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FREQUENTLY
ASKED QUESTIONS:
Is First Carolina Mortgage faster than other brokers?
Regardless of which mortgage company you apply with there are certain documents and verifications that are
needed. Some of the ways FCM expedites the process is that we have the ability to receive documents via e-mail and fax. We
can e-mail you daily to update the status of your loan. There is a borrower's authorization online that you can print out and sign, then fax or e-mail as a scan. It really speeds up the process.
Who do I contact for information once my loan is in process?
You will be assigned a single loan officer dedicated to you once we have received your signed papers and supporting documentation. if you have questions prior to sending in your documents, please call us at 1-800-990-9981.
What is the next step after applying?
You will receive an e-mail that your loan is in process after we receive the loan application. Within 3 business days, you will get a loan package with a set of documents requiring your signature, as well as a request for documents needed (such as W-2's,
paystubs, etc.) PLEASE DO NOT SEND ORIGINALS UNLESS SPECIFICALLY ASKED.
Should I refinance?
There are many things to consider when refinancing.
How long do you anticipate staying in the home?
What is the proposed interest rate and payment versus what you are paying now?
What is your financial situation now and what will it be in the future are you retiring soon? do you have children going to college soon? are you about to have children?)
A loan counselor can help you answer these questions.
What is the difference between Interest rate and APR?
The interest rate is what is quoted on the note. I will explain the difference. If you have a $100,000 note at 7% for 360 months your payment would be $885.30. Now, in closing that loan you had a $1,000.00 broker fee, $299.00 processing fee, $275.00 appraisal fee, $50.00 recording fee, and a $100.00 title search fee. That all adds up to $1,924.00 in closing costs.
But APR is calculated by certain fees that the lender charges you. In this case APR would only be the broker and processing fees,
totaling $1,299.00. You would then subtract the $1,290.00 from $100,000.00 to get $98,701.00. To calculate the APR we would take the known variables
which are the amount financed ($98,701.00) and the term ($300) and the payment ($665.30) and X, which is the unknown (APR).
Using a financial calculator (I use the TI BA-35) you would input 98701 PV 360 N 665.30 PMT CPT %I X 12 = 7.13
So your APR is 7.13. This is your true rate of interest when you calculate in term, closing costs, and payment.
Do I choose the loan with the lowest interest rate or lowest APR?
It depends on a few things. Usually if you have the money to pay the closing costs without financing those costs into the loan, then you should go with the lower APR. If you are strapped for cash, interested in a lower payment, and not really concerned about closing costs, the lower interest rate is probably right for you.
Which is better, a 15- or 30-year term?
Usually a 15-year term gets you a slightly lower rate, but your payment will be higher than a 30 year term because of the shorter
amortization. A 30-year term is ideal if you are strapped for cash on a monthly basis. You usually can prepay without any penalty. Calculate your payments for a 15-year term, set the loan up for a 30 year term, and pay the difference extra each month. You will still pay the loan off in 15 years but you will not have the obligation of the higher payment in case emergencies come up each month limiting your cash flow.
What is a balloon mortgage?
A balloon mortgage is a mortgage that has a lump-sum amount due after a specified time. You will have regular monthly payments, that are usually lower than a fixed rate mortgage, but at the end of the term when the balloon is due you either pay the lump-sum or refinance. Beware: If you cannot do either you could lose your house through foreclosure.
A balloon may be a good idea if you need a lower payment and you know you will be moving or selling the house before the balloon comes due.
What is an adjustable mortgage?
An adjustable mortgage is a mortgage in which the rate can fluctuate over time. The rate is usually tied into an index (t-bill rate). There is usually a cap as to how much the rate can go up or down over time. An adjustable mortgage usually has a rate that has a starting rate lower than a fixed rate. An adjustable rate mortgage is good for someone who needs a lower monthly payment and anticipates an increase in earnings later.
Example: A young couple starting out buying their first house.
Beware: If rates rise and your earnings do not and you have overextended yourself via credit cards, or other debts you could be in trouble. Not only may you have problems making the higher monthly payments but you may not be able to refinance if you don't have enough equity built up or you have overextended yourself financially.
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