Your home isn't the biggest purchase
you will ever make. Your mortgage is.

Choosing the right loan for you is an important decision that could save you thousands of dollars. As outlined below, there are many options to consider in the process of selecting the right loan for your specific goals and situation.

Please feel free to call us at 770-509-7827 and a Mortgage Specialist will provide additional information or answer any questions you may have with no obligation and no pressure. Our expertise is free.

TYPES OF LOANS
How long do you plan to stay in the home? (8.2 years is the national average) Have you considered a 3, 5 or 7 year ARM? If minimizing payments is your strategy, have you considered the different types of interest only loans? (They do not have negative amortization.) Do you need a conforming (less than $417,000 ) loan or a "jumbo" (over $417,000 ) loan? Do you want to maximize cash flow or equity build-up? Will you be using gift funds? Do you need a "no income verification" loan? Does it make sense to do a "piggyback" loan to avoid PMI? Selecting the right type of loan should include consideration of these and other factors. For more information see "Loan Types" or call one of our Mortgage Specialists for suggestions and payments on a variety of options. [BACK TO TOP]

TYPES OF PROPERTIES
Rates may vary depending on whether the property is your primary residence, a second home or an investment property. Properties that may also require special attention are log homes, geodesic domes, "earth" homes, condominiums over four stories tall, and other structures that are not typical for the area. [BACK TO TOP]

LOAN TERM
What term do you prefer…10, 15, 20 or 30 years? The length of term can significantly change your monthly payment and how fast you build equity in the property. Typically, the shorter the term the lower the rate, however, 20 and 30 year rates are often similar, as are 10 and 15 year rates. Adjustable Rate Mortgages have a variety of fixed terms including 1, 3, 5 and 7 years. For more information see "Loan Types" [BACK TO TOP]

LTV (LOAN TO VALUE)
The amount of down payment you make determines the loan-to-value (LTV) ratio of your loan. The ratio is calculated by dividing the loan amount by the sales price. LTV is significant because Private Mortgage Insurance (PMI) is required on most loans over 80% LTV. The higher the LTV, the higher the PMI rate required. One of our Mortgage Specialists will be happy to provide you with details and alternatives. See PRIVATE MORTGAGE INSURANCE. [BACK TO TOP]

PRIVATE MORTGAGE INSURANCE (PMI)
Private mortgage insurance is insurance required by the lender when a down payment of less than 20% is made to purchase a home. It insures the lender against the risk of a loan default. This is a standard Fannie Mae and Freddie Mac guideline that lenders are required to follow in order to sell their loans to them. One alternative to paying PMI is to take out a first and second mortgage simultaneously which can eliminate the need for it. See PIGGYBACK LOAN and LOAN-TO-VALUE. [BACK TO TOP]

PIGGYBACK LOAN (aka: BLEND LOAN)
A Piggyback loan requires the borrower to take out an 80% first mortgage combined with a second mortgage for 5%, 10% or 15%, depending on the amount of the down payment. By taking out an 80% first mortgage, PMI is no longer required. Your situation should be examined closely to determine if this is an advantageous alternative. One of our Mortgage Specialists can discuss the advantages and disadvantages with you as they relate to your situation. [BACK TO TOP]

PREQUALIFICATION
Why spend valuable time looking at houses that don't fit into your budget? Getting prequalified let's you know how much you can get approved for using standard underwriting guidelines. Prequalification includes consideration of your employment history, residence history, LTV (see above), credit scores, loan program, debt ratios (housing and total), current mortgage/rent payment, cash reserves, savings habits, gift funds, ability to verify income (common with self-employed borrowers) and other details. We feel the best, most accurate way to prequalify you is by talking to you and asking questions to make sure we've considered all the facts and can provide you with the most accurate information. To take it to the next level, you can get pre-approved. See PRE-APPROVAL. [BACK TO TOP]

PRE-APPROVAL
With today's technology you can get "pre-approved" through a process known as "Desktop Underwriting" which is a conditional approval directly from Fannie Mae or Freddie Mac, subject to a list of conditions such as copies of bank statements, pay stubs and W-2's. In the past, lenders generally used 28/36 ratios to determine the maximum mortgage payment and total debt ratio (including mortgage and all debt) you qualified for based on your gross income. With today's technology, complex formulas are used and ratios can vary significantly. In some cases, ratios of over 50% are acceptable. That's another reason it's a good idea to get pre-approved…so you can take the guesswork out of the process and know exactly how much you are approved for. Additionally, this type of desktop underwriting pre-approval carries much more weight when you are negotiating to purchase a home. [BACK TO TOP]

DISCOUNT POINTS
Discount points are a form of pre-paid interest used to buy the interest rate down. Generally speaking, .5 discount points ($500 per $100,000 borrowed) reduces you interest rate by .125%. How long you intend to stay in your home may affect your decision to pay, or not pay, discount points. Generally speaking, if you plan on staying in your home for more than 5 years, you may want to consider paying discount points because the lower payments will save you more money than you paid up front. Of course, one of our Mortgage Specialists will be glad to do the math and show you a couple of comparisons so you can make an informed decision. [BACK TO TOP]

REBATE POINTS
Rebate points are the reverse of discount points. If you select a higher interest rate the lender will rebate a percentage of the loan amount which you can use towards closing costs or other pre-paid items such as taxes or interest. Generally speaking, an increase of .125% in rate will yield a rebate of .50% ($500 per $100,000 borrowed) although this does vary with the type of loan program you select. See NO CLOSING COST LOANS. [BACK TO TOP]

NO CLOSING COST LOANS
There is no magic to a "no closing cost" loan. This term is a slight misnomer because there are always closing costs. It's just a matter of who pays them; the purchaser, the seller or the lender. A no closing cost loan means the lender is paying the closing cost through the use of rebate points (See REBATE POINTS), and therefore, there are no closing costs to the purchaser or seller. The attorney, appraiser, title inspector, processor, underwriter, mortgage specialist and courier must all get paid along with the state taxes that are due for each transaction. No closing cost loans are most generally available on 15, 20 and 30 year fixed rates. (Low closing costs are available on almost all loans.) Our Mortgage Specialists can provide you with the specifics of this option based on the loan program you are interested in. [BACK TO TOP]

CLOSING COSTS
Generally speaking, closing costs include an appraisal ($275 - $400), attorney fees ($400 - $500), credit report ($20 - $40), courier fees ($40 - $50), recording fees ($50 - $70), title search ($135 - $160), title insurance ($2 per $1000 borrowed), origination fee (1% of loan amount), underwriting/processing/administrative fees ($600 - $750), Georgia intangibles tax ($3 per $1000 borrowed), flood certificate ($15 - $18) and a couple of other small items. Other cost at closing, but not considered closing costs are "pre-paid" taxes, interest and insurance. (See CLOSING: PRE-PAID ITEMS) [BACK TO TOP]

CLOSING: PRE-PAID ITEMS
At closing, you have to pay interest on the money you are borrowing through the end of the month. For example, if your loan closes on the 15th of a month, you would have to pay about 15 days of interest at closing. For homeowners insurance, most lenders require that you provide them with a one year policy paid in advance at closing. Property taxes required at closing depend on the date that taxes are due in the county you are purchasing in and the month in which you close. The taxes are pro-rated for the time you will live in the house (with the seller paying his/her pro-rated share.) [BACK TO TOP]

SPECIAL CIRCUMSTANCES
There are a number of guidelines for special circumstances such as the need for a "No Income Verification" loan, or a "No Income, No Asset" verification loan. Special guidelines also exist for down payments using 100% gift funds, 3% down payments, unusual property types, difficult credit situations. Occasionally there are other special programs for first time homebuyers, teachers, specific zip codes or other unique situations. You can ask one of our Mortgage Specialists if there are any programs that might benefit you. [BACK TO TOP]

Please call us at 770-509-7827 and a Mortgage Specialist will answer any of your questions with no obligation and no pressure. Our expertise is free.

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