When you speak to a loan officer, there are a few questions you should ask.
Here's a few of them:
1- Ask the loan officer to tell you or even better ask the loan officer to send you by email all the fees. You cannot ask for all the exact numbers since you didn't talk about them yet. There are fees they will charge you or try to charge you that will be standard fee for them (Processing fees, underwriting fee etc...)
Make sure to read my article about the Good Faith Estimate! If you pay points, you may want to have those fees waived since they are just extra fees you don't need to pay. If you do business directly with a lender, usually the underwriter is right there in there office... Negotiate!
2- Make sure you get the program you asked for... If you asked for a 30 year fixed and they tell you you can get a 2/28 ARM or a 3/27 ARM, ask why! Double check the answer they gave you with another lender and make sure they know what you are doing.
I'll write more of them as they come!!!
Enjoy!
Saturday, August 11, 2007
Wednesday, July 4, 2007
What should you be looking at on your GFE (Good Faith Estimate)?
The Good Faith Estimate (GFE) is a very important tool when you are getting a mortgage.
The GFE comes after your loan officer took an application (1003) and found you a mortgage program for your needs.
Always take the time to read everything on your GFE. Some lines are very important and if you are not sure, ask questions.
At the top of your GFE, make sure your subject property address is right, your name, the term of the loan (is it 15 years (180 months) or 30 years (3660 months))and the base amount.
There are many lines on the GFE and they are all numbered. Let's talk about a few of them:
801: Loan origination fee: This is the fee a direct lender may charge you to do the loan. It is not discount points to get a better rate; it is out of the pocket expense from you to pay the lender and / or the loan officer. Make sure it is clear how much they charge you depending on your credit score (FICO score). Better credit score = less origination points.
802: Loan discount fee: This is the line where you pay points to get a better rate. I just want to remind you to calculate if it is better for you to do it or not. I wrote an article called: "Should I buy discount points on my next refinance?" That article is available on this site. Don't get mixed up with origination fee or broker fee. Brokers are always using the phrase "Discount Points to lower your rate" while in fact those fees are at line 808 of the GFE.
803: Appraisal fee. Is it paid outside closing by you? Then you will see a P and the price will not be on the line. It's paid by the lender then make sure you are not paying it!
810: Processing Fee: This is what the broker or lender will charge you to process the mortgage. DO you have to pay it? Good question! You have to look into all the fees you pay and see where you can negotiate a little bit. If you pay 2 points or more (OUCH!) you shouldn't pay any processing fee or go get another lender! Let your loan officer know that!
You will have to pay for title insurance (every time you refinance), courier, closing fee from the closing agent, recording fee... These are third party fees when you work with a broker. If you work with your bank, you will probably not see those fees or less of those.
901: Make sure the prepaid interest is right with the exact number of days.
1001 and 1004: If you escrow, then make sure the number of months are right.
Triple check the Transaction Summary: Principal and Interest paid every month, taxes and insurance and at the bottom the Total Closing costs. Are they right? Are they what you were told?
By the way, it is normal if they are not exactly what you were told. They will change once the lender put the right amount in there. Just follow up on your GFE. Don't forget, it is a GOOD FAITH Estimate! Good Faith!
Enjoy!
The GFE comes after your loan officer took an application (1003) and found you a mortgage program for your needs.
Always take the time to read everything on your GFE. Some lines are very important and if you are not sure, ask questions.
At the top of your GFE, make sure your subject property address is right, your name, the term of the loan (is it 15 years (180 months) or 30 years (3660 months))and the base amount.
There are many lines on the GFE and they are all numbered. Let's talk about a few of them:
801: Loan origination fee: This is the fee a direct lender may charge you to do the loan. It is not discount points to get a better rate; it is out of the pocket expense from you to pay the lender and / or the loan officer. Make sure it is clear how much they charge you depending on your credit score (FICO score). Better credit score = less origination points.
802: Loan discount fee: This is the line where you pay points to get a better rate. I just want to remind you to calculate if it is better for you to do it or not. I wrote an article called: "Should I buy discount points on my next refinance?" That article is available on this site. Don't get mixed up with origination fee or broker fee. Brokers are always using the phrase "Discount Points to lower your rate" while in fact those fees are at line 808 of the GFE.
803: Appraisal fee. Is it paid outside closing by you? Then you will see a P and the price will not be on the line. It's paid by the lender then make sure you are not paying it!
810: Processing Fee: This is what the broker or lender will charge you to process the mortgage. DO you have to pay it? Good question! You have to look into all the fees you pay and see where you can negotiate a little bit. If you pay 2 points or more (OUCH!) you shouldn't pay any processing fee or go get another lender! Let your loan officer know that!
You will have to pay for title insurance (every time you refinance), courier, closing fee from the closing agent, recording fee... These are third party fees when you work with a broker. If you work with your bank, you will probably not see those fees or less of those.
901: Make sure the prepaid interest is right with the exact number of days.
1001 and 1004: If you escrow, then make sure the number of months are right.
Triple check the Transaction Summary: Principal and Interest paid every month, taxes and insurance and at the bottom the Total Closing costs. Are they right? Are they what you were told?
By the way, it is normal if they are not exactly what you were told. They will change once the lender put the right amount in there. Just follow up on your GFE. Don't forget, it is a GOOD FAITH Estimate! Good Faith!
Enjoy!
Saturday, June 23, 2007
Mortgage rates and Yield spread!
I just wanted to add my $0.02 about what Mark Barnes wrote in the previous post on my Blog.
Like a Cop would say when they arrest someone: "You have the right to remain silent. Anything you say can and will be used against you in a court of law.". Let me translate this into the Mortgage business: "You have the right to remain silent and you really should. Anything you say WILL be used against you on your next mortgage rate you will get and because you spoke, I will charge you more and you will be happy anyway!".
There you go, you have it!!!
Let me explain what I mean here.
You need to understand what you sign and what you read. You need to educate yourself before you start a refinance or a new purchase.
Some brokers will cut their fees and tell you I cut your fees by $XX amount of dollars! That is great! But they added "Yield Spread" which won't cost you a penny but your rate will go up and the broker will make more money and it will cost you more monthly! But if like many clients you look into a monthly payment only, you might still be happy if you save $250 a month! What you don't know is you could have cut some fees and get a better rate at the same time!
Don't buy everything said to you, not even what I write! Educate yourself!
Search for yield spread on the internet; check how it affects your rate.
Never tell your loan officer you can afford that much dollar a month! Just tell him, show me what you can do and I want to see the GFE! If they don't want to send you a GFE then, change bank or broker!
If you have a question or if you want me to look over your GFE, I'll do it for a small fee that could save you a lot or send me your questions!
Enjoy!
Like a Cop would say when they arrest someone: "You have the right to remain silent. Anything you say can and will be used against you in a court of law.". Let me translate this into the Mortgage business: "You have the right to remain silent and you really should. Anything you say WILL be used against you on your next mortgage rate you will get and because you spoke, I will charge you more and you will be happy anyway!".
There you go, you have it!!!
Let me explain what I mean here.
You need to understand what you sign and what you read. You need to educate yourself before you start a refinance or a new purchase.
Some brokers will cut their fees and tell you I cut your fees by $XX amount of dollars! That is great! But they added "Yield Spread" which won't cost you a penny but your rate will go up and the broker will make more money and it will cost you more monthly! But if like many clients you look into a monthly payment only, you might still be happy if you save $250 a month! What you don't know is you could have cut some fees and get a better rate at the same time!
Don't buy everything said to you, not even what I write! Educate yourself!
Search for yield spread on the internet; check how it affects your rate.
Never tell your loan officer you can afford that much dollar a month! Just tell him, show me what you can do and I want to see the GFE! If they don't want to send you a GFE then, change bank or broker!
If you have a question or if you want me to look over your GFE, I'll do it for a small fee that could save you a lot or send me your questions!
Enjoy!
Mortgage-Refinance Treachery: Avoid Mortgage Bankers and Brokers Biggest Trick - The Sales Pitch
Mortgage-Refinance Treachery: Avoid Mortgage Bankers and Brokers Biggest Trick - The Sales Pitch
By Mark Barnes
What the average homeowner or home buyer fails to realize is that bankers, loan officers, mortgage brokers, or whatever your lenders call themselves, are salesmen. Certainly, if you purchased your home from a realtor and used her lender, you most likely got a feeling of trust in that person, because the realtor referred him. Beware of this potentially dangerous water.
"This guy will help you complete your loan," the realtor will tell a prospective buyer. "He'll help us close quickly, and you'll be in your new home in less than a month."
Suddenly, the banker is a guy who will help you. Now, he's your friend. The intention here is not to scare you into thinking that everyone in the mortgage business is a bad person, looking to rip you off, but don't trust this guy, just because a realtor sends you to him. Remember, they work together.
The realtor needs the sale, and the banker needs to make loans. They are both salesmen, and salesmen are people who make commissions, based on a particular price. This goes for loan officers, just the same as it goes for a realtor or a car salesman. That used car salesman makes more if you pay more, and the mortgage banker makes more, based on how high your interest rate is.
When I worked in the mortgage business as a full-time loan officer and sales manager, the average customer was far more concerned with the costs of completing the loan and the final monthly payment than with the interest rate on the money they were borrowing. This is one of the biggest mistakes home buyers and people refinancing make in completing a home loan.
Unfortunately, most Americans live from one payday to the next, barely paying the bills, so all they're concerned with is what the monthly payment will be and if it will fit their budget. Bankers feed off of this, as it becomes easy to simply fit a loan into a payment schedule, ignoring interest rate, altogether. In fact, most people make it easy on the mortgage broker, asking more questions about payments than about interest rates.
The unsuspecting borrower will say, "I can't pay more than $1,000 per month." The cunning loan officer will feast on this person, like a starving man at a Thanksgiving dinner. Remember, bankers and mortgage brokers keep secrets, advising in ways that appear to save you money but really cost you thousands in the long run.
Let's assume the previously-mentioned person needs $100,000 to purchase a home. An unscrupulous mortgage broker, looking to make as much money as possible on the borrower will find out how much the taxes and insurance will be on the property. Let's assume they are $230, which will be added to the person's monthly mortgage payment. Let's also assume that the market bears an interest rate of 6% for a 30-year fixed rate mortgage (more on terms later). Now, the mortgage broker says to the borrower who can only afford $1,000 monthly, "What if I get you into your house for less than $900, including taxes and insurance? Can we do the loan today?"
This person, dying for his chance at the American Dream, is going to jump at this, thinking the mortgage broker is his new best friend and ignoring the interest rate on the loan, altogether. What the broker, trying to steal every possible cent from this one deal, has done is sold the borrower a $100,000 loan at an interest rate of 7%, which creates a principal and interest payment of $665.30 monthly. Combine this with $230 in tax and insurance escrows for a monthly mortgage payment of $895.30, almost $105 less than what the borrower said he could afford - a pretty nice savings, the borrower will think.
Think about it; if you said you could afford no more than $1,000 per month, and the person, in whom you placed your trust, told you your payment would be $895, you'd probably be pretty excited, huh? What has really happened, though, is the mortgage broker has done the borrower, his valued customer, a great disservice. Why, you may wonder. Because the market for this model bears an interest rate of 6%, and we're assuming the borrower has good credit. The loan officer could have offered the far better 6% rate, which would create a payment of $829.
This is $66 less than the borrower's payment at 7%. Also, the 7% rate will cost the borrower an extra $792 each year ($66 times 12 months). That is nearly $4,000 over five years! All this, just so the mortgage broker could pocket a few hundred dollars more on this one deal. If the loan amount was much higher, you could lose tens of thousands of dollars in just a few years.
So, what is the big secret? Simply put: bankers and mortgage brokers do not always offer the best possible interest rate, because they make money, when you get a higher interest rate than the market bears! So, be careful of this old trick. Tell your mortgage professional that you want the Par rate. This is the best rate the lender is willing to offer on a given day, without charging a premium. In other words, you could get a better rate, but you’d have to pay to get it. Now, if you are caught off guard and sold a rate that is greater than Par, your payment will be bigger and the loan officer will make extra money. Don’t let it happen.
Check out more great loan information now at Direct Lending Solutions
Article Source:
http://EzineArticles.com/?expert=Mark_Barnes
http://EzineArticles.com/?Mortgage-Refinance-Treachery:-Avoid-Mortgage-Bankers-and-Brokers-Biggest-Trick---The-Sales-Pitch&id=13653
By Mark Barnes
What the average homeowner or home buyer fails to realize is that bankers, loan officers, mortgage brokers, or whatever your lenders call themselves, are salesmen. Certainly, if you purchased your home from a realtor and used her lender, you most likely got a feeling of trust in that person, because the realtor referred him. Beware of this potentially dangerous water.
"This guy will help you complete your loan," the realtor will tell a prospective buyer. "He'll help us close quickly, and you'll be in your new home in less than a month."
Suddenly, the banker is a guy who will help you. Now, he's your friend. The intention here is not to scare you into thinking that everyone in the mortgage business is a bad person, looking to rip you off, but don't trust this guy, just because a realtor sends you to him. Remember, they work together.
The realtor needs the sale, and the banker needs to make loans. They are both salesmen, and salesmen are people who make commissions, based on a particular price. This goes for loan officers, just the same as it goes for a realtor or a car salesman. That used car salesman makes more if you pay more, and the mortgage banker makes more, based on how high your interest rate is.
When I worked in the mortgage business as a full-time loan officer and sales manager, the average customer was far more concerned with the costs of completing the loan and the final monthly payment than with the interest rate on the money they were borrowing. This is one of the biggest mistakes home buyers and people refinancing make in completing a home loan.
Unfortunately, most Americans live from one payday to the next, barely paying the bills, so all they're concerned with is what the monthly payment will be and if it will fit their budget. Bankers feed off of this, as it becomes easy to simply fit a loan into a payment schedule, ignoring interest rate, altogether. In fact, most people make it easy on the mortgage broker, asking more questions about payments than about interest rates.
The unsuspecting borrower will say, "I can't pay more than $1,000 per month." The cunning loan officer will feast on this person, like a starving man at a Thanksgiving dinner. Remember, bankers and mortgage brokers keep secrets, advising in ways that appear to save you money but really cost you thousands in the long run.
Let's assume the previously-mentioned person needs $100,000 to purchase a home. An unscrupulous mortgage broker, looking to make as much money as possible on the borrower will find out how much the taxes and insurance will be on the property. Let's assume they are $230, which will be added to the person's monthly mortgage payment. Let's also assume that the market bears an interest rate of 6% for a 30-year fixed rate mortgage (more on terms later). Now, the mortgage broker says to the borrower who can only afford $1,000 monthly, "What if I get you into your house for less than $900, including taxes and insurance? Can we do the loan today?"
This person, dying for his chance at the American Dream, is going to jump at this, thinking the mortgage broker is his new best friend and ignoring the interest rate on the loan, altogether. What the broker, trying to steal every possible cent from this one deal, has done is sold the borrower a $100,000 loan at an interest rate of 7%, which creates a principal and interest payment of $665.30 monthly. Combine this with $230 in tax and insurance escrows for a monthly mortgage payment of $895.30, almost $105 less than what the borrower said he could afford - a pretty nice savings, the borrower will think.
Think about it; if you said you could afford no more than $1,000 per month, and the person, in whom you placed your trust, told you your payment would be $895, you'd probably be pretty excited, huh? What has really happened, though, is the mortgage broker has done the borrower, his valued customer, a great disservice. Why, you may wonder. Because the market for this model bears an interest rate of 6%, and we're assuming the borrower has good credit. The loan officer could have offered the far better 6% rate, which would create a payment of $829.
This is $66 less than the borrower's payment at 7%. Also, the 7% rate will cost the borrower an extra $792 each year ($66 times 12 months). That is nearly $4,000 over five years! All this, just so the mortgage broker could pocket a few hundred dollars more on this one deal. If the loan amount was much higher, you could lose tens of thousands of dollars in just a few years.
So, what is the big secret? Simply put: bankers and mortgage brokers do not always offer the best possible interest rate, because they make money, when you get a higher interest rate than the market bears! So, be careful of this old trick. Tell your mortgage professional that you want the Par rate. This is the best rate the lender is willing to offer on a given day, without charging a premium. In other words, you could get a better rate, but you’d have to pay to get it. Now, if you are caught off guard and sold a rate that is greater than Par, your payment will be bigger and the loan officer will make extra money. Don’t let it happen.
Check out more great loan information now at Direct Lending Solutions
Article Source:
http://EzineArticles.com/?expert=Mark_Barnes
http://EzineArticles.com/?Mortgage-Refinance-Treachery:-Avoid-Mortgage-Bankers-and-Brokers-Biggest-Trick---The-Sales-Pitch&id=13653
Friday, June 22, 2007
What is a Pay Option ARM? Are they for me?
First thing I want to say is... BE CAREFUL about a Pay Option ARM!
How do you know if that mortgage is a Pay Option ARM? Very simple, the rate is extremely low or the payment is extremely low.
If you watch TV or listen to radio, you hear or see ads (too many ads) about mortgages with monthly payment very low on a $150,000 mortgage. Payment like $435 a month and you are told you can save up to 60% or 65% on your monthly payment. Those companies will tell you: “Why pay $1,000 a month on a $150,000 mortgage while you can pay $435 a month?” I know why, I’ll tell you soon!
Or, they will offer you a 1.5% mortgage rate on your next mortgage!
First thing, let me explain what those offers are. They are legitimate offers but they don’t suit everybody.
I will keep it simple and I won’t go into micro details. They will charge you Prime Rate plus a specific percentage. That rate will change every month or every six months depending on your option. A Pay Option ARM offers you 4 ways to pay your mortgage every month:
1- 15 year Fixed: Your mortgage is amortized on 15 years. You pay principle and interest.
2- 30 year Fixed: Your mortgage is amortized on 30 years. You pay principle and interest.
3- Interest Only: You will have the option to pay interest only without principal.
4- Minimum Payment: Your minimum payment is the lowest payment you can do. That would be the $435 a month. You don’t pay any principal but the worse part is you don’t even cover the interest and that creates a problem. Every month, the bank will add the difference to what you owe. Basically, every month you owe more than what you borrow. It is called negative amortization. Some bank will even let you go up to 115% of the value of your house. You will owe more than the value of your house. I smell foreclosure!
Those programs are excellent if you like to flip houses. You buy a house for $150,000, you fix it in 6 months and you sell it back for $225,000. Even if you have to pay a little bit more after 6 months, it doesn’t matter you make good profits since you got the house and fixed it for $435 a month.
Pay Option ARM are not offered in every state. Some states won’t allow it unless you are federally charted.
Many Mortgage companies will use that tactic to get you to call in so they can offer you something else.
Once again, ask questions! Read your papers!
Enjoy!
How do you know if that mortgage is a Pay Option ARM? Very simple, the rate is extremely low or the payment is extremely low.
If you watch TV or listen to radio, you hear or see ads (too many ads) about mortgages with monthly payment very low on a $150,000 mortgage. Payment like $435 a month and you are told you can save up to 60% or 65% on your monthly payment. Those companies will tell you: “Why pay $1,000 a month on a $150,000 mortgage while you can pay $435 a month?” I know why, I’ll tell you soon!
Or, they will offer you a 1.5% mortgage rate on your next mortgage!
First thing, let me explain what those offers are. They are legitimate offers but they don’t suit everybody.
I will keep it simple and I won’t go into micro details. They will charge you Prime Rate plus a specific percentage. That rate will change every month or every six months depending on your option. A Pay Option ARM offers you 4 ways to pay your mortgage every month:
1- 15 year Fixed: Your mortgage is amortized on 15 years. You pay principle and interest.
2- 30 year Fixed: Your mortgage is amortized on 30 years. You pay principle and interest.
3- Interest Only: You will have the option to pay interest only without principal.
4- Minimum Payment: Your minimum payment is the lowest payment you can do. That would be the $435 a month. You don’t pay any principal but the worse part is you don’t even cover the interest and that creates a problem. Every month, the bank will add the difference to what you owe. Basically, every month you owe more than what you borrow. It is called negative amortization. Some bank will even let you go up to 115% of the value of your house. You will owe more than the value of your house. I smell foreclosure!
Those programs are excellent if you like to flip houses. You buy a house for $150,000, you fix it in 6 months and you sell it back for $225,000. Even if you have to pay a little bit more after 6 months, it doesn’t matter you make good profits since you got the house and fixed it for $435 a month.
Pay Option ARM are not offered in every state. Some states won’t allow it unless you are federally charted.
Many Mortgage companies will use that tactic to get you to call in so they can offer you something else.
Once again, ask questions! Read your papers!
Enjoy!
Thursday, June 21, 2007
Good news on Mortgage Rates!!!
I was checking this morning and the mortgage rates went down a little bit! A 30 year fixed mortgage is at 6.29% according to BankRate.com!
Enjoy!
Enjoy!
Monday, June 18, 2007
How many different mortgages are available to me?
Let's say that so many types of mortgages are available right now! What are they? They all start from some basic mortgages and then each bank upgrades them to look more appealing to the customer. Some underwriter will change the mid FICO score to 580 instead of 600 and call it "The American family Mortgage" etc...
Here are the basic mortgages available to purchase a house or to refinance:
1- 30 year fixed: Fixed rate for 30 years and the house if yours. Some banks will let you do 25 and/or 20 year mortgage;
2- 15 year fixed: Fixed 15 year. Some banks will give you a better rate than a 30, sometimes a 0.25% cheaper. Yes it does make a difference on 15 years.
Those might be available Interest Only if your FICO score qualifies. But be careful! As we know it some house markets lost a lot in last year or two and if you were into a Interest Only (I/O) then you might not be able to refinance since the value of your house is now less than what you owe. That means your loan to Value is over 100% and most of the banks don't like it. The I/O is sometimes available for 5 or 10 years, that means you have to start paying principle after that period. The I/O could be good if you owe let's say $100,000 on a $200,000 mortgage (30 year fixed at 6.5%) and you are having a bad year financially, you could save your house! Here's an example:
$200,000 Mortgage 30 year fixed at 6.5%
Monthly Payment: $1264.10
If you refinance $100,000 at 7.5% your monthly payment will be : $625.00 per month. If you have to do this and you do have a few bucks a month, put it on your principal directly!
3- ARM: Adjustable Rate Mortgage, 2-3-5 year fixed and then it goes adjustable. That is a killer if you ask me. If you have a choice, don't do it! Once you go adjustable, your rate can go up 1% to 2% and move every 6 months! That is why the foreclosure rate is so high right now!
4- Pay Option Arm: It is a program many companies uses to get your business. You saw or heard commercials like "1.5% on your next refinance, we can do it!!!". Be careful!
That program offers you 4 ways to pay monthly but the interest rate may change monthly and your payment will change also:
A) Minimum payment, in this case 1.5%. What you need to understand is that the difference in the interest between 1.5% and your current rate will be added to your principal. It is call Negative Amortization! That means every year, you will owe more. Not good!
B) Pay Interest Only
C) 30 Year fixed
D) 15 Year fixed
To me it is primary good for someone buying a house to flip it. You will be fixing that house for 6 months and you will resale it and make a profit. During those 6 months, you will pay the minimum payment and with the profit, you will pay back your mortgage and the negative amortization.
5- The Home Equity Loan: You just borrow some money on your equity to fix the house or pay some debts.
These are the 5 basic mortgages!
Enjoy!
Here are the basic mortgages available to purchase a house or to refinance:
1- 30 year fixed: Fixed rate for 30 years and the house if yours. Some banks will let you do 25 and/or 20 year mortgage;
2- 15 year fixed: Fixed 15 year. Some banks will give you a better rate than a 30, sometimes a 0.25% cheaper. Yes it does make a difference on 15 years.
Those might be available Interest Only if your FICO score qualifies. But be careful! As we know it some house markets lost a lot in last year or two and if you were into a Interest Only (I/O) then you might not be able to refinance since the value of your house is now less than what you owe. That means your loan to Value is over 100% and most of the banks don't like it. The I/O is sometimes available for 5 or 10 years, that means you have to start paying principle after that period. The I/O could be good if you owe let's say $100,000 on a $200,000 mortgage (30 year fixed at 6.5%) and you are having a bad year financially, you could save your house! Here's an example:
$200,000 Mortgage 30 year fixed at 6.5%
Monthly Payment: $1264.10
If you refinance $100,000 at 7.5% your monthly payment will be : $625.00 per month. If you have to do this and you do have a few bucks a month, put it on your principal directly!
3- ARM: Adjustable Rate Mortgage, 2-3-5 year fixed and then it goes adjustable. That is a killer if you ask me. If you have a choice, don't do it! Once you go adjustable, your rate can go up 1% to 2% and move every 6 months! That is why the foreclosure rate is so high right now!
4- Pay Option Arm: It is a program many companies uses to get your business. You saw or heard commercials like "1.5% on your next refinance, we can do it!!!". Be careful!
That program offers you 4 ways to pay monthly but the interest rate may change monthly and your payment will change also:
A) Minimum payment, in this case 1.5%. What you need to understand is that the difference in the interest between 1.5% and your current rate will be added to your principal. It is call Negative Amortization! That means every year, you will owe more. Not good!
B) Pay Interest Only
C) 30 Year fixed
D) 15 Year fixed
To me it is primary good for someone buying a house to flip it. You will be fixing that house for 6 months and you will resale it and make a profit. During those 6 months, you will pay the minimum payment and with the profit, you will pay back your mortgage and the negative amortization.
5- The Home Equity Loan: You just borrow some money on your equity to fix the house or pay some debts.
These are the 5 basic mortgages!
Enjoy!
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