Do you have questions? We can help! You will find the answers to several frequently asked mortgage questions below.
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 gathers a few basic items from you (income and asset statements), pulls your credit and provides you with a pre-qualification letter. Pre-approval includes all the steps of a pre-qualification but also includes the file being fully underwritten by a lender.
When does it make sense to refinance?
Usually people refinance to save money, either by obtaining a lower interest rate or by reducing the term of the loan. Refinancing is also a way to convert an adjustable loan to a fixed loan or to take some cash out to consolidate debts or do home improvements or pay for college for the kids. The decision to refinance can be challenging, since there are several reasons to refinance.
However, if you are looking to save money, try this calculation:
Calculate the total cost of the refinance
Calculate the monthly savings
Divide the total cost of the refinance (#1) by the monthly savings (#2).
This is the "break even" time. If you own the house longer than this, you will save money by refinancing.
Since refinancing can have many issues to consider, call me if I can help you get the answers you need.
What is the difference between a mortgage broker and a lender?
A mortgage broker counsels you on the loans available from different wholesalers, takes your application, and processes the loan, which involves putting together the complete file of information about your transaction including the credit report, appraisal, verification of your employment and assets, and so on. When the file is complete, the broker sends the completed package to the wholesale lender who "underwrites" the loan, which means deciding whether or not you are an acceptable risk. Once approved the broker works with you and takes you all the way to closing.
What are points?
Points are an option for consumers to pay an up-front fee (points) to the lender at the close of escrow to get a lower interest rate. 1 point is equal to 1% of your loan amount for example. ½ point is equal to ½% of your loan amount. So a lender might offer you a rate of say 3.75% with NO points but if you are willing to pay 1.00 point at close they may offer you a rate of 3.50%, saving you money over the life of the loan. Whether it makes sense to pay points or not depends on several factors, for example how long you plan on staying in your home.
Feel free to call me to discuss the pluses and minuses and the options available in today’s mortgage market.