What is the difference between an Interest Rate & an Annual Percentage Rate?
Your interest rate is the “Promissory Note Rate” which is reflected as the monthly borrowing cost you pay on the unpaid balance of your home loan. While similar, an Annual Percentage Rate (APR) reflects both your interest rate and the timing and effects of any certain additional costs or prepaid finance charges such as the origination fee, points, private mortgage insurance, underwriting and processing fees. (Your loan may not include all of the items above.)
While your interest rate is the rate reflected on your Promissory Note, the APR is a universal measurement that can assist you in comparing the differing costs of mortgage loans offered by different mortgage lenders.
What are “pre-payment penalties” and why would I have to pay them?
A pre-payment penalty is a fee charged to the borrower for paying off their mortgage early. A pre-payment penalty is often attached to a loan in exchange for a slightly lower rate. Pre-payment penalties can benefit lenders by, among other things, discouraging refinancing if rates fall.
We recommend you think twice before agreeing to mortgage containing a pre-payment penalty. No matter how enticing a lower rate or other terms may be, in the long run you may very well be better off paying the higher rate. Why? Because if you refinance or move during the pre-payment penalty period, such fees can be steep. It is Omniscient Real Estate Finance policy to not make mortgage loans that carry a pre-payment penalty.
Are Omniscients Loan Officers licensed?
Yes. Omniscient Real Estate Finance requires every loan officer and home buying specialist to be state and “SAFE Act” licensed and registered and has established measures to ensure that all personnel meet applicable state and federal licensing requirements as they are signed into law. Omniscient is committed to staying at the forefront of federally and state mandated changes that affect how lenders conduct business. We are able to adapt quickly to new requirements to ensure we are 100% compliant with lending requirements. We are highly supportive of our government’s efforts to protect consumers and reduce fraud in the mortgage industry and we are doing our part to put transparency back into lending.
Should I refinance?
To determine whether or not it is a good idea for you to refinance, you should look at your specific situation and your motivation for refinancing. The most common reasons to refinance are to reduce your rate and/or payment, convert from an adjustable to a fixed rate, or take cash out of your equity to payoff or consolidate debt or improve your home. If your objective is to reduce your rate and payment, you should review your current interest rate and see how much you can save with a zero point loan and then determine if it makes sense to pay points to reduce your rate further. If you are converting your adjustable rate into a fixed rate, you may actually see an increase in your rate and payment, but you’ll have peace of mind knowing your rate can never increase again. Though “cash out refinancing” requirements are more strict than they used to be, if you qualify to use the equity in your home to pay off or consolidate debt, your mortgage loan balance and monthly payment may go up, but you can save monthly because you will eliminate the other monthly obligations that you are paying off. Contact an Omniscient Real Estate Finance Professional who can help you determine whether or not refinancing makes sense for you.
What if I have a second mortgage on my home? Can I still refinance?
Typically, any second mortgages are paid off through the refinance. Omniscient will consolidate both loans into one new first mortgage and you will only have one payment each month. If you’d prefer to keep your second mortgage intact, we may be able to ask your second mortgage lender to remain in second position and allow us to refinance the first loan. This process is called subordination. Some second mortgage holders charge a fee for their subordinating their loan to a new one. Call one of our Mortgage Professionals today to see if you qualify for a refinance loan.
How much can I afford?
There are several factors that determine the home purchase price and loan amount that you can afford. For qualification purposes, lenders look at income, debt, assets (how much money you have for the down payment, closing fees, points, and other funds necessary to close your loan), as well as your credit standing and history. There are many different loan programs that offer different terms and rates, and some require lower down payments than others and offer more flexibility in dealing with your particular credit history and income. The best thing to do is to get pre-qualified so that you know what loan programs you qualify for, the price range you can afford, and what your monthly payments might be. Omniscient will pre-qualify you at no cost.
How much of a down payment will I need to buy a home?
Traditional conventional financing requires a down payment of 10% to 20% of the purchase price of the home. However, there are other loans available such as our FHA Program that allow you to buy a home with as little as 3.5% down payment. In addition to the down payment, you should be aware that there may be other costs and fees associated with purchasing a home. For example, there are closing fees, pre-paid interest, and paying items such as property taxes and homeowner’s insurance. Call and speak with one of our Mortgage Professionals to get all the details.
Will I have to pay Private Mortgage Insurance (PMI)?
PMI is usually required for any conventional loan that exceeds 80% of the value of your home. This is a standard Fannie Mae and Freddie Mac guideline, although there are programs available that do not require PMI. Call and speak with a Mortgage Professional to discuss your options.