What can home equity credit line do for me?

If you need to borrow money, home equity lines just could be a great source of cash. It would provide you with a large amount of cash at relatively low interest rates and with some tax advantages not available with other kinds of loans.

Is it a good idea to pay points for a lower rate?

If you are refinancing mortgage, paying points is not always your best option. Points paid for refinancing can be deducted only in small amounts from your taxes, so it could take couple of years before you benefit from a lower rate.

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.

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 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.

Why do I need to pay for another policy of title insurance when we already own the property?

Before closing your new mortgage, your new mortgage lender must be certain that the title to the property will be free and clear, free of prior defects and indebtedness. A new policy is needed to protect the new mortgages lender and subsequent investor of your new mortgage. Both a homeowner and prospective lender need to be certain that what is available on the property is what is referred to as a "marketable title". A title company researches the legal history of the property that entails searching public records in the offices of the county recorder. Problems with the title could threaten the mortgage, limit ones use and enjoyment of the property and could result in financial loss. A policy of title insurance protects a homeowner's title and the insurer covers the cost of any legal challenges.

What should I get in writing when getting a loan?

If your loan is primarily for personal or family needs, the lender is required to give you a disclosure form before you sign the documents.This disclosure form should tell you the actual cost of the loan. It should include the finance charge, the annual percentage rate and the all the other fees included.

Should I lock my interest rates at mortgage application or float the rate until closing?

The answer depends on one's outlook for interest rates, whether you are satisfied with the current rate being offered (and would not be deterred from proceeding if rates declined), when you need to close and whether or not a rate increase could effect your ability to qualify for the mortgage. With a purchase, there is a contractual obligation to close on a specified date. With a refianance transaction, there is no such obligation to close and therefore a home mortgage refinance applicant could postpone closing for a more favorable rate. Some lenders take the guesswork out of the process by allowing borrowers to lock and then float the rate down one time during the mortgage process.

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.

What is the difference in rate for non-owner occupied vs. owner occupied financing?

Conforming non-owner occupied rates are typically 3/8% higher than owner occupied interest rates. The equity requirement is usually higher for non-owner occupied mortgages as well, typically 20-30%.

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.

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