Mortgage 101 with Loan FAQ
Purchase: Purchasing and owning real estate is a powerful thing, and it can have enormous wealth building implications for the home-owner. Borrowing tax advantaged money (aka: a mortgage) to buy an appreciating asset can be a fantastic way to build personal wealth. Equity is what you gain over time. The definition of equity in terms of real estate is the difference between what is owed on a property, and what that property is worth. Let me show you how your mortgage/equity balance, when properly managed, can be an integral part to your overall financial well being.
Refinance: A refinance mortgage is when a person secures a new mortgage to pay off an existing one. This new mortgage loan can have new terms which can create better cash flow (lower monthly payments) – or possibly a larger balance than the previous one. This larger balance can be used to make property improvements, pay off other consumer debt, or simply save as a cash cushion.
Investment: Once you get a taste for how powerful owning real estate can be, you may want to purchase investment real estate. Let me show you how I have helped many clients build a significant net worth through moving equity into investment real estate, and multiplying their appreciation, as well as their tax advantages. At Mortgage Trust Inc, We offer every type of mortgage financing. Please get in touch with me and I’d be glad to find the best available loan program and strategy for your situation.
Loan Frequently Asked Questions
- What is the Mortgage Process exactly?
- I have created a detailed explanation of the 6 steps of the Mortgage Process Here
- What are closing costs?
- Closing costs are the fees associated with getting a new mortgage organized, insured and funded. Common loan fees are: loan processing, underwriting, credit report, loan origination fee, and discount points. In addition to the loan fees, there are also title company fees. The title company fees are commonly: Escrow fee, Title insurance, and title policy endorsements. These fees are collected at closing and need to be considered in addition to whatever down payment you are planning to bring to a transaction. Watch Answer On: YouTube
- How much are closing costs?
- Closing costs vary depending on many factors. They can be paid outright at closing; they can be financed into the loan balance in a refinance, or credited to the buyer from the seller’s proceeds at closing. In my experience, since every mortgage has certain fixed costs: Processing, underwriting, appraisal, and title fees. These fixed costs, since they rarely change usually add up to about $2750.00. If you are paying a loan origination fee of one percentage point (which is fairly standard), you should add 1% of your loan balance to this figure. Example- If you are borrowing $200,000.00. You can estimate the closing costs to be about $2,750.00 + $2,000.00, or a total of $4,750.00. Closing costs in a refinance are actually slightly higher due to the title insurance. The fixed costs in a refinance should be more like $3,250.00. Watch Answer On: YouTube
- What are pre-paid items?
- Prepaid items are additional costs associated with real estate ownership, but are NOT the costs connected to the transaction, therefore are NOT closing costs. These are things like: property taxes, homeowners insurance, and pre-paid mortgage interest (which is a pro-rated monthly payment based on what day of the month you close). Probably the most significant prepaid item is the property taxes. In Oregon, we collect taxes one time per year and they are paid in advance. Therefore when you purchase a property, the county collects the entire lump at closing. Hence: “pre-paid”. Watch Answer On: YouTube
- How are closing costs financed?
- Closing costs are unavoidable, but there are a few ways to structure a deal where the closing costs and pre-paid items can be financed into your loan. You can finance fees into your mortgage rate, pay for them out of the proceeds of your new mortgage (in a refinance), OR have the seller give you a cash credit to apply to these fees at closing. Watch Answer On: YouTube
- What are points?
- You may here people talking about “paying points” in order to get a better interest rate. What this is referring to is an additional fee that can be collected and paid to the bank up front, for the purpose of getting a lower mortgage interest rate. The word “point” is in reference to how the fee is calculated- it is generally one percentage point of the loan amount, or a portion of a percentage point. Watch Answer On: YouTube
