The Leesmann Mortgage Team does not charge any up-front fees at the time of application. Our fees are collected at the time the loan closes.
The only fee we require to be paid is if an appraisal has been completed without the loan closing. Our appraisers are independent third parties, and therefore, are required to be paid regardless of loan status.
All lenders are required by the Real Estate Settlement and Procedures Act (RESPA) to show the rate which will be charged on the note signed at closing, including the total cost to obtain the loan.
This includes, but is not limited to, the total interest paid over the life of the loan, assuming the full term is carried out at the note rate, plus certain closing costs. Closing costs could include prepaid interest, Private Mortgage Insurance/FHA Mortgage Insurance Premium or VA Funding Fee, whichever may be applicable, and various miscellaneous costs such as an underwriting fee, tax service fee, etc., as may be charged by the lender.
All of these finance charges are taken into consideration when calculating the APR to give a more accurate picture of the total cost of the loan.
Mortgage insurance was created to allow consumers to purchase a home without a large down payment.
Many home buyers do not have savings or reserves that are equal to 20% of the value of the home the wish to purchase. Mortgage insurance assumes the lenders risk on the loan amount above 80% of the home value.
Lenders are most wanting protection against decreases in the housing values and to assure that they could sell the property quickly, while still recouping their loan amount in the event of default or foreclosure. This insurance has a cost associated with it, which is your monthly PMI or MI payment that is included in your mortgage payment if your loan requires PMI or MI.
Mortgage insurance has served its purpose by providing more people the ability to purchase homes at low interest rates by decreasing the risk to lenders.
When you choose to lock-in your interest rate, you are guaranteed that rate through the expiration date. Rates can be locked on a 15, 30, 45 or 60 term. The longer the lock is guaranteed, the more risk the lender takes and therefore the higher your rate.
The benefit is the security of knowing the interest rate is locked in if interest rates should increase. The down side is if interest rates fall, you are locked in at the higher interest rate.
When floating the interest rate, you take the risk of interest rates increasing before you lock-in. The benefit, however, is if interest rates go down, you would have the option of a lower interest rate than if you had locked in previously.
The decision of whether to lock-in or not is a personal choice. We can give you advice, but ultimately it is your decision on the amount of risk you are willing to take.
Please visit our loan checklist for a general list of items needed. Additional documentation may be requested once your loan has been reviewed by a member of our team.
FIXED RATE MORTGAGES
These programs are typically either on a 15 year or 30 year amortization or repayment schedule. These programs provide the most security in the sense that the required monthly principal and interest payments will not change for the life of the loan. This is because the interest rate is fixed for the entire life of the loan, thus it is called a 15 or 30 year fixed program.
ADJUSTABLE RATE MORTGAGES (ARMS)
All of our ARM programs are based on a 30 year amortization or repayment schedule. These loans are referred to as adjustable rate mortgages (ARM’s), because the interest rate will change or adjust on a predetermined schedule.
ARM’s have an initial fixed period that the interest rate will not change or adjust. After this initial period the interest rate will change or adjust based on a market index plus a margin.
The market index for ARMS may be an average one year treasury bill index as published in the Wall Street Journal. The margin is predetermined and is typically between 2.75% and 3%. So, if the one year treasury bill index is 5.5% and your margin is 2.75% on the date of your first adjustment, your new rate would be 8.25%.
There are limits to how much your interest rate can adjust in any given adjustment and over the life of your loan. A periodic rate cap, would limit the amount of any single adjustment and a lifetime rate cap limits the cumulative amount of any adjustments over the life of the loan.
Yes. In recent years, mortgage guidelines have been tightened. A pre-approval uncovers potential pitfalls and provides you with a price range that’s best for you. You’ll know how much cash is needed to close, and your maximum monthly payment.
Understanding these limits will help you and your Realtor determine the best homes for you to view. Having a pre-approval letter from us will also give the sellers confidence in your offer, knowing you are a serious homebuyer.