At Integrated Funding, a Raleigh, NC mortgage company, we encounter certain mortgage-related questions on a regular basis. Read on for answers to these frequently asked questions.
If you would like more information about buying a home, refinancing or mortgages and loans in general, please contact us at 919-847-2766 to schedule an appointment with one of our North Raleigh mortgage advisors serving North Carolina clients from Wilmington to Charlotte and beyond.
What if I can’t afford 20% to put down on a house?
It shouldn’t be a problem. There are many loan programs available today that require less than 5% down payment. The best thing to do would be to call us — we’ll work with you to find the right program.
Do you offer custom loan programs?
Yes, the different types of loan programs being offered are changing every day. We find the best loan scenario for all of our clients. Unlike big banks that are restricted to using loan programs and rates being offered at that time by the bank, we have access to many lenders. What we do is find the lender that best fits your needs. Call us today and let us show you what we can do for you.
Can I use some of my IRA or 401(k) plan for a down payment?
Yes you can. However, the rules regarding this issue are constantly changing. Your best bet would be to contact your accountant. Your accountant can inform you of your best options in regards to this.
What’s the difference between a fixed and adjustable rate mortgage?
With a fixed rate mortgage, the interest rate and the amount you pay each month remain the same over the entire mortgage term, traditionally 15, 20 or 30 years. With an adjustable rate mortgage (ARM), the interest rate is fixed for a certain number of years (3, 5, 7 or 10), and then fluctuates according to the index the ARM is tied to. Initial interest rates of ARMs are typically lower than fixed rate mortgages — however, there is the uncertainty of what the rate will adjust to after the initial fixed rate period. Different ARMs are tied to different financial indexes, some of which fluctuate up or down more quickly than others. To avoid constant and drastic changes, ARMs typically regulate (cap) how much and how often the interest rate and/or payments can change in a year and over the life of the loan.
Is a fixed or an adjustable rate mortgage better?
It depends. Because interest rates and mortgage options change often, your choice of a fixed or adjustable rate mortgage should depend on: the interest rates and mortgage options available when you’re buying a house, your view of the future (generally, high inflation will mean ARM rates will go up and lower inflation that they will fall), and how willing you are to take a risk. When mortgage rates are low, a fixed rate mortgage is the best bet for most buyers. Over the next 5, 10 or 30 years, interest rates are more apt to go up than further down. Even if rates could go a little lower in the short run, an ARM’s teaser rate will adjust up soon and you won’t gain much. In the long run, ARMs are likely to go up, meaning most buyers will be best off to lock in a favorable fixed rate now and not take the risk of much higher rates later. Keep in mind that lenders not only lend money to purchase homes; they also lend money to refinance homes. If you take out a loan now, and several years from now interest rates have dropped, refinancing will probably make sense.
What is private mortgage insurance (PMI)?
Private mortgage insurance (PMI) policies are designed to reimburse a mortgage lender up to a certain amount if you default on your loan. Most lenders require PMI on loans where the borrower makes a down payment of less than 20%. Premiums are usually paid monthly or can be financed. With the exception of some government and older loans, you may be able to drop the mortgage insurance once your equity in the house reaches 20% and you’ve made timely mortgage payments. In certain circumstances, you can obtain a second mortgage to reach the 20% down payment, thus removing the need for PMI. Please call us today to discuss whether this option would work for you.