Maryland Home Equity Loans & Mortgage Company
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Buying Frequently Asked Questions:
Q Will a mortgage broker be able to find me a better
rate than a mortgage bank?
A Mortgage brokers work with many lenders including
commercial banks, thrifts, and mortgage bankers. Brokers
may also have access to lenders who don't have an office
located in your state, but are licensed to lend money there.
Q But the mortgage broker has to be paid. Doesn't
this mean I automatically pay more for this loan?
A
It shouldn't because the broker is processing the paperwork,
so it cost less for the lender to make the loan. In return,
the lender discounts the loan to the broker. For example;
a borrower who finds a loan on their own many pay 7.5 percent
with two points (One point is equal to 1 percent of the
loan amount.), but the broker receives the loan for 7.5
percent with one point. True, the broker then adds a fee
to the loan, if its one point using the above example the
borrower has benefited from the broker's service with the
discount covering the fee. By state law, both the broker's
fee and the discount the broker is getting from the lender
must be disclosed up front to the borrower.
Q Should I forget the type of institution and focus
instead on who advertises the lowest rate?
A You can, but you have to remember that there is
no guarantee you will get the rate advertised. It may be
good for only 30 to 60 days and it probably will take you
longer than that to close. To get a loan with what's called
a longer lock in period, you usually have to pay a higher
rate. In addition, interest rates can change daily. The
better way to compare is to ask each lender what the rate
would be if your closed in 90 days or whatever your timetable
is. Also, get everything in writing.
Q What documents do I have to provide?
A Be prepared to provide verification of income (including
a pay stub and the previous two years tax returns), bank
account numbers and details of your long-term debt (credit
cards, auto loans, child support, etc.). If you're self
employed you may also be required to provide financial statements
for your business. Lenders want specific information. For
example, the origin of your down payment will be queried.
Q Does it make sense to prepay my mortgage or should
I use the money to invest elsewhere?
A That depends on the cost of the mortgage, your
appetite for risk and your age. Prepaying shortens the term
of the loan, saving you thousands of dollars of interest.
"As a general rule, on a 30 year mortgage, you save $3 for
every $1 prepaid. On an After-tax basis, you get back $2
for ever $1 you prepay." It's and easy, risk-free investment.
Just round your monthly payment up to the nearest $100:
if you pay $883.50, write the check for $900. If your mortgage
costs 8 percent a year, that's what you'll earn on your
prepayment. Compare that return with what you'd earn in
other comparably safe investments, like a CD or paying off
credit cards (If you pay 18 percent on credit cards don't
even think about prepaying a 8 percent mortgage instead.)
Note. Notify your lender if your personal or financial status
changes between the time you submit and application and
the time its funded. If you change jobs, get an increase
or decrease in salary, incur additional debt, or change
your marital status, you must let the lender know.
Still
have questions? Contact the maryland mortgage company and
our professionals will get back to you.
Maryland
Home Equity Loans & Mortgage Company
