” and will have other prepaid interest costs or fees. These other points and fees are included in the APR to give an “adjusted” percentage rate to more easily compare loans and lenders.
This is a disclosure, required by law, that every lender must provide to the borrower within 3 days of application. This is a “best” estimate of all the figures associated with acquiring your property loan. USA-Mortgage.com will send this with your loan approval package.
This disclosure shows you your Annual Percentage Rate (APR), Finance Charge, Amount Financed and Total Of Payments.
The APR was discussed above.
The Finance Charge is the total amount of interest calculated at the interest rate over the life of the loan, plus Prepaid Finance Charges ant the total amount of any required mortgage insurance over the life of the loan.
The Amount Financed is the loan amount applied for, minus the Prepaid Finance Charges. Prepaid Finance Charges include items paid at or before settlement, such as points and initial mortgage insurance premium. The Amount Financed may be lower than the amount you applied for because it represents a net figure. If you applied for $50,000 and the Prepaid Finance Charges totaled $2,000, the Amount Financed would be $48,0000.
The Total Of Payments is the total amount you will have paid if you make the minimum required payments for the entire term of the loan. This includes principal, interest, and mortgage insurance premiums, but does not include payments for real estate taxes or property insurance premiums.
Adjustment Periods for USA-Mortgage.com Programs The First number indicates an initial fixed period. The second number indicates how often adjustments occur after the initial fixed period.
- 1 Year ARM – Fixed for first year – Adjusts annually after 1st year
- 3/1 ARM – Fixed for first 3 years – Adjusts annually after first 3 years
- 5/1 ARM – Fixed for first 5 years – Adjusts annually after first 5 years
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