With the numerous mortgage options being offered by mortgage lenders today, newcomers to the arena may find the scenery just plain confusing. If you’re planning to get a mortgage loan, and you don’t know where to start, here is a list of the basics that you need to know about.
Mortgage Defined
A lot of people tend to use mortgage to mean a mortgage loan. A mortgage refers to the document that you, as a borrower, sign and entrust to a mortgage lender in return for a mortgage loan. If you default on your mortgage payments, the mortgage lender, through the document called mortgage, has the right to take possession of your property. The borrower, the one who applies for a mortgage loan, is referred to as the mortgagor since it is the borrower who hands the mortgage over to the mortgage lender.
Mortgage Loan
The basic premise of a mortgage loan is that it is a type of loan used to pay the difference between the purchase price and the cash available for a down payment. When mortgage lenders let you use their money, they will charge you a fee for it. The biggest fee is called the interest, which is expressed as an annual percentage of the loan. Usually, it is in the range of a low 5% and a high 12%. When you apply for a mortgage loan at one of these financial institutions, they will also charge you with an origination fee, which may include application fees, credit report fees and appraisal fees. The annual percentage rate (APR) consists of the base interest rate with points and other fees.
Mortgage Loan Rates
The mortgage loan comes in a fixed rate and adjustable rate. A fixed rate mortgage loan refers to a loan that features a fixed interest rate and fixed monthly payments for the entire life of a loan. Mortgage lenders typically offer 15- and 30-year fixed rate mortgage loans. An adjustable rate mortgage loan features lower initial rates, which may change as frequently as every six months. Borrowers who prefer going the least expensive way can opt for the 15-year mortgage loan. However, this type of loan is suitable for those who can afford the higher monthly mortgage payments. For people who plan on moving to another home in less than eight years, may find it more appropriate to settle for a 30-year mortgage loan, with its lower monthly mortgage payments.
Mortgage Loan and Down Payment
The down payment made on a house is usually in the range of five to 20 percent. The down payment precedes the mortgage loan, or the amount borrowed on the residual cost of the house. Thus a house that’s worth $450,000, you will require a down payment of $90,000 and a mortgage of $360,000.
Basic Mortgage Interest
Interest rates are prone to fluctuations, which make them highly unpredictable. There are two popular indices of short-term interest rates. The first one is the rate banks offer for six-month certificates of deposits (CDs). The second one is the interest on Treasury Bills, or T-bills. Mortgage lenders operate by charging around 2.5% over the publicly quoted interest rate. Compared to short-term rates, long-term rates are higher since they expose lenders to greater risk when lending money for a long time.
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Help answer the question about mortgage loan
What is the deal with mortgage loan modification schemes?I heard on NPR that mortgage brokers who made a lot of money during the housing boom are now making a lot of money doing loan modifications. How is loan modification lucrative? How do people get paid to do loan modifications?
If you are both going to be on the loan, then both incomes will count. Critereia for a mortgage is dependent on the following:
* Credit Score – there are 3 credit bureaus and this thing called a FICO (Fair Issac) score. The closer your score is to 850 the easier the loan is to get and the better rate (lower interest) you will be offered.
* Debt to income ratio. If you earn $1,000 a month and have $750 per month in bills to pay, it will be tougher. Banks/mortgage companies like debt to income to be less than 50%, and would prefer 30% area.
* Don't be getting new loans and don't apply for new credit until after you have purchased your new home. These "inquiries" will bring down your credit score.
Look up your credit online now. You can get it done very inexpensively and know where you stand.
Hope that help
Simply put the loan officer will get paid either three ways:
1. You pay him origination points
2. The lender will pay him
3. A combination of 1 and 2
For anyone to come here and tell you that only one or two ways is the right way or how much of % should be paid is completely wrong.
Each state is different on how much on an average a borrower will pay on origination points.
In order for you to find out how the loan officer is chargin your, look at the Good Faith Estimate.
If you are paying for origination points up front, you may be getting a better rate than having the lender pay the loan officer for his commission. Although you could be getting charge at both ends.
Look carefully at the Good Faith Estimate.
I can tell you from my own personal experience.
First off, modifying your mortgage is a very difficult thing to do. Forget what the media and all these other yahoos are saying about the government's modification act. Most banks are not willing to modify your mortgage without putting up a fight.
Why? Because it costs them money to do it. Most mortgages are sold off to someone else after you take out the loan, but the original bank still acts as the servicer. They receive a percentage from the buyer of your mortgage to handle the payments and record keeping.
When something complex as a loan modification is requested, any profits they would make disappear and as such they are reluctant to do it.
The media and the banks themselves don't tell you this of course.
First-expect to hire a lawyer or get a legal aid lawyer. Most banks will not take you seriously unless you have a legal mouthpiece going to bat for you. Having a lawyer shows you mean business and just are not some schlub looking for a handout.
If you try to do it yourself, expect to be jerked around for months only to be told it can't be done and by the way we're starting foreclosure proceedings, which will only make the modification even more difficult.
The bank will not talk to you unless you are delinquent. And this is where time is of the essence-if you're very late with your payments and they have'nt started legal proceedings it makes the process much easier. Once legal proceedings start, then it becomes difficult if not impossible to complete the modification because now the courts will be involved.
Second-you will be expected to make your new payments ON TIME if you do receive the modification. The bank will not care how you accomplish this. You will be told that the first 3 payments or such MUST BE ON TIME OR THE AGREEMENT IS NULL AND VOID.
Keep in mind whatever agreement you agree to will only stall the inevitable. Eventually over time your payments will return slowly back to where they originally were. The original terms and payments will not go away. ALL A MODIFICATION DOES IS LOWER YOUR PAYMENT FOR A PERIOD OF TIME UNTIL YOU CAN GET BACK ON YOUR FEET.
Third-If you feel you can't keep up with the payments at any time now or in the future, consider selling the home while you can or give it back to the bank. It may seem difficult but it's a far better option than having it being taken away from you. Also note that if you file for chapter 7 bankruptcy, don't sign a reaffirmation of your loan. That way if you need to walk away you won't be held liable for whatever is still owed.
Fourth-I can't empathize this enough: NEVER, EVER, LET ANYONE TALK YOU INTO BUYING YOUR TITLE OR ASKING FOR MONEY TO REARRANGE YOUR LOAN. IT WILL BE A SCAM I ASSURE YOU AND YOU WILL STILL BE LEFT HOLDING THE BAG.
I hope this helps you and don't believe Obama and his socialist bullshit. What I told you is the reality and what the government says is fantasy.
Good luck!
Yes it is. In fact, it is common these days. It will all depend on what type of loan you are going for, and what type of collections you have. If you owe 200 bucks to a phone company from a year or two ago, it isn't as big of a deal to the lenders as owing 5,000 in back child support…. they do whatever makes sense…
Comment back on what type, how old, and total number of collection accounts, as well as a total dollar amount and I will tell you how your chances look…
In an interest-only loan or mortgage the borrower only pays interest each month. This makes it cheaper than a conventional mortgage, in which part of each month's payment goes towards the principal and part goes towards interest. These loans have become popular because the monthly payments are lower, allowing borrowers to afford a larger home.
However, these loans can be dangerous, especially in a down housing market. The interest rates are generally fixed for the first 1, 3 or 5 years. After that, they convert to a conventional loan, with a higher monthly payment. Most borrowers take on these loans because they assume they will sell the home before the interest rate increases. In a down market, they may not be able to sell. If they cannot afford the increased payment, they may have to default on the loan, and foreclose on the home. So, when the rate starts to adjust, you would need to refinance again. And, either get a fixed or another interest only adjustable. And, yes, I do believe you mean ARM. Although, if you have extra money every so often, you can pay down the principal in extra payments.
Avg. Salary: 42k$
50 Salaries registered here:
http://www.whatsalary.com/us/salary/MORTGAGE-LOAN-OFFICER-T4154.htm
Mortgage Loan officers do not make anything from the SALE of a home. They make a certain percentage of the amount of the mortgage loan on the PURCHASE of a house.
The percentage of commission varies from state to state and from lender to lender.
I really suggest looking around at different careers websites, such as monster.com, in addition to checking out our careers page (I’m an employee of Quicken Loans).
Don’t worry about your lack of experience. At many mortgage companies, including Quicken Loans, no lending experience is not a problem.
In addition to on-going training, all new mortgage bankers attend five weeks of industry-leading training. We’ve been hiring 200+ new mortgage bankers a month for the past few months and we consider candidates with various work backgrounds and experiences.
I’ve included a link to our mortgage banker careers page that has more information, but if you have any questions feel free to contact me through my profile.
One thing, we only hire for employment in Detroit, Cleveland, and Scottdale, Arizona.
Good luck!