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What is the difference between Fixed and Adjustable rate mortgages?
Fixed Rates
A loan whose rate is fixed for the life of the loan. Fixed rate loans are available in 30-year,
20-year, and 15-year fixed periods. Generally, the shorter the fixed loan period, the lower
the interest rate. Monthly payments are always the same and are due at the same time each month.
Adjustable Rate Mortgage (ARM)
An Adjustable Rate Mortgage (ARM) is a loan that has an adjustable interest rate after a fixed
timeframe. Usually, ARM programs adjust after the first 6 months or 1 year. Monthly payments
are due the same time each month. Because interest rates are typically lower than a fixed rate
mortgage, this is a popular program for borrowers who expect to own property for a shorter period of time.
What’s the difference between a home equity loan and a line of credit?
Usually, home equity loan has a fixed interest rate and is given in one lump sum. Equal monthly payments
are made over the term of the loan. A line of credit usually has a variable interest rate and funds are
accessed as needed. Interest charges are assessed only on that portion of the funds that are used.
What is the FICO score?
A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining
the likelihood that credit users will pay their bills. A credit score attempts to condense a borrowers
credit history into a single number. Credit scores analyze a borrower's credit history considering
numerous factors such as:
Late payments
The amount of time credit has been established
The amount of credit used versus the amount of credit available
Length of time at present residence
Employment history
Negative credit information, such as bankruptcies, charge-offs, collections, etc.
There are really three FICO scores computed by data provided by each of the three bureaus––Experian,
Trans Union and Equifax. Some lenders use one of these three scores, while other lenders may use the
middle score.
What if there is an error on my credit report?
You can contact all three credit bureaus directly.
Equifax 1-800-685-1111)
Trans Union 1-800-916-8800)
Experian 1-888-397-3742)
Will I be considered for a loan if my credit is less-than-perfect?
Yes. We closely work with variety of lenders that offer a wide range of products for individuals with
excellent, average, and less than perfect credit.
What is PMI?
Private Mortgage Insurance-What does mortgage insurance do? Mortgage Insurance (MI) protects lenders
form borrower default, and is generally required on mortgages with a down payment less than 20%. For
example, if you make a down payment of 10% instead of 20%, the loan-to-value ratio is higher, thereby,
increasing the lender's risk. MI provides the protection lenders need to approve this type of low down
payment mortgage.
Can I cancel Mortgage Insurance?
Yes. When your mortgage balance reaches 78% of your home's original value, the lender will automatically
cancel your Mortgage Insurance.
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