Q: So what should I know before I secure a loan?
First of all, you have to find the right mortgage for you. Who you get a loan from can be just as important as what kind of loan you get. The options can get pretty complex but narrowing down the reason of why you should refinance can make the process easier. Are you looking for cash? lower payments? flexibility? Once you answer “yes” to one of these questions then stay focused and do not get confused with too many options offered by too many lenders.
Also, evaluate your lending sources. The first thing you should think about: accessibility. Ask yourself: where can I get the financial planning or credit counseling I need—and connections to lenders—FAST? Time is of the essence.
Sure you want to get the best possible interest rate available but you don’t need to shop around with 20 different lenders. The best advice is check with your bank first. If they can not help you (which many are restricted on the programs they offer), then look for a company with a wide range of capabilities. Can this company help me refinance? Consolidate? Cash out? Can they help me with an FHA loan? Do they know how to help improve my credit? Look for a company that knows the industry and can help you make better choices.
Lending Choice can help. We are not a lender, but we connect you to hand-selected lenders monitored to provide you service levels you expect and deserve. The lenders in our network have an in-depth understanding of your situation and can see past a few credit blemishes and help you make the right choices.
Q: What should I look out for when it comes to lending companies?
Lending Choice hand-selects lenders to be part of our network to give you the products, competitive rates and service you can trust and deserve. Here are some tips and valuable advice we suggest you consider when deciding whether or not you are with the right lender or loan officer:
- You wouldn’t permit a doctor to perform surgery before diagnosing your problem! So, don’t permit a Loan Officer to recommend a product without listening to your reasons for considering a refinance.
- When choosing a mortgage company or product, you should be certain to take the time to educate yourself and learn about all of your available product options.
- Write everything down. It will help you recall the terms and conditions you were told to expect.
- Ask when you should expect your early disclosures. Federally regulated lending laws require many upfront disclosures explaining the terms and cost of your mortgages. If you’re not receiving them, you’re NOT with the right lender. With these required documents, you can prevent surprises—like thinking you really were getting a fixed rate vs. an adjustable rate mortgage. It’s the law!
- Ask to see your final terms before you get to the closing table. The final terms should be very close to your original disclosures, unless material information changed during the discovery process (i.e., appraised value, income or credit changed).
- Make sure all of your questions are answered to your satisfaction. If you still are uncertain with the given explanation, ask for a clarification.
- Until you receive your new loan, follow up with your Loan Officer frequently to monitor your loan’s progress. Lending Choice recommends you obtain all necessary contact information from your Loan Officer in the event you need their assistance at any time.
- Prepayment options. Ask if you can pay your loan off early. If not, loan terms can be modified to accommodate your request.
Lending Choice hand-selects each lender who becomes part of our network. While we take pride in selecting only the most experienced and reputable lenders applying to our network, we suggest that asking the right questions and planning before refinancing might save you hundreds—even thousands—on your next mortgage.
With Lending Choice, you’ll have a company you can trust to put you in touch with lenders that have your best interests at heart.
Q: How are loans approved & priced?
All mortgage products are priced to access the overall risk associated in lending money to a borrower. There are three primary attributes to determine “overall risk”:
- Credit – Do you pay your mortgage on time? Other bills? (and/or) What is your FICO score?
- Collateral – The property secured to back up your promise to repay the lender. The lender will also consider the amount of equity being utilized.
- Capacity to Repay – How will you repay the lender? Are you employed? Do you have verifiable income?
Q: What are ARMs and what’s been going on in the mortgage industry? Should I be afraid?
ARMS are Adjustable Rate Mortgages: A loan where the interest rate is periodically adjusted, moving higher or lower in the same ratio as the originally selected index, such as Treasury bill or LIBOR rates. ARM loans may include caps on interest rate increases in a given time period and over the life of the loan, and may include limits on the frequency of interest rate adjustments. ARM loans generally have initial below-market interest rates in return for the borrower sharing the risk that interest rates may rise during the life of the loan.
In general, ARMs are not bad loans but you need to be informed that the rate will adjust at some point in the future. For example, if you are planning to relocate your home or will need to refinance again in the future, then an ARM loan may give you much needed savings today.
A few years ago, when interest rates were low, many Americans were able to secure new loans with adjustable rate mortgage loans or interest-only loans with incredibly affordable payments. But now, adjustable rate mortgage payments are rising. Many mortgage experts are suggesting these exotic products are the primary reason for many of the mortgage delinquencies and foreclosures in 2007. In several cases, consumers’ payments can increase by 25-35%—or several hundred dollars a month—the first time their adjustment rate mortgage payment increases!
But you shouldn’t be afraid. Let’s say you refinanced into an ARM three years ago, your credit is good and now you’re really stuck trying to make ends meet. Our network specializes in helping people just like you. With hundreds of thousands of adjustable rate mortgages expected to recast upwards, it’s great to know that you can find safe, secure mortgage solutions with some guidance from trusted experts like Lending Choice.
Q: What are FHA loans and how can they help me?
FHA loans are really useful—especially in today’s market. An FHA loan is insured by the Federal Housing Administration. Basically, FHA loans help Americans borrow money for the purchase or refinancing of a home. The program originated during the Great Depression, when rates of foreclosures and defaults rose sharply.
It’s actually the perfect time to take advantage of this kind of opportunity. Sub-prime loans only represented 15-20% of all mortgage loans in 2005. Many of those loans are good loans. FHA lost market share due to the increase in non-government backed sub-prime loans of the past 5-10 years. But that’s changed sincemany lenders offering non-government backed loans have been forced out of business due to most of the subprime product elimination. FHA loans are never related to your credit score.
But keep in mind—only a limited number of companies specialize in FHA loans. And Lending Choice has selected a number of them to be part of our exclusive network. Not everyone qualifies for these FHA programs. Call today and find out if you qualify!?
Q: I probably need perfect credit to be considered for a loan with Lending Choice, right?
Actually, no. Lending Choice was developed to help people with all kinds of credit needs, and our network of lenders have specifically been chosen for their ability to help people at all credit levels. So no matter what your situation, you may be able to lower your monthly payments and get back a little peace of mind FAST.
Q: Should I Refinance?
Lending Choice is not a lender—we are an information resource providing you the tools you need before you refinance. We’ve watched many people refinance for all kinds of reasons. Here are some questions you should ask yourself before making the decision to refinance:
- Can I afford my current budget situation? Every person’s financial situation is different. Lenders will typically approve your loan based on what revolving or secured debts show up on your credit report. They do not take into consideration your monthly parking garage fees, eating or entertainment habits and many other incidental expenses. Only you know how much you can afford or when your next salary increase will be. Refinancing situations can work to your benefit when you’re talking openly about your goals or limitations. An experienced Loan Specialist will take the time to help you design a program meeting all of your needs.
- Are rates increasing in the market? Or are they scheduled to increase on my current 1st or 2nd mortgage? Conventional mortgage rates have been relatively stable over the past several years. People who entered into an adjustable rate program in the early to mid 2000’s are now starting to realize the effects of interest rate and payment increases. Many ARM programs utilize indices that have experienced a large increase over the past three years. If you are in an adjustable rate mortgage scheduled to reset within the near future, you may be able to refinance into many government-regulated or -insured programs. Fixed interest rates are still at near-historical lows. People with revolving debt and a Home Equity Line of Credit with a floating rate tied to the Prime Rate may also benefit from a refinance.
- Can I reduce my rate or monthly mortgage payments? People making a decision on refinancing their mortgage should first take into consideration whether they are simply attempting to reduce their mortgage payment or utilizing the refinance for cashout or a debt consolidation. If you are solely looking to refinance your mortgage, then an improvement in your equity position (i.e., less of an outstanding mortgage balance and an increase in your home’s value) or credit (i.e., increase in your FICO score or paying your mortgage on time) could assist you in getting a low enough rate/payment to save money. You can still reduce your payments with a consolidation loan encompassing credit card debt, student loans, home equity lines of credit or other high interest rate programs.
- Do I want to pay my home off sooner? Term reduction loan can often save you thousands of dollars in finance changes. In addition, lower rates are often available with shorter term loans. Lending Choice does not recommend term reduction loans unless your personal budget can avoid accumulating other debt as a cost of an increase monthly mortgage payment.
- Is my need or desire for cash enough to consider utilizing the equity in my home? Many of the Lenders within Lending Choice’s network are regulated to provide loans with a “tangible net benefit.” In layman’s terms, the loan’s purpose needs to have a benefit based on what the loan will cost you. While each person’s individual needs are different, understand that most loans will not be approved unless a tangible benefit will be realized by the borrower.
- Can I improve my credit? When obtaining a consolidation loan, a person will tend to see an increase in their credit. However, many lending institutions have direct connection with all of the three primary credit providers (i.e. Experian, Equifax and Trans Union) and can usually assist you in improving your credit in real-time. Meaning, you do not need to write multiple letters or wait 30 or 60 days to see improvements. Lenders are professionals in reading and placing people in credit improvement situations. Ask your Loan Specialist if their company offers these additional services as an added benefit to your refinance.
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