Question 1

How do I compare fee sheets from multiple lenders?

Accepted Answer

When comparing lender fee sheets, focus on fees set by the lender, such as credit report, origination, underwriting, processing, discount points, admin, LLC review, and appraisal fees. These are typically found in sections A and B of the loan estimate. To simplify comparison, obtain your first rate quote. If you're satisfied with the payment at your target rate, ask other lenders to quote the same rate, allowing for easy comparison of total lender fees for that option. Remember that title fees are often your choice, and taxes and insurance are not determined by the lender.

Question 2

What is a flex term loan?

Accepted Answer

Flex term loans offer fixed-rate financing for non-traditional loan durations. While most lenders typically offer 30, 20, 15, and 10-year terms, some lenders provide options for any increment you prefer. For instance, if you have 17 years remaining on a 20-year commercial loan for a residential investment property, a flex term loan allows you to refinance with a customized 17-year term. This approach enables a more precise match to your existing loan term, avoiding the need to restart with a new 20-year term or switch to a shorter 15-year fixed rate.

Question 3

Can I assume someone else's VA loan?

Accepted Answer

VA loans are indeed assumable. This means a qualified buyer can take over the seller's existing VA mortgage, including its current interest rate, remaining balance, and terms. This feature can be particularly advantageous in a high-interest rate environment, potentially offering significant savings to the buyer.

Question 4

What Is a mortgage recast?

Accepted Answer

A mortgage recast, also known as reamortization, is a method to reduce monthly mortgage payments without refinancing. The process involves making a substantial lump-sum payment towards the loan's principal, after which the lender recalculates the monthly payments based on the new, lower balance. The interest rate and loan term remain unchanged. Benefits include lower monthly payments, reduced interest over the loan's life, and no need for a credit check or appraisal. However, it's important to note that only conventional loans typically qualify, and most lenders require a minimum lump sum payment.

Question 5

When should I refinance? How to decide based on a simple break-even analysis?

Accepted Answer

Determining when to refinance involves a break-even analysis, which compares the costs of refinancing against the potential savings. To calculate the break-even point, divide the total refinancing costs (including closing costs and fees) by the monthly savings from the lower interest rate or shorter loan term. The result, expressed in months, indicates how long it will take for the savings to offset the refinancing costs. This analysis helps determine if refinancing is financially beneficial in your specific situation.

Question 6

Should I do a 30 year fixed or a 15 year fixed? Which is right for me?

Accepted Answer

The choice between a 30-year and 15-year fixed mortgage depends on your financial goals, income stability, and long-term plans. A 30-year mortgage offers lower monthly payments and more flexibility, but comes with a higher interest rate and more interest paid over time. A 15-year mortgage typically has a lower interest rate and builds equity faster, but requires higher monthly payments. Consider your income stability, how long you plan to stay in the home, and other financial goals when making this decision. Ultimately, the right choice aligns with your overall financial strategy and comfort level with monthly payments.

Question 7

How does a reverse mortgage work?

Accepted Answer

A reverse mortgage is a financial product designed for homeowners aged 62 or older, allowing them to convert a portion of their home equity into cash without selling their home or making monthly mortgage payments. The loan can be received as a lump sum, monthly payments, a line of credit, or a combination thereof. Repayment is due when the homeowner sells the home, moves out permanently, or passes away. At that point, the homeowner or their heirs can either repay the loan or sell the home to settle the debt. This type of mortgage uses the home as collateral, with the lender paying the homeowner instead of the traditional arrangement.

Bernard Guste - Mortgage Loan Originator, NMLS #79676

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