Home Loan Rates & Fees
When it comes to home financing, there are many different options to choose from. How do you find the home loan that's right for you? Here is some information to help you decide.
Are there any prepayment penalties charged for these loan programs?
None of the loan programs we offer have prepayment penalties. You can pay off your mortgage at any time with no additional charges.
How are interest rates determined?
Interest rates fluctuate based on a variety of factors, including inflation, the pace of economic growth and Federal Reserve Policy.
Over time, inflation has the largest influence on the level of interest rates. A modest rate of inflation will almost always lead to low interest rates, while concerns about rising inflation normally cause interest rates to increase.
Our nation’s central bank, the Federal Reserve, implements policies designed to keep inflation and interest rates relatively low and stable.
Is there a fee charged or any other obligation if I complete the online application?
There’s no cost at all for completing our application. After your loan is approved, you can decide whether you want to pay the application deposit to cover the cost of the appraisal and final credit report so you can lock in an interest rate and we can begin to process your request.
Should I choose a 15 or 30-year loan?
A 15-year fixed rate mortgage gives you the ability to own your home free and clear in 15 years. And while the monthly payments are somewhat higher than a 30-year loan, the interest rate on the 15-year mortgage is usually a little lower. You’ll also pay less than half of the total interest cost of the traditional 30-year mortgage.
However, if you can’t afford the higher monthly payment of a 15-year mortgage, don’t feel alone. Many borrowers find the higher payment out of reach and choose a 30-year mortgage. It still makes sense to use a 30-year mortgage for most people.
Who should consider a 15-year mortgage?
The 15-year fixed rate mortgage is most popular amoung young homebuyers with sufficient income to meet the higher monthly payments to pay off the house before their children start college. They own more of their home faster with this kind of mortgage, and can begin to consider the cost of higher education for their children without having a mortgage payment to make as well. Other homebuyers, who are more established in their careers, have higher higher incomes, and whose desire is to own their homes before they retire, may also prefer this mortgage.
Advantages and Disadvantages of a 15-year mortgage
The 15-year fixed rate mortgage offers two big advantages for most borrowers:
- You own your home in half the time it would take with a traditional 30-year mortgage
- You same more than half the amount of interest of a 30-year mortgage. Lenders usually offer this mortgage at a slightly lower interest rate than with 30-year loans.
Disadvantages of a 15-year fixed rate mortgage:
- The monthly payments are roughly 10 to 15% higher per month than a 30-year loan
- Because you’ll pay less in interest on the 15-year mortgage, you won’t have the maximum mortgage interest tax deduction possible.
Should I lock in my interest rate or let it float?
Mortgage interest rate movements are as hard to predict as the stock market and no one can really know for certain whether they’ll go up or down.
If you have a hunch that rates are on an upward trend then you’ll want to consider locking the rate as soon as you are able.
Before you decide to lock, make sure that your loan can close within the lock period. It won’t do any good to lock your rate if you can’t close during the rate lock period.
If you’re purchasing a home, review your contract for the estimated closing date to help you choose the right rate lock period.
If you are refinancing, in most cases, your loan could close within 30 days. However, if you have any secondary financing on the home that won’t be paid off, allow some extra time since we’ll need to contact that lender to get their permission.
If you think rates might drop while your loan is being processed, take a risk and let your rate “float” instead of locking. After you apply, you can lock in by contacting your Loan Officer.
Should I pay for points in exchange for a lower interest rate?
Points are considered a form of interest. Each point is equal to one percent of the loan amount. Uou pay them up front at your loan closing in exchange for a lower interest rate over the life of your loan. This means more money will be required at closing. However, you will have lower monthly payments over the term of your loan.
To determine whether it makes sense for you to pay points, you should compare the cost of the points to the monthly payment savings created by the lower interest rate.
Divide the total cost of the points by the savings each month. This gives you the number of payments you’ll need to make before you actually start saving money by paying points.
If the number of months it will take to start saving money is longer than you plan on having this mortgage, you should consider the loan program option that doesn’t require points to be paid.
What are closing fees and how are they determined?
A home loan often involves many fees, such as the appraisal fee, title charges, closing fees, and state or local taxes. These fees vary from state to state and also from lender to lender. Any lender should be able to give you an estimate of their fees, but it is more difficult to tell which lenders have done their homework and are providing a complete and accurate estimate. We take quotes very seriously. We’ve completed the research necessary to make sure the our fee quotes are accurate to the city level.
To assist you in evaluating our fees, we’ve grouped them as follows:
Third Party Fees:
Fees that we consider third party fees include the appraisal fee, the credit report fee, the settlement or closing fee, the survey fee, tax service fees, title insurance fees, flood certification fees, and courier/mailing fees.
Third party fees are fees that we’ll collect and pass on to the person who actually performed the service. For example, an appraiser is paid the appraisal fee, a credit bureau is paid the credit report fee, and an attorney is paid the title insurance fees.
Typically, you’ll see some minor variances in third party fees from lender to lender since a lender may have negotiate a special charge from a provider they use often or choose a provider that offers nationwide coverage at a flat rate. You may also see that some lenders absorb minor third party fees such as the flood certification fee, the tax service fee, the courier/mailing fee.
Taxes and Other Unavoidables:
Fees that we consider to be taxes and other unavoidables include: State/Local Taxes and recording fees. These fees will most likely have to be paid regardless of the lender you choose. If some lenders don’t quote you fees that include taxes and other unavoidable fees, don’t assume that you won’t have to pay it. It probably means that the lender who doesn’t tell you about the fee hasn’t done the research neccesary to provide accurate closing costs.
Fees such as points, document preparation fees, and loan processing fees are retained by the lender and are used to provide you with the lowest rates possible.
This is the category of fees that you should compare very closely from lender to lender before making a decision.
You may be asked to prepay some items at closing that will actually be due in the future. These fees are sometimes referred to as prepaid items.
One of the most common required advancers is called “per diem interest” or “interest due at closing.” All of our mortgages have payment due dates of the 1st of the month. If your loan is closed any day other than the first of the month, you’ll pay interest from the date of closing through the end of the month.
If an escrow or impound account will be established, you will need to make an initial deposit into the escrow account at closing so that sufficient funds are available to pay the bills when they become due.
If your loan requres mortgage insurance, up to two months of the mortgage insurance will be collected at closing. Whether or not you must purchase mortage insurance depends on the size of the down payment you make.
If your loan is a purchase, you’ll also need to pay for your first year’s homeowner’s insurance premium prior to closing. We consider this to e a required advance.
What is an adjustable rate mortgage?
An adjustable rate mortgage, or an “ARM” as they are commonly called, is a loan type that offers a lower initial interest rate than most fixed rate loans. The trade off is that the interest rate can change periodically, usually in relation to an index, and the monthly payment will go up or down accordingly.
Against the advantage of the lower payment at the beginning of the loan, you should weigh the risk that an increase in interest rates would lead to higher monthly payments in the future.
For many people in a variety of situations, an ARM is the right mortgage choice, particularly if your income is likely to increase in the future or if you only plan on being in the home for three to five years.
What is mortgage insurance and when is it required?
First of all, let’s make sure we mean the same thing when we discuss “mortgage insurance.” Mortgage insurance should not be confused with mortgage life insurance, which is designed to pay off a mortgage in the event of a borrower’s death. Mortgage insurance makes it possible for you to buy a home with less than a 20% down payment by protecting the lender against the additional risk associated with low down payment lending. Low down payment mortgages are becoming more and more popular, and by purchasing mortgage insurance, lenders are more comfortable with down payments as low as 3–5% of the home’s value. It also provides you with the ability to by a more expensive home than might be possible if a 20% down payment were required.
The mortgage insurance premium is based on loan to value ratio, type of loan, and amount coverage required by the lender. Usually, the premium is included in your monthly payment and one to two months of the premium is collected as a required advance at closing.
It may be possible to cancel private mortgage insurance at some point, such as when your loan balance is reduced to a certain amount (below 75–80% of the property value). Recent Federal legislation requires automatic termination of mortgage insurance for many borrowers when their loan balance has been amortized down to 78% or the original property value.
What is the Rate Lock policy?
The interest rate market is subject to movements without advance notice. Locking in a rate protects you from the time your lock is confirmed to the day that your lock period expires.
A lock is an agreement by the borrower and the lender that specifies the number of days for which a loan’s interest rate and points are guaranteed. Should the interest rate rise during that period, we are obligated to honor the committed rate. Should the interest rate fall during that period, the borrower must honor the lock.
When Can I Lock?
Online rate locks are not available. Please contact us at 1–888-499-FIRE to discuss your rate lock options.
We do not charge a fee for locking your interest rate.
We currently offer a 60 day lock-in period on our site. This means your loan must close and disburse within this number of days from the day your lock is confirmed by us.
Once we accept your lock, your loan is committed into a secondary market transaction. Therefore, we are not able to renegotiate lock committments.
What is title insurance and why do I need it?
If you’ve ever purchased a home before, you may be familiar with the benefit:s and terms of title insurance. But if this is your first home loan or you are refinancing, you may be wondering why you need another insurance policy.
The answer is simple: the purchase of a home is most likely one of the most expensive and important purchases you will ever make. You, and especially your mortgage lender, want to make sure your property is indeed yours. That no individual government entity has any right, lien, claim, or encumberance on your property.
The function of a title insurance company is to make sure your rights and interests to the property are clear, that transfer of the title takes place efficiently and correctly, and that your interests as a homebuyer are fully protected.
Title insurance companies provide services to buyers, sellers, real estate developers, builders, mortgage lenders, and others who have an interest in real estate transfer. Title companies typically issue two types of title policies:
- Owner’s policy that covers you, the homebuyer
- Lender’s policy that covers the lending institution over the life of the loan.
Both types of policies are issued at the time of closing for a one-time premium, if the loan is a purchase. If you are refinancing your home, you probably already have an owner’s policy that was issued when you purchased the property, so we’ll only require that a lender’s policy be issued.
Before issuing a policy, the title company performs an in-depth search of the public records to determine if anyone other than you has an interest in the property. The search may be performed by title company personnel using either public records or, more likely, the information contained in the company’s own title plant.
After a thorough examination of the records, any title problems are usually found and can be cleared up prior to your purchase of the property. Once a title policy is issued, if any claim covered under your policy is ever filed against your property, the title company will pay the legal fees involved in the defense of your rights. They are also responsible to cover losses arising from a valid claim. This protection remains in effect as long as you or your heirs own the property.
The fact that title companies try to eliminate risks before they develop makes the title insurance significantly different from other types of insurance. Most forms of insurance assume risks by providing financial protection through a pooling of risks for losses arising from an unforeseen future event, say a fire, accident, or theft. On the other hand, the purpose of title insurance is to eliminate risks and prevent losses caused by defects in title that may have happened in the past.
This risk elimination has benefits to both the homebuyer and the title company. It minimizes the chances that adverse claims might be raised, thereby reducing the number of claims that have to be defended or satisfied. This keeps costs down for the title company and premiums low for the homebuyer.
When can I lock in my interest rate and points?
You can lock in your interest rate and points as soon as your loan is approved and you pay the application deposit to cover the cost of your appraisal and final credit report.
The application deposit is not another fee, it’s actually just the appraisal cost estimate and will be credited to the actual appraisal cost at your closing.
If you complete your application today, and your request is approved online, you’ll have the opportunity to pay the application deposit via credit card and can lock in your rate immediately.
If we need to review your information before providing your loan approval, a Loan Officer will contact you and you’ll have the opportunity to lock your rate and fees then.