Residential Loans

Your Mortgage Questions Answered

Do you know which mortgage questions to ask? Do you know what to expect? If you have questions about the home-buying process, you’ll find all the information about home loans you need here. Trimax designed this Information Center specifically to address your home loan questions and help you through the process of:

  • Buying a home and moving.
  • Obtaining financing for your home, whether you’re purchasing or refinancing.
  • Qualifying for a loan.

Plus, we’ve included some tips to help you along the way.

What is a conventional mortgage?

A conventional mortgage is one in which the underlying terms and conditions meet the funding criteria of Fannie Mae and Freddie Mac — meaning Fannie Mae or Freddie Mac guarantees or purchases the mortgage. In most cases, about 35% to 50% of mortgages are conventional mortgages. Conventional loans are not insured or guaranteed by the Federal Housing Administration (FHA) or the Veterans Administration (VA).

In comparison, other available loans may be insured by FHA or guaranteed by VA or the Rural Housing Service. These are often called government loans.

What is a mortgage rate?

A mortgage rate is the cost (interest rate) you pay to borrow the money to buy your home. The two most common mortgage rates are the fixed-rate and the adjustable-rate mortgage.

Home Buying Tips

The number one tip for you as a homebuyer is to ask questions until you understand. This rule applies whether you’re shopping for your first home loan, exploring refinancing options or seeking to leverage the equity you have built up in your current home.

General Do’s and Dont’s

  • Find the best home and home loan that you can comfortably afford — The rule-of-thumb is that your mortgage payment should be approximately 30% (or less) of your income and your total monthly payments (including mortgage payment) 40-45% of your income.
  • Pay off small debts — Several credit cards with small balances may seem insignificant, but imagine if those balances were $0.
  • Be budget conscious — Once you tidy up your finances to qualify for your loan, keep them that way. A budget that allows for savings pays big rewards.
  • Be prepared for closing costs — In addition to your down payment, you’ll need funds to cover the closing costs. For purchases, they’re paid in cash and can’t be borrowed funds.
  • Compare apples to apples — When you compare loan programs, be sure that you’re comparing equal terms, down payments and loan types.
  • Prove you’re a qualified buyer — Get pre-approved. You’ll know what you can afford and you’ll demonstrate to buyers that you’re qualified. If you are interested in a pre-qualifying, take a look at our online application.
  • Do the up-front work — Your offer, once accepted, is a contract to purchase. Know exactly what you need from a house and what you’re prepared to pay for it.
  • Always get a home inspection — Your choice to avoid paying the cost of a home inspection, or choosing an inspector with limited experience can prove to be expensive – even catastrophic – if you fail to identify hidden problems in the property prior to purchase.

Should You refinance?

Refinancing means paying off your current home loan with a new home loan. There are a variety of reasons to consider refinancing:

  1. To cut costs — If you’ve found a lower mortgage rate, there’s a good chance that you can lower your monthly payment and save thousands of dollars over the term of the new loan.
  2. To access cash — By taking out a new home loan based on your home’s current value — replacing the old home loan with a new one in the same amount — you may have cash available for a new business venture, a college education, home improvements or an around-the-world cruise.
  3. To restructure your finances — You may want to convert an adjustable-rate home loan to a more predictable fixed-rate loan; or if you have a short-term balloon home loan that is due, you might replace it with long-term financing.

Call a Home Loan Advisor today for a free refinance evaluation to learn how much you can save.

Refinance Tips

The One Percent Rule — It was once considered essential that there be at least a 1% point difference between your present home loan’s interest rate and the new loan’s rate in order to make refinancing worthwhile. However, with the variety of different loan programs available today, you can still cut costs with a smaller percentage difference — it will simply take a little longer.

Converting an ARM to a fixed-rate loan — Some adjustable-rate mortgages can be converted to fixed-rate mortgages for a fee during a specified window of opportunity — from the 13th to the 60th month, for example. This method can sometimes be less expensive, and less bothersome, than refinancing. But compare the rate of converting with current fixed-rate loans; you could benefit from a new loan.

Remember it’s an investment — Before you cash-out the equity you’re accumulating in your home for what seems to be a worthwhile expenditure, consider that your property can be transformed into retirement income someday or that a more pressing need could arise.

We’d be happy to help you evaluate all your options — Speak to a Trimax Loan Advisor at (310) 954-0808.

Recommended Reading

  • I Want to Buy a House, Now What?
    By Chris Sandlund
  • Mortgages for Dummies
    By Eric Tyson and Ray Brown
  • All About Mortgages – Insider Tips to Finance or Refinance Your Home
    By Julie Garton-Good

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