Why are there so many different rates and how should I choose one?
With so many interest rates on so many different kinds of loans out there, it is hard to know which is right for you. You shouldnít take a rate just because itís low. In fact, a lower rate on the wrong loan can cost you thousands of dollars. Thatís why we discuss your financial goals with you and help you access the best rate on the right loan to help you achieve financial freedom.
What does PMI mean?
PMI stands for Private Mortgage Insurance. PMI protects lenders from losing money should a loan default or foreclosure occur. PMI is required on loans where 80.01% or more of the property is being paid for by the loan.
What is an Adjustable Rate Mortgage (ARM)?
With an ARM loan, your interest rate may move up or down every year as market conditions change. ARM loans have rate caps that prevent the interest rate from raising or falling too much. ARM loans are usually amortized over 30 years and typically have the lowest monthly payments.
What are Hybrid ARMs?
A hybrid or intermediate-term ARM has a fixed interest rate for the first 3 to 10 years of the loan and then converts to an ARM that adjusts every year. Typically amortized over 30 years, they have a lower monthly payment than fixed-rate loans, but higher payments than ARMs.
What is a balloon payment or mortgage?
A balloon mortgage has a fixed interest rate and is amortized over 30 years. However, with a balloon mortgage, the loan must be paid in full in 5 or 7 years. Balloon mortgages feature fixed monthly payments that are typically lower than fixed-rate mortgages.
What are closing costs and how can I anticipate what they will be?
When the purchase or refinance of a property is finalized, various closing costs are collected, including:
- Discount Points, or fees paid to lower the interest rate
- Processing Fees
- Escrow Deposit
- Title Insurance
- Appraisal
- Lender Fees
- Credit Report
- Courier Charges
- Miscellaneous Closing
Is it possible to get a home loan with little or no money to put down?
It is possible to get a loan with little or no money down. However, this may not be the best strategy to help you meet your goals. We will work with you to get into the home you need, plus achieve financial freedom.
What does pre-approval involve and should I consider it?
Pre-approval allows you to obtain loan approval before you buy a home. It helps direct you to homes you can comfortably afford, and expedites the loan process when you find the home of your dreams. Start by gathering the following documents that you will need when you meet with a Paramount Mortgage loan officer:
- Tax returns from the last two years,
- Your business tax returns from the last two years if you are self-employed,
- W-2 forms from the last two years,
- Your most recent pay stub(s) to include at least 30 days of year-to-date earnings,
- The most recent two months of checking/savings account statements,
- The most recent investment statements (stocks, mutual funds, IRA, 401(k), etc.),
- If applicable, a copy of divorce decrees and property statements,
- For VA loans, a copy of your Certificate of Eligibility and/or Form DD214. If you are currently in service, you will also need a Statement of Service from your Commanding Officer and your most recent LES statement.
What is an Escrow Account?
Lenders put a portion of your monthly mortgage payment into an escrow account – a holding bin of funds to cover hazard and fire insurance and property taxes. When these payments are due, the lender pays them from the escrow account on your behalf. Escrow accounts are required for loans that cover 80.01% or more of the value of the property.
What is PITI?
PITI is the acronym (Principal, Interest, Taxes, and Insurance) used to cover whatís included in your monthly payment. Principal is the portion of your payment that goes toward the repayment of the money you borrowed. Interest is the portion of your payment that goes toward the interest youíre being charged on your loan amount. Taxes and Insurance are the portions of your payment held in an Escrow account to cover real estate tax and hazard and fire insurance when they come due.
When is paying the pre-payment penalty a good idea?
Believe it or not, there are times when we recommend to our customers that they pay a pre-payment penalty. Because everybody has different short and long-term financial goals, when and if to take a pre-payment penalty depends on the individual situation. When a potentially better mortgage loan comes along – as revealed by e-Rate Monitor, or one of Paramount Mortgageís financial management tools, we produce a Total Cost Analysis comparison for you to consider how the new opportunity may work for you and your goals.
