What paperwork will the lender need to process my mortgage?

The answer depends upon the quality of your credit and the amount of equity you have in your property. On a typical fully documented house mortgage application (where an applicant is seeking to qualify based on an employee's salary), the mortgage lender will require: one month's current pay stubs, W-2's for the prior two years and bank and investment account statements for the prior 2-3 months. If an applicant is self-employed then additional documentation could be required

How long will I have to repay the second mortgage?

Some second mortgage loans could go for 20 years and some could require repayment in same year. You should discuss the repayment terms with lenders and pick one who offers the best terms for your needs.

What is the difference between 0 point and no cost mortgage?

With no cost mortgage, a borrower has accepted a higher interest rates, with the trade off that the lender or broker will pay for all their non-recurring closing costs. With 0 point mortgage, a borrower has opted not to pay points to buy their interest rates down but will still be paying for their base closing costs.

Will the lender require an appraisal of the property?

Yes, the property is the collateral for the morgage, therefore an appraisal is almost always required and if a borrower pays for the appraisal he or she is definitely entitled to receive a copy of it.

What is a mortgage prepayment penalty and is it generally advisable to get a mortgage that has one?

A prepayment penalty allows the lender to charge a borrower additional interest, typically six months worth, when a morgage is repaid during the penalty period, which is usually somewhere in the first three to five years of the mortgage. If a mortgage does have a prepayment penalty, this is clearly stated within the mortgage disclosures, mortgage note or prepayment penalty rider to the note. The advantage of taking a mortgage with a prepayment penalty is that it could carry a lower rate of interest or you may be permitted to take a it without paying for non-recurring closing costs.

Will my interest rate for second mortgage change?

If your loan is fixed-rate, the interest rate is set for the duration of the loan. Many lenders will offer variable rate mortgages, and these can provide for periodic interest rate changes. If your contract lets your lender adjust the interest rate, make sure to understand when excatly can the lender change the interest rate and if there are any limitations on how much the rate can change.

How much will closing cost?

Generally you will need around 2% of the purchase price to cover the time between when you close and your first mortgage payment. But when refinancing , your old mortgage should have money in escrow to cover these costs.

Is it possible to reduce my closing costs?

If you are refinancing, you could reduce some costs by asking your lender about them. Example: your lender could use your last home appraisal or your other credit reports or even recertify old documents for cheaper then getting new documents.

What is the best way to find mortage lenders?

It is a good idea to contact at least three to five lenders for input on mortgage programs and rates. You can do all of your shopping on-line or by phone. If there are any usual twists to your mortage scenario, it is best to disclose as much information up front as possible to be certain you are making a proper mortage comparison amongst lenders. When making morgage comparisons you must be sure to compare mortgages of similar terms.

What is an interest only home loan?

An interest only mortgage is loan with which you can just pay the interest or the interest and portion of the principal whenever you want during the predesignated amount of time. These loans can be 20-year fixed or adjustable rate mortgages.

What is APR?

APR is annual percentage rate and its purpose is to give borrowers a truer representation of the effective interest rate on their mortgage. APR factors in certain closing costs and fees and spreads these costs over the life of the mortgage, along with the note rate, to arrive at a more accurate annualized percentage rate than the note rate alone represents.