Breeze mortgage is committed to providing our clients with information that will help you make the best financing choice. Below are helpful
FAQ topics. If you don't find what your are looking for we invite you to give us a call.
What is an Adjustable Rate Mortgage?
An Adjustable Rate Mortgage (ARM) is a loan under which the interest rate is periodically adjusted to more closely coincide with current rates. The amounts and times of adjustment are agreed to in the Adjustable Rate Note signed by the homeowner.
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What is a Balloon Loan?
A balloon loan is usually a five or seven year loan calling for payments which are insufficient to fully amortize the amount of the loan before the maturity date. This creates a principal sum, known as a balloon payment, which is due at maturity.
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How is my new interest rate determined?
Most Adjustable Rate Mortgages require that an index be taken on a specific date, then a margin is added to the index and the result is rounded to determine the new interest rate.
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Why is my interest rate going up but my payment going down?
If you have remitted extra money in addition to your regular payment, you will have lowered your principal balance ahead of the normal amortization. At your interest rate change cycle, we will determine your new payment amount by using your current principal balance, new interest rate and remaining term. If you have remitted enough extra money, it is possible to lower your payment even though your interest rate increases.
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How do I know which type of mortgage is best for our family�s situation?
The best way to determine what is best for your particular situation is to sit down with your mortgage broker so they can explain the options available to you. Some things you may want to consider are: how long do you plan to stay in the home, current and expected income and debts, credit history, and cash available to close.
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Why shouldn�t I just go to my local bank?
Breeze Mortgage has an advantage over banks because we can offer the most competitive interest rates and a much wider variety of loan programs. At Breeze, we work with over 30 different lenders. That means we can provide greater loan flexibility for people at all credit levels, in unique funding situations with different budget needs. Your local bank offers only their �one size fits all� loan program and does not have the ability to �shop� a rate or loan program from other wholesalers.
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How much money will I need to purchase a home?
The amount of money you will need depends upon several factors. Generally speaking, you will need to supply the following:
Earnest Money � The deposit that is supplied when you make an offer on a house
Down Payment � A percentage of the cost of the home that is due at settlement (depends on the type of loan you chose)
Closing Costs � Costs that are associated with closing your loan.
Breeze Mortgage offers many types of loans that require little to no money down. Speak to one of our representatives to find out which one is right for you.
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What if I don�t have any money for a down payment?
There are programs available that offer a no down payment option and in conjunction with seller contributions, can make it so that you will not need to spend any money to buy a home. You can discuss these options with a Breeze Mortgage associate.
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How do I know how much house I can afford?
Typical mortgage requirements say that if you have an average debt load, you can obtain a mortgage between 2 and 3 times your annual income. However, it really boils down to a payment that you are comfortable with. To receive a more detailed estimate, contact one of our associates and receive a prequalification in 10 minutes or less.
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What is the difference between a fixed rate and an adjustable rate mortgage (ARM)?
Fixed rate mortgages offer an interest rate that remains constant for the life of the loan. An ARM is a loan in which the interest rate is fixed for a short period of time and then adjusts to reflect current market conditions. Ask your mortgage broker about the different types of ARMs available.
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Can the seller pay for my down payment?
No. However, there are many programs where the down payment can be a gift from a relative or non-profit organization, or be borrowed if the loan is secured by a currently owned asset. The seller can pay for the borrower�s closing costs if negotiated.
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How long do I have to wait before refinancing?
There are many factors that influence whether or not to refinance such as current interest rates, financial situations, and pre-payment penalties. Consult your Breeze Mortgage associate to find out what options are available to you.
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Some ads show surprisingly low interest rates. What�s the catch?
Typically, the ads you see are for adjustable rate mortgages(ARMs). These loans offer a low initial interest rate, sometimes for as little as a month, then adjust on a regular basis. This means that the interest rate and the amount of the monthly payment can go up or down.
If suspect that an advertised rate is too good to be true, chances are it is.
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How is an index and margin used in an ARM?
An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate you pay is a combination of the index and a pre-specified margin, which stays constant for the life of the loan.
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Is an ARM the right kind of loan for me?
This usually depends on your particular situation and the terms of the ARM. The benefit of having an ARM is lower initial interest rates but the risk is there for interest rates to increase down the road. If your only going to be in your home for short period of time (3to 7 years) then an ARM might be the way to go.
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What documents will I need to provide when applying for a loan?
With all the different type of documented loans available, it is hard to generalize the documents required for your particular situation. In some cases the documents are minimal, however be prepared to for the following list:
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What if I have credit problems?
You will need to explain the circumstances of the credit problem. If you no longer have the credit problem and have kept current with your obligations for a period of one year or more, most lenders will accept your mortgage application. Depending on the type of credit problem, your only choice may be a �sub-prime (B/C)� type of loan.
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What is a B/C or sub-prime loan?
A sub-prime loan is for borrowers with credit problems such as late payments, low credit score, or bankruptcy. This type of loan is usually a �band-aid� type of loan where the interest rate is higher than an �A� loan. Typical B/C loans include a 2/28 or 3/27 ARM and are intended to help a borrower with credit issues get back to a point where they can get into an �A� loan.
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How can I improve my credit score?
Pay your bills on time
Keep balances low on unsecured revolving debt such as credit cards
Apply for and open new credit accounts only when needed
Make sure the information on your credit report is accurate
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What are points?
Points are prepaid interest on the mortgage that is charged at the time of closing and include origination, discount, buy down, and mortgage broker fees. Each point represents 1% of the loan amount.
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What does it mean to lock-in?
When you �lock-in�, your lender will guarantee the interest rate on your mortgage for a limited period, regardless of the current market rates. This option is usually done for a fee, as it represents a risk to the lender. If you are concerned that interest rates may rise before your closing date, you may ask your mortgage broker to lock-in your rate.
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What is private mortgage insurance?
Mortgage insurance or "MI" requires a monthly insurance fee be paid to the lender. It is normally required anytime you are borrowing more that 80% of the home�s value.
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What is the meaning of PITI?
This stands for Principal, Interest, Taxes, and Insurance. The principal and interest are kept by the lending institution each month. The taxes and insurance portion of the monthly payment can be kept in an escrow account and are used to make the taxes and borrower�s homeowners insurance payment and mortgage insurance (if applicable) payment when due.
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What are escrow accounts?
Escrows are payments made by the borrower to the lender for the purpose of paying the homeowner�s taxes, insurance, and any other payment associated with the loan. Escrows are added onto the monthly payment amount the homeowner pays. This makes it easier on the borrower because it spreads the tax and insurance payments over the full year.
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What does APR stand for?
This stands for Annual Percentage Rate. This amount also reflects the annual cost of the mortgage, taking into account the points paid and other costs (pre-paid finance charges) incurred for the credit extended to the borrower.
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What is a cap?
A cap is a limit that is placed on an ARM. It may limit the maximum interest rate, the maximum the payment can increase or decrease, or the maximum amount the rate can increase per term (usually annually).
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What does a Processor do?
Your mortgage broker is not the only person that deals with your loan before it gets sent to the lender. Typically, there is a loan processor who checks and double checks the numbers and makes sure all documents required by the lender are in the package and in the right order before submission. It is a demanding job, requiring great attention to detail. If you receive a call from a processor asking for some documentation, get it to them as quickly as possible and this will ensure that your loan will not be delayed.
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What is automated underwriting?
Automated underwriting is a computer based method that enables us to process loan applications in a quicker, more efficient manner. Until recently, this process was done manually, with the underwriter having to review each piece of information separately. The automated system evaluates different pieces of information and gives a recommendation about whether or not the loan meets the criteria for approval. If a loan is does not meet the criteria, it is referred to us with advice about areas where additional information could be helpful. Using an automated system allows us to speed up and streamline the review and approval process. As a result, more borrowers are able to qualify and be approved for mortgage loans, and in a timely manner.
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What is a closing?
Closing (or settlement) is the date when the buyer, seller, lender, or their agents agree to meet and legally transfer the property and disperse all the funds or reference the property.
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What are closing costs?
Closing costs are the costs associated with the transfer of property and obtaining a mortgage. They mat be costs such as points, appraisal fees, title search fees, insurance charges, mortgage broker fees, and state tax and filing fees. Typical costs amount to approximately 2% to 4% of the mortgage amount.
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