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Common Homeowner's Mortgage Questions Answered
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If you are in the market to buy a home or already have a mortgage, homeowner's mortgage questions are always circling around your mind. We asked a Realtor/Sr. Loan Officer, Valerie Albano from Viola & Associates, Realtors and AM Funding in Los Angeles, California some of the common questions people have about mortgages.
Q. In terms of a first-time buyer, what would you say is the most common mistake they do when shopping around for a mortgage loan?
A. In my experience, they usually shop for estimates one day, then they compare it to estimates they gathered from a later date. This is like comparing apples to oranges, instead of apples to apples. Rates differ from month-to-month and sometimes day-to-day; so comparing these estimates are a waste of time. Also, remember to get a good faith estimate. This will show you your interest rate for that day and how much you pay for that interest rate and all the other fees involved in the loan.
Q. If you already have a mortgage, when should you start thinking about refinancing?
A. There are a couple of ways to know when to refinance: when you know your adjustable rate is about to adjust, when interest rates are getting lower and when you want to cash out to pay off debts or remodel your home.
Q. Is it better to refinance or open a second mortgage?
A. This all depends on the interest rate. I would get a quote for a second mortgage and for refinancing. For the refinance, the costs will usually be more than simply getting a second mortgage. And for the second mortgage, there are choices for fixed or adjustable rates.
Q. When you decide to refinance, do you have to stay with the same company that gave you the original loan or can you shop around?
A. You can definitely shop around for the best rates at the lowest costs. You can also call your same company and get an estimate from them. If they do it, this is what you call a streamline loan -- your costs might be a bit lower.
Q. What do you suggest is the best refinancing plan for the majority of homeowners?
A. First, you need to look at the individual's debt situation. If you get a cash out refinance to pay off your debts, then that refinance should result in a lower monthly payment. This will save you money than having to pay off each credit card or debt individually. Another scenario is if you plan to purchase anything big, like a car, boat, remodel your home, and instead of using a credit card, you decide on a cash out refinance. This would be a better decision because you'll be able to get a write off of your purchase.
Q. In your experience, what mistake do homeowner's tend to do when deciding to refinance?
A. They refinance into something they are not familiar with, such as getting a pay option plan or an adjustable rate. Just make sure you ask your loan broker to explain the program you are interested in. I usually prepare a spreadsheet showing the various programs. Most people understand numbers better than percentages. This way they see everything in dollar form.
Before you commit to anything, take the time to do your research and educate yourself with what is being offered. The more information you have, the better prepared you are to obtain the perfect loan. |
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