THE BEST LOCAL MORTGAGE.COM
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IMPORTANT MORTGAGE TERMINOLOGY:
Fixed Rate Mortgage: A mortgage that has no adjustment periods and has terms of 10, 15, 20, 30 or 40 years. The safest loans to obtain.
ARM: Adjustable Rate Mortgage. Loan is fixed for 2. 3. 5. 7 or 10 years and then adjusts every 6 to 12 months after that.
Interest Only Loan: This is a loan which only requires you to pay the monthly interest payments. Principal payments are not required.
Pre-payment Penalty (PP): A period in which the mortgage holder will be penalized if they refinance their mortgage and in some cases sell their home. PP range from 1% to 6% of the mortgage balance. Pre-payment periods range from 1 to 7 years.
Debt To Income Ratio (DTI): This ratio is shown as a percentage. This
is the total amount of outgoing cash for all creditors including any mortgages divided by your monthly income.
Loan To Value (LTV): This figure is
shown as a percentage. The LTV is the amount of money being borrowed against the value of the home. Example: If you are borrowing $80,000 against a $100,000 home your LTV would be 80%.
Good Faith Estimate (GFE): This is a
form that breaks down every cost involved with performing your loan. Most lenders, banks and mortgage brokers will provide you with one as
they are trying to obtain your business.
THINGS TO WATCH OUT FOR:
Option ARM's: Also called; Flex-Pay,
Option Mortgage, Mortgage Select,
Flex Option Mortgage and many other names. Basically any mortgage that allows you to select from 3 or 4 different mortgage payments on a monthly basis. If you pay the minimum payment you will be deferring interest otherwise Known as a neg-am loan (Negatively Amortizing Loan). They will offer a teaser rate of 1% to 3.5% for the minimum payment. If you pay this amount every month your mortgage balance actually goes up. It is an extremely Volatile loan and can adjust on a monthly basis.
Pre-payment Penalty (PP): Sometimes it is OK to have a PP on your mortgage. If you are a sub-prime borrower and the only loans available to you have a PP you might need to accept it or not refinance/purchase at all. Be smart, try to get the term of the PP as short as possible and shop around for the shortest PP term.
Up Front Fee: See the column to the right. This is a fee that the lender states they need to lock your loan and rate and to proceed forward. There are a ton of mortgage brokers who would never charge you an upfront fee. These fees range from $400 to $1,100 and in many cases you will never get it back. NEVER PAY AN UP FRONT FEE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Many times a lender or bank will promise you the world, the rate you want and the loan you want if you just give them $400 to $1,100 to secure the deal.
Some will say it is refundable but in most cases you are speaking with a telemarketer and you will not get your money back. Go to the "Ripoff Report.com" and see how many people have been suckered in to this. It is outrageous that this is still going on.
They will charge you this fee and then blame your credit or your scenario for the loan not going through and in many cases not refund the money.
Simply "walk away" from the deal. There are 50 other "mortgage brokers" in your local area that would love to have your business and not require a deposit.
Also, all mortgage brokers contracted with The Best Local Mortgage.com are restricted from charging "up-front fees". Please report any violations to us immediately.
It is your home, your money, your investment. Never let yourself get bullied or pushed around by an aggressive salesperson.
No matter how desperate your situation may seem, don't move forward on your loan unless you are sure there are no other options.
If possible, try to work with a mortgage broker in your local area or in your state. They should understand the values of the homes, the current market conditions, loans that might only apply to your state and have many loans options available.
REGARDLESS OF YOUR CREDIT SCORE...YOU DESERVE TO BE TREATED FAIRLY!!!!!!!!!!!!!!
