Looking for tips on financing a mortgage? We make our information easy to follow and fool-proof. We know that getting a mortgage is hard enough as it is!


Common questions posted by some of my current and former clients:

How do I know which loan is best for me? 

There are many loans out there and they all may not suit you. Some of the things to take into consideration before inquiring on a loan are:

What is your financial situation? 

  • Income.
  • Current liabilities. 
  • Prior bankruptcies. 

What is your end-goal with the mortgage? 

  • Lower monthly payments.
  • Be mortgage-free in a time horizon. 
  • Your mortgage has a variable interest rate and you wish to acquire a fixed rate. 
  • Do you need money to make fixes around the house or toward home improvement.
  • Pay credit cards and/or other debts.
  • Help finance college education or a large asset (a second or investment home, car, truck, etc). 
Once you have answered those questions, speak with a licensed loan officer to discuss your best options.

I'm a first time homebuyer, where do I start? 

Even people with experience buying houses can sometimes find themselves overwhelmed by the loan process. For a first time homebuyer, the first step is to visit this page and educate on the different loan programs. Second, it's time you ought to speak with a loan officer and look for the guidance of a real estate agent. Your agent will not only make the buying process easier but she will have the experience necessary to be an intermediate between you and the seller. The help of the loan officer will allow you to acquire the loan that best suits your goals. 

What is an ARM and how is it different from a fixed rate mortgage? 

An Adjustable Rate Mortgage (ARM) is a loan that has a variable interest rate. Until January, 2014, ARMs came in many different ways such as Interest Only, Negative Amortization ARMs, Option ARMs, etc. However, after the CFPB regulation changes, only regular ARMs and those with caps are permissible. ARM mortgage rates are pegged to an index, usually the LIBOR (London Interbank Offered Rate) or the 1-Year Constant Maturity Treasury (CMT) securities. 

Because the interest rate fluctuates on an ARM mortgage, a big increase on the interest may increase monthly payments and bring hardship to the borrower. To limit this risk, ARMs may have caps. For example, an ARM can be quoted this way:

3/1 ARM 2/2/6 

What this means is that the loan will have a 30-year maturity with an adjustable rate. It will be fixed for the first 3 years and will adjust once a year thereafter. On the date of the first adjustment (year 4), the loan could adjust by as much as 2% above or below the original rate (plus the margin). Every year after that, it can adjust by up to 2%. Finally, the rate will never get more than 6% above the original start rate.  

I want to refinance my house but I have a second mortgage. What can I do?

There are two things you can do when there is a second mortgage. You can either: 

  • Subordinate: Meaning the new lender will ask permission for the lender of the second mortgage to refinance the first one as they have lien preference. 

  • Pay it off: If you have equity on the home, you can get a cash out mortgage and pay it off completely. Some folks refer to this as "combining" the two loans.  

Have any more questions not listed here? Send me a message by clicking HERE!


Post a Comment