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Mortgage Frequently
Asked Questions (FAQ)
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For a complete mortgage glossary,
click
here
(click on a question to see the answer)
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What is the difference
between pre-approval and pre-qualification?
When does it make
sense to refinance?
What is a rate lock?
How does PMI work?
Should I pay points?
What is a FICO Score?
Why do mortgage rates
change?
Can my loan be sold?
What happens if my lender goes out of business?
What is PMI? Can I get
rid of PMI?
What is an Annual
Percentage Rate (APR)?
How much will my
closing costs be?
Why should I choose
Sunrise Mortgage Company versus another lending source?
If a loan is locked
and rates come down, can we obtain a lower interest rate?
Do you offer loans
with less than perfect credit?
Can you pull out more
cash than what your home is worth?
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What is the
difference between pre-approval and pre-qualification?
The pre-approval process is
much more complete than pre-qualification. For
pre-qualification, the loan officer asks you a few questions
and provides you with a pre-qual letter. Pre-approval includes
all the steps of a full approval, except for the appraisal and
title work. Pre-approval can put you in a better negotiating
position, much like a cash buyer.
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When does it make
sense to refinance?
The most common reason for
refinancing is to save money. Saving money through refinancing
can be achieved in two ways:
By obtaining a lower interest rate that causes one's monthly
mortgage payment to be reduced.
By reducing the term of the loan, thus saving money over the
life of the loan. For example, refinancing from a 30-year loan
to a 15-year loan might result in higher monthly payments, but
the total of the payments made during the life of the loan can
be reduced significantly.
People also refinance to convert their adjustable loan to a
fixed loan. The main reason behind this type of refinance is
to obtain the stability and the security of a fixed loan.
Fixed loans are very popular when interest rates are low,
whereas adjustable loans tend to be more popular when rates
are higher. When rates are low, homeowners refinance to lock
in low rates. When rates are high, homeowners prefer
adjustable loans to obtain lower payments.
A third reason why homeowners refinance is to consolidate
debts and replace high-interest loans with a low-rate
mortgage. The loans being consolidated may include second
mortgages, credit lines, student loans, credit cards, etc. In
many cases, debt consolidation results in tax savings, since
consumers loans are not tax deductible, while a mortgage loan
is tax deductible.
The answer to the question "Should I refinance?" is a complex
one, since every situation is different and no two homeowners
are in the exact same situation. Even the conventional wisdom
of refinancing only when you can save 2% on your mortgage is
not really true. If you are refinancing to save money on your
monthly payments, the following calculation is more
appropriate than the rule of 2%:
Calculate the total cost of the refinance––example: $2,000
Calculate the monthly savings––example: $100/month
Divide the result in 1 by the result in 2––in this case
2000/100 = 20 months.
This shows the break-even time. If you plan to live in the
house for longer than this period of time, it makes sense to
refinance.
Sometimes, you do not have a choice––you are forced to
refinance. This happens when you have a loan with a balloon
provision, but with no conversion option. In this case it is
best to refinance a few months before the balloon comes due.
Whatever you choose to do, consulting with a seasoned mortgage
professional can often save you time and money. Make a few
phone calls, check out a few web sites, crunch on a few
calculators and spend some time to understand the options
available to you.
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What is a rate
lock?
You cannot close a mortgage
loan without locking in an interest rate. There are four
components to a rate lock:
1. Loan program.
2. Interest rate.
3. Points.
4. Length of the lock.
The longer the length of the lock, the higher the points or
the interest rate. This is because the longer the lock, the
greater the risk for the lender offering that lock.
Let's say you lock in a 30-year fixed loan at 8% for 2 points
for 15 days on March 2. This lock will expire on March 17 (if
March 17 is a holiday then the lock is typically extended to
the first working day after the 17th). The lender must
disburse funds by March 17th, otherwise your rate lock
expires, and your original rate-lock commitment is invalid.
The same lock might cost 2.25 points for a 30-day lock or 2.5
points for a 60-day lock. If you need a longer lock and do not
want to pay the higher points, you may instead pay a higher
rate.
After a lock expires, most lenders will let you re-lock at the
higher of the original price and the originally locked price.
In most cases you will not get a lower rate if rates drop.
Lenders can lose money if your lock expires. This is because
they are taking a risk by letting you lock in advance. If
rates move higher, they are forced to give you the original
rate at which you locked. Lenders often protect themselves
against rate fluctuations by hedging.
Some lenders do
offer free float-downs––i.e. you may lock the rate
initially and if the rates drop while your loan is in process,
you will get the better rate. However, there is no free
lunch–the free float-down is costly for the lender and you pay
for this option indirectly, because the lender has to build
the price of this option into the rate.
What do you do if
the rates drop after you lock?
Most lenders will not budge unless the rates drop
substantially (3/8% or more). This is because it is expensive
for them to lock in interest rates. If lenders let the
borrowers improve their rate every time the rates improved,
they spend a lot of time relocking interest rates, since rates
fluctuate daily. Also they would have to build this option
into their rates and borrowers would wind up paying a higher
rate.
Lock-and-shop
programs
Most lenders will let you lock in an interest rate only on a
specific property. If you are shopping for a house, some
lenders offer a lock-and-shop program that lets you lock in a
rate before you find the house. This program is very useful
when rates are rising. There may be an up front fee for this
program.
New-construction
rate locks
Most lenders offer long-term locks for new construction. These
locks do cost more and may require an up-front deposit. For
example, a lender might offer a 180-day lock for 1 point over
the cost of a 30-day lock, with 0.5 points being paid
up-front, as a non-refundable deposit. Most long-term
new-construction locks do offer a float-down––i.e. if rates
drop prior to closing, you get the better rate
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How does PMI
work?
I have been asked on several
occasions, ‘Please Explain how PMI Works’
PMI is usually required when the new home buyer is applying
less than a 20% down payment towards the purchase of their new
home. Mortgage insurance protects lenders across the United
States from losses due to defaults on first mortgages for
residential properties.
If the borrower defaults and the lender has to foreclose on
the property, the mortgage insurer (UGI, for example) reduces
or eliminates the loss to the lender. Although this seems to
be just an added cost, it really benefits the borrower by
allowing them to use lower down payments when purchasing a
home. As a result, they can write off more interest deduction
on their annual taxes.
Private mortgage insurance is typically paid for by the
borrower. The initial premium is paid at closing and a monthly
amount may be included with the payment made to the lender who
remits the payment to the insurer.
Please feel free to contact me at anytime! I look forward to
hearing from you and helping you determine the best Loan
Program and the Best Rate available! If you or someone you
know is in need of a mortgage home loan I would love the
opportunity to provide a good faith estimate and discuss what
options are available to you.
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Should I pay
points?
The best way to decide whether
you should pay points or not is to perform a break-even
analysis. This is done as follows:
Calculate the cost of the points. Example: 2 points on a
$100,000 loan is $2,000.
Calculate the monthly savings on the loan as a result of
obtaining a lower interest rate. Example: $50 per month
Divide the cost of the points by the monthly savings to come
up with the number of months to break even.
In the above example, this number is 40 months. If you plan to
keep the house for longer than the break-even number of
months, then it makes sense to pay points; otherwise it does
not.
The above calculation does not take into account the tax
advantages of points. When you are buying a house the points
you pay are tax-deductible, so you realize some savings
immediately. On the other hand, when you get a lower payment,
your tax deduction reduces! This makes it a little difficult
to calculate the break-even time taking taxes into account. In
the case of a purchase, taxes definitely reduce the break-even
time. However, in the case of a refinance, the points are NOT
tax-deductible, but have to be amortized over the life of the
loan. This results in few tax benefits or none at all, so
there is little or no effect on the time to break even.
If none of the above makes sense, use this simple rule of
thumb: If you plan to stay in the house for less than 3 years,
do not pay points. If you plan to stay in the house for more
than 5 years, pay 1 to 2 points. If you plan to stay in the
house for between 3 and 5 years, it does not make a
significant difference whether you pay points or not!
Zero-Point/Zero-Fee
Loans
Whatever happened to the conventional wisdom of waiting for
the rates to drop 2% before refinancing?
You have a 30-year fixed loan at 8.5%. A loan officer calls
you up and says they can refinance you to a rate of 8.0% with
no points and no fees whatsoever.
What a dream come true! No appraisal fees, no title fees and
not even any junk fees! Is this a deal too good to pass up?
How can a bank and broker do this? Doesn't someone have to
pay? Whose money is being used to pay these closing costs?
No–this is not a scam. Thousands of homeowners have refinanced
using a zero-point/zero-fee loan. Some refinanced multiple
times, riding rates all the way down the curve in 1992, 1993
and, more recently, in 1996. Some homeowners used
zero-point/zero-fee adjustable loans to refinance and get a
new teaser rate every year.
The way this works is based on rebate pricing, sometimes also
known as yield-spread pricing, and sometimes known as a
service-release premium. The basic idea is that you pay a
higher rate in exchange for cash up front, which is then used
to pay the closing costs. You will pay a higher monthly
payment––so the money is really coming from future payments
that you will make.
You can also think of this as negative points! For example, a
30-year fixed loan may be available at a retail price of :
8.0% with 2 points or
8.25% with 1 point or
8.5% with 0 points or
8.75% with -1 point or
9% with -2 points
On a $200,000 loan, the loan officer can offer you 8.75% with
a cost of -1 point, which is a $2,000 credit towards your
closing costs. A mortgage broker can use rebate pricing to pay
for your closing costs and keep the balance of the rebate as
profit.
What are the
benefits of a zero-point/zero-fee loan?
The main benefit is that you have no out-of-pocket costs. As a
result, if the rates drop in the future, you could refinance
again even for a small drop in rates. So if you refinanced on
the zero-point/zero-fee loan to get a rate of 8.75% and if the
rates drop 1/2%, you can refinance again to 8.25%. On the
other hand, if you refinanced by paying 1 point and got a rate
of 8.25%, it may not make sense to refinance again. Now, if
the rates drop another 1/2%, a zero-point/zero-fee loan can
drop your rate to 7.75%, whereas if you paid points, you may
have to do a break-even analysis to decide if refinancing will
save you money.
The zero-point/zero-fee loan eliminates the need to do a
break-even analysis since there is no up-front expense that
needs to be recovered. It also is a great way to take
advantage of falling rates.
Some consumers have used zero-point/zero-fee loans on
adjustable loans to refinance their loans every year and pay a
very low teaser rate.
What are the
disadvantages of a zero-point/zero-fee loan?
The main disadvantage is that you are paying a higher rate
than you would be paying if you had paid points and closing
costs. If you keep the loan for long enough, you will pay
more––since you have higher mortgage payments. In the scenario
where you plan to stay in the house for more than 5 years, and
if rates never drop for you to refinance, you could wind up
paying more money. If, on the other hand, you plan to stay at
a property for just 2-3 years, there really is no disadvantage
of a zero-point/zero-fee loan.
Whose money is it?
Since you are being paid "cash" up-front in exchange for a
higher rate, it really is your own money that will be paid in
the future through higher payments. Investors who fund these
loans hope that you will keep the loans for long enough to
recoup their up-front investment. If you refinance the loans
early, both the servicer and the investor could lose money.
To summarize, zero-point/zero-fee loans in many cases are good
deals. Make sure, however, that the lender pays for your
closing costs from rebate points and NOT by increasing your
loan amount. So if your old loan amount was $150,000, your new
loan amount should also be $150,000. You may have to come up
with some money at closing for recurring costs (taxes,
insurance, and interest), but you would have to pay for these
whether you refinanced or not.
Zero-point/zero-fee loans are especially attractive when rates
are declining or when you plan to sell your house in less than
2-3 years.
Zero-point/zero-fee loans may not be around forever.
Lenders have discussed adding a pre-payment penalty to such
loans, however few lenders have taken steps to implement such
a measure.
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What is a FICO
Score?
A FICO score is a credit score
developed by Fair Isaac & Co. Credit scoring is a method of
determining the likelihood that credit users will pay their
bills. Fair, Isaac began its pioneering work with credit
scoring in the late 1950s and, since then, scoring has become
widely accepted by lenders as a reliable means of credit
evaluation. A credit score attempts to condense a borrowers
credit history into a single number. Fair, Isaac & Co. and the
credit bureaus do not reveal how these scores are computed.
The Federal Trade Commission has ruled this to be acceptable.
Credit scores are calculated by using scoring models and
mathematical tables that assign points for different pieces of
information which best predict future credit performance.
Developing these models involves studying how thousands, even
millions, of people have used credit. Score-model developers
find predictive factors in the data that have proven to
indicate future credit performance. Models can be developed
from different sources of data. Credit-bureau models are
developed from information in consumer credit-bureau reports.
Credit scores analyze a borrower's credit history considering
numerous factors such as:
Late payments
The amount of time credit has been established
The amount of credit used versus the amount of credit
available
Length of time at present residence
Employment history
Negative credit information such as bankruptcies, charge-offs,
collections, etc.
There are really three FICO scores computed by data provided
by each of the three bureaus––Experian, Trans Union and
Equifax. Some lenders use one of these three scores, while
other lenders may use the middle score.
How can I increase
my score?
While it is difficult to increase your score over the short
run, here are some tips to increase your score over a period
of time.
** Pay your bills on time. Make mortgage payments on time no
matter what.
Late payments and collections can have a serious impact on
your score.
** Do not apply for credit frequently. Having a large number
of inquiries on your credit report can worsen your score.
Accounts less than 24 months old will decrease your credit
score as well.
** Reduce your credit-card balances. If you are "maxed" out on
your credit cards, this will affect your credit score
negatively. Try to keep balances under 50% of your credit
limit.
** Avoid excessive credit. Try to have no more than 2-3 credit
card accounts along with a mortgage and/or an automobile loan
account. Keeping the number of accounts at 3-6 total will have
the most impact on your credit score.
**If you have limited credit or no credit, obtain additional
credit. Not having sufficient credit can negatively impact
your score.
What if there is an error on my credit report? If you see an
error on your report, report it to the credit bureau. The
three major bureaus in the U.S., Equifax (1-800-685-1111),
Trans Union (1-800-916-8800) and Experian (1-888-397-3742) all
have procedures for correcting information promptly.
Alternatively, your mortgage company may help you correct this
problem as well.
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Why do mortgage
rates change?
To understand why mortgage
rates change we must first ask the more general question, "Why
do interest rates change?" It is important to realize that
there is not one interest rate, but many interest rates!
Prime rate:
The rate offered to a bank's best customers.
Treasury bill
rates: Treasury bills are short-term debt
instruments used by the U.S. Government to finance their debt.
Commonly called T-bills they come in denominations of 3
months, 6 months and 1 year. Each treasury bill has a
corresponding interest rate (i.e. 3-month T-bill rate, 1-year
T-bill rate).
Treasury Notes:
Intermediate-term debt instruments used by the U.S. Government
to finance their debt. They come in denominations of 2 years,
5 years and 10 years.
Treasury Bonds:
Long-debt instruments used by the U.S. Government to finance
its debt. Treasury bonds come in 30-year denominations.
Federal Funds Rate:
Rates banks charge each other for overnight loans.
Federal Discount
Rate: Rate New York Fed charges to member banks.
Libor:
London Interbank Offered Rates. Average London Eurodollar
rates.
6 month CD rate:
The average rate that you get when you invest in a 6-month CD.
11th District Cost
of Funds: Rate determined by averaging a composite
of other rates.
Fannie Mae-Backed
Security rates: Fannie Mae pools large quantities
of mortgages, creates securities with them, and sells them as
Fannie Mae-backed securities. The rates on these securities
influence mortgage rates very strongly.
Ginnie Mae-Backed
Security rates: Ginnie Mae pools large quantities
of mortgages, secures them and sells them as Ginnie Mae-backed
securities. The rates on these securities influence mortgage
rates on FHA and VA loans.
Interest-rate movements are based on the simple concept of
supply and demand. If the demand for credit (loans) increases,
so do interest rates. This is because there are more buyers,
so sellers can command a better price, i.e. higher rates. If
the demand for credit reduces, then so do interest rates. This
is because there are more sellers than buyers, so buyers can
command a lower better price, i.e. lower rates. When the
economy is expanding there is a higher demand for credit, so
rates move higher, whereas when the economy is slowing the
demand for credit decreases and so do interest rates.
This leads to a
fundamental concept:
Bad news (i.e. a slowing economy) is good news for interest
rates (i.e. lower rates).
Good news (i.e. a growing economy) is bad news for interest
rates (i.e. higher rates).
A major factor driving interest rates is inflation. Higher
inflation is associated with a growing economy. When the
economy grows too strongly, the Federal Reserve increases
interest rates to slow the economy down and reduce inflation.
Inflation results from prices of goods and services
increasing. When the economy is strong, there is more demand
for goods and services, so the producers of those goods and
services can increase prices. A strong economy therefore
results in higher real-estate prices, higher rents on
apartments and higher mortgage rates.
Mortgage rates tend to move in the same direction as interest
rates. However, actual mortgage rates are also based on supply
and demand for mortgages. The supply/demand equation for
mortgage rates may be different from the supply/demand
equation for interest rates. This might sometimes result in
mortgage rates moving differently from other rates. For
example, one lender may be forced to close additional
mortgages to meet a commitment they have made. This results in
them offering lower rates even though interest rates may have
moved up!
There is an inverse relationship between bond prices and bond
rates. This can be confusing. When bond prices move up,
interest rates move down and vice versa. This is because bonds
tend to have a fixed price at maturity––typically $1000. If
the price of the bond is currently at $900 and there are 10
years left on the bond and if interest rates start moving
higher, the price of the bond starts dropping. The higher
interest rates will cause increased accumulation of interest
over the next 5 years, such that a lower price (e.g. $880)
will result in the same maturity price, i.e. $1000.
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Can my loan be
sold? What happens if my lender goes out of business?
Your loan can be sold at any
time. There is a secondary mortgage market in which lenders
frequently buy and sell pools of mortgages. This secondary
mortgage market results in lower rates for consumers. A lender
buying your loan assumes all terms and conditions of the
original loan. As a result, the only thing that changes when a
loan is sold is to whom you mail your payment. If your loan
has been sold, your existing lender will notify you that your
loan has been sold, who your new lender is, and where you
should send your payments from now on.
If your lender goes out of business, you are still obligated
to make payments! Typically, loans owned by a lender going out
of business are sold to another lender. The lender purchasing
your loan is obligated to honor the terms and conditions of
the original loan. Therefore, if your lender goes out of
business, it makes little difference with regards to your loan
payments. In some cases, there may be a gap between the date
of your lender's going out of business and the date that a new
lender purchases your loan. In such a situation, continue
making payments to your old lender until you are asked to make
payments to your new lender.
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What is PMI? Can
I get rid of PMI?
PMI or Private Mortgage
Insurance is normally required when you buy a house with less
than 20% down.
Mortgage insurance is a type of guarantee that helps protect
lenders against the costs of foreclosure. This insurance
protection is provided by private mortgage-insurance
companies. It enables lenders to accept lower down payments
than they would normally accept. In effect, mortgage insurance
provides what the equity of a higher down payment would
provide to cover a lender's losses in the unfortunate event of
foreclosure. Therefore, without mortgage insurance, you might
not be able to buy a home without a 20% down payment.
The cost of PMI increases as your down payment decreases.
Example: The cost of PMI on a 10% down payment is less than
the cost of PMI on a 5% down payment. Your PMI premium is
normally added to your monthly mortgage payment.
The decision on when to cancel the private insurance coverage
does not depend solely on the degree of your equity in the
home. The final say on terminating a private
mortgage-insurance policy is reserved jointly for the lender
and any investor who may have purchased an interest in the
mortgage. However, in most cases, the lender will allow
cancellation of mortgage insurance when the loan is paid down
to 80% of the original property value. Some lenders may
require that you pay PMI for one or two years before you may
apply to remove it.
To cancel the PMI on your loan, contact your lender. In most
cases, an appraisal will be required to determine the value of
your property. You will probably also be required to pay for
the cost of this appraisal. Another way of canceling the PMI
on your loan is to refinance and to get a new loan without PMI.
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What is an
Annual Percentage Rate (APR)?
The annual percentage rate
(APR) is an interest rate that is different from the note
rate. It is commonly used to compare loan programs from
different lenders. The Federal Truth in Lending law requires
mortgage companies to disclose the APR when they advertise a
rate. Typically the APR is found next to the rate.
The APR does NOT affect your monthly payments. Your monthly
payments are a function of the interest rate and the length of
the loan.
The APR is a very confusing number! Even mortgage bankers and
brokers admit it is confusing. The APR is designed to measure
the "true cost of a loan." It creates a level playing field
for lenders. It prevents lenders from advertising a low rate
and hiding fees.
If life were easy, all you would have to do is compare APRs
from the lenders/brokers you are working with, then pick the
easiest one and you would have the right loan. Right? Wrong!
Unfortunately, different lenders calculate APRs differently!
So a loan with a lower APR is not necessarily a better rate.
The best way to compare loans in the author's opinion is to
ask lenders to provide you with a good-faith estimate of their
costs on the same type of program (e.g. 30-year fixed) at the
same interest rate. Then delete all fees that are independent
of the loan such as homeowners insurance, title fees, escrow
fees, attorney fees, etc. Now add up all the loan fees. The
lender that has lower loan fees has a cheaper loan than the
lender with higher loan fees.
The reason why APRs are confusing is because the rules to
compute APR are not clearly defined.
What fees are included in the APR?
The following fees
ARE generally included in the APR:
Points - both discount points and origination points
Pre-paid interest. The interest paid from the date the loan
closes to the end of the month. Most mortgage companies assume
15 days of interest in their calculations. However, companies
may use any number between 1 and 30!
Loan-processing fee
Underwriting fee
Document-preparation fee
Private mortgage-insurance
The following fees
are SOMETIMES included in the APR:
Loan-application fee
Credit life insurance (insurance that pays off the mortgage in
the event of a borrowers death)
The following fees
are normally NOT included in the APR:
Title or abstract fee
Attorney fee
Notary fee
Document preparation (charged by the closing agent)
Home-inspection fees
Recording fee
Transfer taxes
Credit report
Appraisal fee
An APR does not tell you how long your rate is locked for. A
lender who offers you a 10-day rate lock may have a lower APR
than a lender who offers you a 60-day rate lock!
Calculating APRs on adjustable and balloon loans is even more
complex because future rates are unknown. The result is even
more confusion about how lenders calculate APRs.
Do not attempt to compare a 30-year loan with a 15-year loan
using their respective APRs. A 15-year loan may have a lower
interest rate, but could have a higher APR, since the loan
fees are amortized over a shorter period of time.
Finally, many lenders do not even know what they include in
their APR because they use software programs to compute their
APRs. It is quite possible that the same lender with the same
fees using two different software programs may arrive at two
different APRs!
Conclusion:
Use the APR as a starting point to compare loans. The APR is a
result of a complex calculation and not clearly defined. There
is no substitute to getting a good-faith estimate from each
lender to compare costs. Remember to exclude those costs that
are independent of the loan.
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How much will my
closing costs be?
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Why should I
choose Sunrise Mortgage Company versus another lending source?
Because you want to work
with an expert in debt planning!
Most people make the mistake of only associating interest rate
with the objective of borrowing money. Too many times the
consumer obtains a loan that is not monetarily beneficial to
them.
At Sunrise Mortgage Company, we offer extremely competitive
interest rates and fees, but like most others we don’t stop
there. Our average loan agent has logged in seven and a half
years in the industry and brings a wealth of knowledge and
expertise to their clients. Most people give a great degree of
credence and credibility to their CPA and Financial Planners,
and rightfully so. At Sunrise Mortgage Company, we demonstrate time and again
the value of having a Professional handle the largest debt you
obtain in your lifetime, a mortgage loan.
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If a loan is
locked and rates come down, can we obtain a lower interest rate?
Sometimes yes, but most of
the time no.
What an interest lock really is, is a commitment by both
parties, that being the borrower of the money and the investor
lending the money. The borrower is committing to the investor
that they want to borrow a set amount of money at a certain
interest rate, and that they will borrow that money within a
given period of time, also known as the lock period. In
return, the investor is guaranteeing the borrower that
interest rate, as long as they close their transaction within
that given period of time. Since interest rates could
potentially go up from there, the borrower is now protected
from the volatility of the market and therefore receives their
locked in rate as long as they close in a timely fashion.
When you think of it logically, it would be unfair to the
investor to have to provide a lower rate of interest and
therefore, unlock the loan in the event that rates went down.
This is because they certainly will never contact the borrower
and ask them to take a higher rate of interest in the event
that rates go up. The exception to this would be if there were
significant movement in the marketplace in the downward
direction. At this point in time, the investor sometimes will
be willing to take the loss that would be generated from a
commitment undelivered and renegotiate the rate with the
client and offer them a slightly more attractive rate of
interest.
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Do you offer
loans with less than perfect credit?
The answer to this question
is absolutely yes.
A number of years ago, credit scoring became such a major part
of the mortgage industry that "sub-prime" loans became a very
common occurrence.
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Can you pull out
more cash than what your home is worth?
The answer to this question
is also "yes."
We do have the ability to obtain 125% second mortgages for the
customer. This simply means that the borrower can receive up
to 125% of the value of their property, therefore borrowing
more money than their home is worth. These types of loans
carry a much higher rate of interest due to the fact that they
are quite a bit more risky to the lender. Having a good credit
score is an absolute requirement to being able to obtain one
of these types of loans.
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