Please
feel free to call us at 770-509-7827 and a Mortgage
Specialist will 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? 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
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LOAN
TERM
What
term do you prefer…10, 15, 20 or 30
years? The term length 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
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LTV
(LOAN TO VALUE)
The
ratio is calculated by dividing the loan
amount by the appraised value. 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
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2ND
MORTGAGE / HOME EQUITY LINE OF CREDIT (HELOC)
If
you have an existing 2nd mortgage or home
equity line of credit, the account will either
have to be paid off and closed, subordinated
to the new 1st mortgage or included in the
total refinance amount. The current balance,
interest rate on the new 1st mortgage and
existing 2nd mortgage, length of time in
the home and repayment plan are factors that
should be considered when making this decision.
Different rules apply depending on whether
the 2nd mortgage or HELOC were taken out
at the time of original purchase or some
time thereafter. A Mortgage Specialist will
be glad to discuss how these differences
may affect your loan. [BACK
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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
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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 situation. 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
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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
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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
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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
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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
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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. Although
you may have to fund new tax and insurance
escrow accounts, you will receive a refund
of monies which are in your current escrow
account within 30 to 35 days of closing. [BACK
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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 unusual
property types and difficult credit situations. [BACK
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REQUIRED
DOCUMENTS
The
standard underwriting requirements for borrowers
include:
