Should I Use a Mortgage Broker or Go to My Local Bank?

Mortgage Brokers do not get pay until they deliver a loan that’s acceptable to you. We, C2 Financial Corporation, are set up with over 100 lenders, and hundreds of loan programs. One of our jobs is to place your loan to the appropriate lender. As lenders fight for your business, you benefit from better pricing and better services. Do you want to work with one bank and be restricted to that bank’s loan programs or with us with over a hundred lenders? Our compensations are lender-paid so you don’t have to bring in extra money; however, you can choose to pay our fee.

How to Improve My Credit Score?

We are not a credit repairs company, but we work with the credit reporting company and we have many ways to help you improve your credit score through awareness and/or using our credit company proprietary software to help increase your credit if needed. Please contact our Loan Officer for a free consultation for a better interest rate.

1. Do I Need Great Credit to Get a Mortgage?

No, we work with everyone to help them achieve home-ownership. We may say yes when others say no. we have signed up with over a hundred lenders, and hundreds of loan programs so we are confident that we can place your loan to the appropriate lender. If we can’t, we will help direct you to take the proper steps toward home-ownership.

2. How Much of a Down Payment Do I Need?

The short answer is that you can get a conventional mortgage with as little as 3% down, an FHA loan with 3.5% down, and a VA or USDA loan with no money down at all. However, with a conventional or FHA loan, you’ll have to pay private mortgage insurance, aka PMI, if your down payment is less than 20% of the home’s sale price. (Those payments won’t be a permanent fixture in your monthly payments, however. Once the loan-to-value ratio on your mortgage falls to 80%, you can ask your lender to drop them. And even without your request, lenders are required to cancel PMI when the loan-to-value ratio drops to 78%.)

3. What Not to Do During Your Home Loan Purchase or Refinancing.

Here are 10 things you should avoid doing before closing your mortgage loan. DO NOT:

1. Buy a big-ticket item: a car, a boat, an expensive piece of furniture
2. Quit or switch your job
3. Open or close any lines of credit or payoff bills without notifying your loan officer first.
4. Pay bills late
5. Ignore questions from your lender or broker
6. Let someone run a credit check on you
7. Make large deposits to your accounts outside of your paycheck
8. Cosign a loan with anyone
9. Change bank accounts or transfer your money between accounts
10. Do not double apply, apply at two or more locations.

4. What are Some Typical Closing Cost?

1. Loan origination fee or broker’s fee
2. Lender’s Underwriting fee
3. Appraisal Fee (P.O.C)
4. Wire transfer fee
5. Credit report (P.O.C)
6. Tax service fee
7. Flood certification fee
8. Escrow fee
9. Title insurance
10. Recording fee.

The appraisal fee and the credit report fee are paid outside of closing (POC), you paid for them first. Lender can help pay for part or all of your closing fee. Ask me how.

5. What are Closing Costs, and How Much Should I Expect them to Be?

The closing cost is the cost to secure your loans. Some costs will be included in the annual percentage rate calculation, and others are not. It’s based on the nature of those costs. When you work with us, we will provide you with a fee worksheet and loan estimate to break down all the costs and fees.

6. Should I Choose a Fixed-Rate or an Adjustable-Rate Mortgage?

When interest rates are historically low, like they are now, a fixed-rate mortgage makes good financial sense. Not surprisingly, the vast majority of mortgages we originated today are fixed-rate.

That said, while a fixed-rate mortgage is the best choice for the majority of homebuyers, there are some circumstances where an ARM may be better. For example, if you expect to sell the house before the fixed-interest period ends and the rate starts to float, an ARM could end up saving you thousands of dollars. Or, during periods of falling interest rates, an ARM can allow you to get a low initial rate, and will save you money later if rates drop further.

7. Should I “Lock” My Interest Rate?

A rate lock means that the lender has agreed to do business with you at that interest rate for some predetermined period, typically 15 to 60 days depending on your rate lock period. This does not mean your loan is approved. Your loan still must have to meet lender’s guidelines. Please discuss with your loan officer.

8. What Type of Mortgage is Best for Me?

There are several different types of mortgages to choose from. A conventional mortgage is tougher to qualify for credit-wise, but an FHA loan can be costlier. If you’re a veteran, a VA loan could be the best option for you, and if you plan to buy a home in a rural area, a USDA mortgage could give you a no-money-down option. Talk to our loan officer to help you choose the right mortgage for you. Its FREE!

9. What are Discount Points, and Should I Pay them?

Discount points are money that you pay upfront on your mortgage in exchange for a lower interest rate. One “point” is equal to 1% of the loan amount, so on a $200,000 mortgage, one discount point would be $2,000. Discount points are likely tax-deductible, and mathematically, if the interest savings over the life of the loan is greater than the

points paid, it can be worth it. A mortgage calculator can help you determine whether discount points are a good idea by comparing the effect of various interest rates on your mortgage. Again talk to our loan officer as it depends on your specific situation.

10. Should I Get a 15-Year or 30-Year Term Loan?

This depends on how much you want to stretch your budget. If you can afford the higher monthly payments, a 15-year mortgage usually comes with a better interest rate than a 30-year version. Not only will you pay off the house quicker, but you can save a tremendous amount of interest. On the other hand, a 30-year mortgage will cost less per month, allowing you to afford a bigger or nicer house, or one in a better location.

11. What Documentation Should I Gather?

Your lender may ask for many different items, but in general, be prepared to show all of the following:

• Income verification (Last two years’ tax returns, W-2s, 1099s, and your last few pay stubs)
• Drivers’ license and Social Security card (or alternative ID)
• Bank statements
• Proof of funds to close
• If some or all of your down payment is coming from a gift, you will need gift letter from the source of the funds that confirm they are gift, not a loan.

12. What is a Pre-Qualification?

A pre-qualification is a basic review of your finances to determine if you would qualify for a mortgage. In general, a pre-qualification is based on unverified information you provide and does not include a credit check or any documentation, and is therefore not a firm guarantee of a loan.

13. What is a Pre-Approval?

Unlike a pre-qualification, a pre-approval can be a highly useful tool in the homebuying process. It’s essentially the same thing as applying for a mortgage, just without a specific home attached to it. As part of a pre-approval, a lender will check your credit, verify your income and employment, and commit to lending a certain amount of money. A pre-approval can show sellers that you’re serious about buying a home, and that you’re likely to be able to follow through on a bid, and close on their property.

14. What is an Escrow Account?

When you obtain a mortgage, you’ll probably be asked to put money into an escrow account to guarantee the lender that the ongoing expenses of owning the property will be handled — specifically taxes and insurance. You’ll pay a lump sum into the escrow account at closing (also known as your “prepaids”), and add to it further with each of your monthly mortgage payments

15. Why Does it Take so Long to Close a Mortgage?

Mortgages tend to take at least 30 days to originate, and many first-timers don’t expect this much of a waiting period. The short answer is that a lot of things need to happen between you submitting your mortgage application and you taking ownership of your home.

Just to name a few: You’ll need to gather documentation for your lender (and they’ll always come back and ask for more, believe me); you’ll want to schedule and complete a home inspection; the seller may need time to complete repairs; and the loan needs to make its way through underwriting. It’s a lengthy process. However, with us, we may be able to close your loan within 3 weeks and sometimes sooner. That’s how we make a difference!

16. How is My Mortgage Payment Determined?

Depending on your situation, there are typically three or four parts of your mortgage payment:

• • Principal: Repayment of your outstanding balance.
  • Interest: Payment of the interest charged on the outstanding balance.
  • Taxes: See question 12. One-twelfth of your expected annual property taxes will be included in your mortgage payment, and deposited into your escrow account.
  • Insurance: This includes homeowner’s insurance, as well as any other hazard insurances you’re required to have, such as flood or windstorm. If you put less than 20% down on your loan, this can also include private mortgage insurance.

Based on these four items, your mortgage payments are sometimes referred to as PITI.

17. Will My Monthly Payments Change During the Loan Term?

Probably. Even with a fixed-rate loan, your payment is likely to change over time. The reason? Your property taxes and insurance expenses, upon which the escrow portion of your payment is based, tend to fluctuate. If they rise, it may be necessary for your lender to ask for a higher escrow payment.