Home buying can have so many questions. You have come to the right place however, we have the answers for you!
Can a lender sell my loan?
Yes. An active secondary mortgage market exists in which lenders and investors buy and sell pools of mortgages. If another company purchases your mortgage, it assumes all terms and conditions. A new lender cannot change the rate, payments, or any other aspect of the agreement. You will only have to send payments to the new loan servicer.
A refinance is a new loan that replaces an existing mortgage — typically to get more favorable terms or payment options. Let’s say you purchased a home with a 30-year fixed rate mortgage at an interest rate of 4.75%. A few years later, you notice that interest rates are hovering around 4.25%. While that 0.5% difference might not seem like much, it can add up to a significant amount of money over the life of your loan.*
Is refinancing my mortgage a good decision for me?
You’ll be replacing your current loan with a new one, so it’s important that you have a specific goal when considering refinancing.
How do I refinance my home?
The process for refinancing your home will likely be similar to the steps you went through to get your current loan. Arrowhead Home Loans, doing business in the State of California as Arrowhead Capital Corporation, will look at your income, credit score and the value of your property. If refinancing your home sounds like something that fits with your homeownership goals, then finding the right type of loan is the next step.
What are the benefits of refinancing?
It depends on your particular situation. Three major factors should be considered when deciding whether to pay points:
• How much you can afford to pay up front? • How long do you expect to make payments on your mortgage? • What is the length of your loan and how long do you plan to live in the home? Many people looking for a long-term mortgage opt to pay points to ease the monthly payments over the long term of the loan. People looking at a mortgage with a shorter term or looking to stay in the home for a shorter period of time often opt to make a larger down payment instead of paying points. You can refinance your home for a number of reasons, most of which typically result in a more favorable financial situation. Some of the benefits of refinancing include: Lower your monthly payments: By obtaining a lower interest rate, you may lower your monthly payment – keeping more money in your pocket. Refinancing can reduce your monthly payment initially, but that doesn’t always mean it will save you money in the long run. Fees and interest rates need to be considered when calculating if your new mortgage will save you money over the entire life of the loan. A licensed loan officer will be able to help you decide if refinancing is right for you. We’ll help you calculate at which point you will break even and begin to save. Shorten your loan term: Maybe you’re making more money now than you were when you first got your mortgage and can afford to put more money toward it. By shortening your loan term, you’ll pay off your mortgage sooner. Short term means you’ll pay less interest over the life of your loan. An example would be refinancing a 30-year mortgage into a 20-year or 15-year mortgage. Extend your loan term: Maybe you want a lower monthly payment and are willing to extend your mortgage out several years to get it. It’s important to understand that you’ll pay more over the long term in interest, but you’ll have a lower payment each month. Get cash out: As you pay on your mortgage, you build equity. Eventually, you can refinance through certain programs to get access to funds from that equity. These funds can be used in a variety of ways, such as paying bills, making a special purchase, improving or repairing your home or paying for college tuition. Stabilize an underwater mortgage: As a result of the 2008 financial crisis, many homeowners watched their home values plummet below the outstanding balance on their mortgages. With a HARP refinance, you can refinance an underwater mortgage and regain control.
How can I raise my credit scores?
Raising a credit score is not always easy and not something that can be done overnight. There are several credit best practices that will raise your rating over time: Pay your bills on time. This is extremely important. Collections and late payments can lower your credit scores. Reduce your credit balances. Maxed out credit cards will lower your credit score. Don’t apply for credit often. This reflects poorly on you and your rating. Establish credit history.
What's the difference between pre-qualified and pre-approved?
Pre-qualification is a determination of the loan amount you’re likely to receive. It is not a guarantee of approval. To obtain pre-qualification, you usually are interviewed by a licensed loan officer who determines the pre-qualification amount. You will be issued a letter with this information that you can present when making an offer on a home. It’s important to understand that pre-qualification does not imply any obligation from the lender that you will be approved. Pre-approval is more thorough than pre-qualification. To be pre-approved, you must submit an application and verify your credit and financial history. After you receive your pre-approval certificate, you’re in a stronger position to close earlier and negotiate a better price. It’s highly recommended that you seek pre-approval if you are shopping for a home.
Should I move my finances to improve my chances for loan approval?
Although it may seem intuitive to move money around in accounts to show financial strength, this is actually not advisable. All facets of your income will be considered when applying for a loan. It’s best not to make any financial changes that could alter your eligibility, especially placing money from untraceable sources into your accounts. Additionally, don’t change your employment during the home loan process. Steady employment can be a factor in determining loan qualification. Lastly, large purchases such as cars, appliances or furniture can negatively impact the outcome of the loan.
What can I expect from interest rates?
Interest rates vary depending on the program you happen to be working with as well as credit scores, down payment amount and few other factors. We can help you figure out the best course of action as well as educate you on how you can work with these rates.
How much money do I need to put down?
In most instances, as well as the program that you are a part of, your down payment may be at a minimum of 3%. Programs vary depending on whether you are a first time homebuyer as well. Talk to us about what program is right for you and we can make sure you are putting the correct amount down on your next home!
What documentation do I need to provide in order to get my loan approved?
• Form 1003 — The residential loan application — including the attached Fair Lending notice, loan info sheet, and credit authorization.
Note: Do not use whiteout on this paperwork. Mistakes should be crossed out and initialed.Copies of W-2s or tax returns for the previous 2 years.If you own rental units, provide the most recent rental agreement and tax returns for previous 2 years. • • Your last 3 bank statements along with the most recent statements for any mutual funds, IRA/401(k), or stock accounts. • Settlement agreement and divorce decree (if applicable).Letter explaining how you plan to utilize refinance proceeds if you’re seeking a cash-out refinance. • Non-U.S. citizens must present their Green Card or H-1 or L-1 visa.If you’ve filed for bankruptcy, present a schedule of creditors, discharge notice, and filing. • If you’re applying for a second loan, include the first mortgage note. These documents may not be all-inclusive, but by having these on hand, you will expedite the application.
Points are prepaid interest that you can pay up front. You can pay points to get a lower rate on both fixed rate and adjustable rate mortgages, but the points charged to reduce the rate may vary depending on the type of loan. One point is equal to 1% of the mortgage amount. (Example: $100,000 mortgage amount = $1,000 point)
A mortgage rate lock is a promise to you from the lender to hold a specific combination of an interest rate and points for an agreed upon time (typically 10, 15, 30, 45 or 60 days) until you can close on your home. Locking in a rate protects you from unforeseen interest rate increases that can occur in the days or weeks leading up to closing, but conversely, if the rates fall, you may not be able to take advantage of the lower rates.Rate locks are dependent on the type of loan program, current interest rates, points, and the length of the lock. To hold a rate for longer periods of time, you usually have to agree to pay higher points or interest rates.
Why do homeowners refinance?
Refinancing is a common solution for homeowners who want to lower their interest rates, adjust the length of their mortgages, change the type of their mortgages, or use their existing home equity to fund a large expense, like a renovation or home repairs, through a cash-out refinance.
What will be considered during the loan process?
Proof of Income – Find and make copies of your pay stubs. Tax Information – Gather your W-2s, 1099s, and tax returns for the last 2 years. If you’re self-employed or an independent contractor, you’ll be required to provide your 1099-MISC information. Credit Details – We’ll perform a credit check when you apply. Debt Documentation – You’ll be required to provide documentation on your outstanding financial commitments. Gather materials on your current mortgage, car loans, student loans and any other debts.
Why do mortgage rates go up and down?
Interest rates change based on the demands of the market. When a high demand exists for loans, interest rates increase to take advantage of an active market. If demand for mortgages is low, interest rates decrease to entice new customers.Inflation also has a major impact on mortgage rates. Inflation is associated with a growing economy. As the economy grows, the prices for goods and services increase along with it. This price inflation affects real estate along with everything else, pushing up the price for mortgages.Lastly, the Federal Reserve has the ability to influence interest rates for the purpose of controlling inflation and employment. It can do this by raising or lowering the discount rate, and indirectly influencing the direction of the Federal funds rate.
Why do I need a home inspection?
Inspections are important to understand the condition of the home. They can also be helpful when it comes time to negotiate with the sellers, in terms of lowering the price of the home, or adding service stipulations to the contract.
What do I do if i want to change jobe before I go to settlement?
Talk to your loan officer if there is going to be a change in your employment. It’s best to have steady employment for at least 2 years and verifiable income when applying for a loan.
How does the pre-approval process work?
We send you a needs list that consists of the necessary documentation that we need to help process and adequately determine the loan program that is best suited for you. The needs list details all the info needed for the process such as income, assets, etc. The turnaround time for a pre-approval is less than a day so you could be looking for your next home faster than you think!
How do I know if I qualify for a VA loan?
Whether you are active military, a veteran or in the reserves you are able to qualify for a VA loan. You are unable to qualify for a VA loan if you have been dishonorably discharged however.
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