Frequently
Asked Questions
In many cases they are, We recommend you contact your tax preparer or the IRS to obtain a qualified opinion on the deductibility of discount points.
From our beginning in 1987, we have focused on delivering Premier Service to our customers, from application through servicing the loan. Reliance on state of the art electronic data processing systems has enabled us to achieve this goal. Additionally, the use of leading edge computer systems has enabled our company to reduce costs, particularly in the loan origination process. For instance, most mortgage banking companies employ loan originators to develop business. Typically, loan originators are compensated at a rate of one half of one percent (1/2 of 1%) to three quarters of one percent (3/4 of 1%) of the mortgage loan amount for taking the loan application. On a $100,000 loan, the loan originator commission would be anywhere from $500 to $750. Easy Home Loans does not pay a commission, but instead, passes the savings on to the borrower. The larger the mortgage loan, the greater the savings to the borrower. Significant savings can be realized by borrowers submitting their own application on the Internet or contacting our office directly.
Prepaid interest is typically paid at loan closing. It is the interest paid on a new loan from the day of closing through the end of the month. All future interest on a mortgage loan is then paid in arrears. For example, if your new loan closes on February 19th, prepaid interest would be paid at closing from February 19th through the end of the month of February. Interest would then be paid monthly with your first payment beginning April 1st, which would pay March interest. Your payment on May 1st would pay April interest, etc.
Why is the Annual Percentage Rate (APR) on the Truth in Lending Disclosure higher than the rate shown on my note, which is the rate I thought I chose?
All lenders are required by the Real Estate Settlement and Procedures Act (RESPA) to show the rate which will be charged on the note signed at closing, including the total cost to obtain the loan. This includes, but is not limited to, the total interest paid over the life of the loan, assuming the full term is carried out at the note rate, plus certain closing costs. Closing costs could include prepaid interest, Private Mortgage Insurance/FHA Mortgage Insurance Premium or VA Funding Fee, whichever may be applicable, and various miscellaneous costs such as an underwriting fee, tax service fee, etc., as may be charged by the lender. All of these "Finance Charges" are taken into consideration when calculating the APR to give a more accurate picture of the total cost of the loan.
The mortgage you currently have involves a series of legal documents, which in most cases do not provide for a reduction or change of interest rate. If this is the case, one way to lower your interest rate is to obtain a new mortgage and pay off the old mortgage. Most fixed rate mortgage instruments today are like this since the majority of these mortgages are used to create mortgage-backed bonds (called either MBS's, PC's or GNMA mortgage-backed securities).
If your mortgage does contain an option to modify its terms, you may want to compare the terms of the modification to current refinance rates and costs before finalizing the modification. In some cases, a new refinance can be the better (less expensive) option over the modification.
Prepaid interest is typically paid at loan closing. It is the interest paid on a new loan from the day of closing through the end of the month. All future interest on a mortgage loan is then paid in arrears. For example, if your new loan closes on February 19th, prepaid interest would be paid at closing from February 19th through the end of the month of February. Interest would then be paid monthly with your first payment beginning April 1st, which would pay March interest. Your payment on May 1st would pay April interest, etc.
This question is best answered after careful consideration of your own personal financial goals. Buying down the interest rate (paying points on the mortgage - one point is one percent of your mortgage amount) may not be in your best interest. Here are some reasons why:
Mortgage interest paid is tax deductible in most cases (seek the advice of an accountant or the IRS).
The funds are no longer available to invest, save or use (i.e. purchase an IRA, pay off credit card debt at a higher rate, etc.)
Falling interest rates can be taken advantage of sooner if discount points are not paid to buy down the interest rate (the original interest rate was higher).
In the past, if a consumer bought down the interest rate and then refinanced (buying down the rate again), it is possible not enough time will have elapsed to recover the "buy down" amount through the reduced monthly payment. This also occurs if the consumer sells the home before recovering the "buy down" amount.
Not only does the amount paid in discount fees ("buy down amount") need to be recovered, the "time value" of the money spent or its "present value" also needs to be recovered. Present value is the income you could have earned or the satisfaction you could have received through alternative use of your money. Remember, consider the tax consequences of your ultimate decision.
Individuals should do what best fits their own personal situation and goals.
What does the origination fee cover?
The origination fee is the fee lenders charge to cover some of the costs of making the loan and is calculated by multiplying the total mortgage loan amount by the percentage shown. This fee is typically 1% or lower but may also be influenced by market conditions or the type of loan being sought.
Easyhomeloans.net's customary origination fee is 1% on most types of loans. However, we allow you to choose! See our rate sheet to take advantage of a rate with no origination fee, or even better, credits which will reduce or eliminate closing costs.
The number of days from application to closing can vary from a few days to 45 or more days depending on a number of factors. Some of the factors are loan type, whether an appraisal is needed, title clearance, etc. Time delays also occur if outside sources or the borrowers do not promptly provide documents to the lender.
The typical Easy Home Loans loan takes about 20 minutes to get approved and as little as 5 days to complete the process for conventional loans. Government tends to take a little longer for processing due to having to obtain a full appraisal. They generally run about 30 days to complete the process. As new technology is implemented, the time frame required to process a loan will be significantly reduced. An example of this technology is the ability to apply for a loan with easyhomeloans.net over the Internet.
YES! Easyhomeloans.net experienced staff is available to discuss your refinance needs between the hours of 8:00 A.M. to 5:00 P.M., Monday through Friday, Eastern Standard Time. Contact one of our loan counselors by email at RRodriguez@easyhomeloans.net or by telephone at 888-381-3274 for information about Easyhomeloans.net's loan products and competitive interest rates. You may also analyze various financing possibilities or make an application at this time.
When borrowers make their monthly mortgage payments, they generally also pay one-twelfth of the anticipated annual amount needed to pay taxes and insurance premiums. These additional funds are deposited into an escrow account (also known as an impound account), until the lender pays the taxes and insurance premiums as they come due. The borrower benefits for budgeting reasons because costs are spread through the year rather than as a lump sum. This method allows the lender greater control in avoiding tax delinquencies or lapses of hazard insurance coverage on the property. Mortgage documents often stipulate lenders establish an escrow account.
The Real Estate Settlement Procedures Act (RESPA) sets standards for the calculation of the amount mortgage lenders require borrowers to deposit into the escrow account. RESPA limits the initial deposit into an escrow account to an amount equal to the sum sufficient to pay taxes, insurance premiums, and other charges on the mortgaged property for the first payment period, plus a cushion.
An escrow cushion is an amount of money held in the escrow account to prevent the account from being overdrawn when increases in disbursements occur.
On a monthly basis, mortgage lenders may not require borrowers to pay more than one-twelfth of the total amount of the estimated annual taxes, insurance premiums, and other charges, plus an amount necessary to maintain the allowable cushion.
When a loan is originated, the mortgage documents specify the escrow conditions. Lenders are required to establish escrow accounts for all FHA insured mortgages. This has become a standard practice for all mortgages, including VA and conventional mortgages. The interest rates quoted to borrowers are normally based on lenders collecting escrows. Occasionally on conventional loans, Easy Home Loans waives the collection of escrow requirement at closing by collecting a fee to compensate for the lost value of the escrows. Once an escrow account is established, it continues for the life of the loan.
Many tax authorities will mail an informational copy of the real estate tax statement to the homeowner in addition to the mortgage company. Generally, Easy Home Loans does not require you to mail real estate tax statements to our office for payment. However, there are some statements tax authorities do not forward to the mortgage company and in special cases we will need your assistance in obtaining the statement. If you receive a statement for any of the following, please forward it to our office by mail or fax.
* delinquent real estate taxes
* supplemental or additional real estate taxes (NJ, CA, MD)
* special assessments
* if you reside in a homeowner area or if the tax authority will not honor a statement request from another party
* if you have a mortgage in Wisconsin and wish to have your taxes paid by the end of year.
There may be several reasons. Some mortgages, such as ARM loans, provide for periodic adjustments to your principal and interest payment amount. A second reason for a change may be due to an annual analysis of your escrow account. In compliance with the Real Estate Settlement Procedures Act (RESPA), you will receive an Annual Escrow Disclosure Statement, which shows the adjustment to your escrow payment based on current tax and insurance amounts.
An ARM loan is an Adjustable Rate Mortgage. The interest rate on an ARM loan is adjusted periodically based on the terms of the mortgage documents. The interest rate is typically based on a common index published periodically, adjusted by a margin. The margin is an interest rate charged in addition to the index and typically does not change over the life of the loan.
Prior to the existence of mortgage insurance, individuals typically could not purchase a home unless they had a down payment of at least 20% of the purchase price. Mortgage insurance benefits the mortgage lender directly by reducing the costs associated with borrower default. It also benefits consumers by lowering down payments, thereby allowing more people to achieve homeownership.
FHA insured mortgages require mortgage insurance premiums (MIP) and conventional loans with a loan-to-value greater than 80% (and in some cases even lower percentages) require private mortgage insurance (PMI).
Most mortgages originated today calculate interest in arrears, unlike consumer loans which calculate interest to the date of payment receipt. As an example, when borrowers pay their February mortgage payments, they are paying the January interest. This method of calculating interest is based on a 360 day year in which each month has 30 days.
My previous mortgage lender sold my loan to another lender. Does Easy Home Loans sell loans?
Easyhomeloans.net does not sell servicing (the right to receive mortgage payments and maintain the customer relationship with the borrower) as a business practice as do many other lenders, nor do we plan to sell servicing at any time in the foreseeable future. In very rare circumstances, we have sold an individual loan or released servicing to assist another mortgage company or an investor. However, Easy Home Loans's goal is to actively originate and purchase loans and to retain the servicing to build a quality portfolio and establish long lasting relationships with our customers. We view the stability you will receive from our relationship with you as an important part of the Premier Service we provide our customers.
When a lender makes a mortgage loan (other than a home equity loan), the lender typically requires a first lien position. This means there can be no other outstanding liens against the property that are superior to the new mortgage. Liens can result from a variety of sources, such as home equity loans or lines of credit, child support judgments, divorce settlements, delinquent taxes, and special assessments. Most realtors, mortgage companies, title companies, and escrow companies will assist the seller and/or borrower in clearing title. The ultimate responsibility, however, lies with the sellers of the property who are warranting clear title to the buyers. It is important the buyers receive clear title from the sellers so there are no future claims against their property ownership rights.
Generally, the process takes as long or short as the borrower wishes. Explaining and signing the documents takes approximately 15 to 20 minutes. However, the borrower may choose to sign the documents and be on his/her way or ask a number of questions and spend more time. Closings may also vary from state to state or closing agent to closing agent.