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HOW CAN I ENSURE TIMELY CLOSING?
HOW IS MY CREDIT SCORE DETERMINED?
WHAT CAN I DO ABOUT MY CREDIT?
WHAT DO I NEED TO KNOW ABOUT RATES?
WHAT DOES RATE LOCK MEAN?
HOW CAN I BUY DOWN "POINTS" FOR A BETTER RATE?
WHAT SHOULD I DO ABOUT FINANCING CLOSING COSTS?
WHAT ELSE CAN I DO TO GET A LOWER RATE?
WHAT DIFFERENT KINDS OF RATES ARE THERE?
WHAT IS A GOOD FAITH ESTIMATE?
HOW COME I SEE SOME ADVERTISEMENTS FOR INTEREST RATES FOLLOWED BY THE A.P.R.?
Complete the application entirely. Be sure not to omit or alter any amounts, such as credit card payments, etc. Any missing information could cause a delay.
If you are refinancing an existing home, be available for the appraiser to inspect the home.
While you income will show what you can afford to buy, your credit score shows your willingness to repay loans in a timely manner. That is why it is so important to make payments on time. Lenders look at your credit score to see how prompt you are at making loan payments.
Most credit scores of the traditional FICO type fall between 350 and 850. The higher your score the lower the risk to the lender. Credit scores are based only on the information in your credit profile, such as past delinquencies, derogatory payment behavior (late payments, etc.), current debt level, length of credit history, types of credit and number of inquiries.
Making late payments or applying for many cards without the ability to repay them will lower your score. Limiting your credit card transactions, maintaining a good payment history and having loans or cards for long periods of time help your score.
When considering how to score your account the breakdown is typically based:
Obtain your report free of charge each year from the major credit bureaus. You can then review your credit so you can make wise decisions about applying for new cards, etc. If there are inaccuracies about late payments, you need to dispute those in writing. You may have to supply evidence, such as cancelled checks or postal receipts to support your claim.
Rates constantly change. The rate you can obtain all depends on your individual financial situation. Some brokers may state you can get a low rate up front, then discover that due to a lower than average credit score or lower income and higher debt ratio, you cannot.
BBC wants to speak with you first. Once we understand your situation we can quote you a more accurate rate. While rate "shopping" is attractive to consumers, it is mostly a meaningless exercise since everyone's financial condition is different. Factors like owning rentals, retirement age, poor credit or limited down payment availability will affect what rate you can obtain. So before you bother shopping, make sure you are comparing apples with apples. BBC will determine what kind of loan you can get based on your finances AND give you the best rate for that loan. Other brokers may entice you in with great rates only to disappoint you with MUCH higher rates once they realize you can't qualify for their standard criteria.
When BBC states your rate is "locked", that simply means you can expect a particular interest rate to be available while we process your loan application. That way you know your rate will be the same at the end when we are ready to close. If there are delays in processing your loan because you did not supply documents, or the ones you supplied show different numbers than you stated in writing, then this period can expire. The best way to avoid losing a great rate is to quickly respond to all requests.
A point is equal to one percent of the loan amount. Not everyone can or should do pay down points. While popular, BBC recommends looking at your finances first.
If you have the ability to put more money in the down payment, then you can usually get a lower rate for the loan. That is because the lender recognizes you have immediate equity (ownership portion) in the house. They have lower risk in writing the loan so they are willing to give you a lower rate. It does not always make financial sense to do this however. For some people it is better to keep the money in reserve. There are also limits to the effect of a greater down payment. Taking several thousand dollars more to pay down a quarter point or so may not be advisable. But it could be necessary to qualify for a better loan program. This kind of balancing is considered when BBC speaks directly with you. We will make recommendations to get your best financing options.
Closing costs cover a wide range of fees, such as title examination, and document stamps, either required by law or to protect the lender's interest in the property. Some are paid by the seller and some by the buyer (inspections for example). We have to make sure that the property you are buying has no outstanding liens or problems.
BBC always looks at your individual situation. If you can finance closing costs without greatly affecting the rate or terms of the loan then we will offer you this option. If not, then we will recommend paying the closing costs when the loan closes.
Since the interest rate offered to you depends on your credit score and your income-to-debt ratio, the best way to be prepared and get a lower rate is to maintain low debt, good credit, and earn greater income. This makes you a good risk for loaning money. Some people will take a second job or have a spouse return to work in order to show greater earnings. Start now if you plan to apply for a home in the future.
If you plan on staying in your new home for some time, then a fixed-rate loan can give you peace of mind. Consumers know their monthly payment up front, and it is unlikely to change much. The loan payment stays the same. Your property taxes, homeowner's insurance and other items unrelated to the loan may increase over the life of the loan.
But overall, the payment will be stable. As the years go by, more of your payment is dedicated to the principal versus the interest. You will begin to build equity in your home. People who have Adjustable Rate Mortgages now may want to switch over to the fixed-rate loan. Especially if the find they are not going to move after all.
BBC has a wide range of fixed-rate loans available. CALL BBC to find out your options.
Adjustable Rate Mortgages (ARMs):
There are so many types of adjustable mortgages, designed to help homebuyers reach certain income/debt thresholds, that BBC recommends you CALL US to review your options. Most loans of this type have a cap that protects your monthly payment from going up too quickly. There may be a cap on the interest, i.e. no more than two percent in a year, even if the lender index rises faster than that. Or they can have a lifetime cap, or even a payment cap.
All ARMs are created to give you the most attractive rate at the beginning of the loan. Some of the ARMs BBC offers adjust annually, some only adjust after the first three or five years. This is convenient for homebuyers who know they will want to move in the five year period. That way they can buy the house they want now, at a great rate, then when they move and sell the home they have avoided the rate adjustment. Did you know that many people in the U.S. move on the average of every five years? Even if you don't move, you might be in a better financial position to refinance your loan at a lower rate later. Keep your credit good and work on saving money so you can invest it in your home later.
All homebuyers will get a "Good Faith Estimate" of closing costs from BBC at the time the loan application is submitted. This is purely an estimate and reflects our loan officer's past experience. It may not include all the closing costs but gives you a good idea of what to expect.
Typical closing costs include, but are not limited to:
If there are other costs associated with the loan you are offered, BBC will make every effort to detail these in the statement we provide.
When you see an interest rate you can easily compare the actual Annual Percentage Rate (A.P.R.) for the loan by the way it is calculated. An interest rate might look attractive, but it is the APR which reveals what you will be charged on the loan. Many brokers and banks will hide additional fees in the loan outside the rate they are charging. This ends up costing many consumers more when you use the actual A.P.R. to calculate your payments. Always ask for the additional fees up front. Then there won't be any surprises. A.P.R.s are general calculation and don't take into account all facets of the loan.
Again, it is best for you to CALL BBC so we can review your finances. Just because you received a great rate from a broker doesn't mean it is right for you. Without direct knowledge of your individual financial situation we cannot give you an accurate idea of your qualifications for a particular rate. Often BBC can get you a lower monthly payment. And that is what is important.
Whether you take cash out of your loan to pay off higher rate credit cards, eliminate other debts, or pay out some of your closing costs, refinancing when you have equity in your home makes sense.
Many homeowners have learned how to take advantage of this period of lower rates by refinancing. They have restructured their debt and improved their credit in the process. Depending on your individual situation BBC can help you calculate what type of loan would be most attractive and what debts to eliminate.
Refinancing costs depend on the type of loan and the inherent costs. Normal expenses include settlement fees, an appraisal, title insurance and items like you paid at your first closing.
The costs of refinancing, including the lower interest deduction you will earn on your taxes, must be balanced against the advantage of a lower payment. BBC can help you calculate the pros and cons of refinancing. Simply CALL BBC today to get started.
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