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At Amerihome Lending, Inc., we want to provide as much information as possible in order to help you make sound decisions, whether you’re applying for a new home loan, refinancing your existing mortgage, or planning for your family’s overall financial future. This page highlights news items, publications and videos you may find helpful.
Please contact us if you would like more information about any of the topics presented. We look forward to assisting you.
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Frequently Asked Questions
There are many costs associated with taking out a mortgage. These include the interest rate, points, fees, and other charges. The interest rate is the cost of borrowing money expressed as a percentage rate. It does not reflect fees or any other charges you may have to pay for the loan.
An Annual Percentage Rate (APR) is a broader measure of the cost of borrowing money. The APR reflects not only the interest rate but also the points, broker fees, and certain other charges that you have to pay to get the loan, including certain portions of your closing costs. For that reason, your APR is usually higher than your interest rate.
Tip: Take care when comparing the APRs of adjustable-rate loans. For adjustable rate loans, the APR does not reflect the maximum or even the likely interest rate your loan may carry. This is important to keep in mind when comparing the APRs of fixed-rate loans with adjustable-rate loans, or among different adjustable-rate loans. Don’t look at the APR alone in determining what loan makes the most sense for your circumstances.
Source: Consumer Financial Protection Bureau
Contrary to popular belief, mortgage rates are not dictated by the 10 year Treasury, although they typically trend together. Historically, 30 year fixed-mortgage rates have been about 1.7 to 2 percent higher than the 10-year Treasury.
Mortgage rates are based on mortgage-backed securities (MBS), basis point for basis point. Mortgage-backed securities are issued primarily by Fannie Mae and Freddie Mac. These securities trade in the open market, just as a stock does. The higher the demand for MBS the higher the cost and lower the yield to the bond holder. In turn, the lower the interest rate to the borrower.
This is arguably the most commonly asked question by prospective homebuyers. At Amerihome Lending, it is one we’re not particularly comfortable with. This question was one that got so many borrowers in trouble during the last housing boom and subsequent bust.
Typically, lending guidelines require the proposed mortgage payment plus all other minimum monthly payments (that report on a full credit report) can be up to 45 percent of the total gross monthly income.
But again, what the bank says you can afford is irrelevant. The “how much do I qualify for” question should always start with a question you, as the homebuyer, must answer. What is the maximum monthly payment I am comfortable with? Once that number is established, a purchase price can be determined and a pre-approval issued.
When an interest rate is locked in, the lender is guaranteeing that interest rate regardless of any changes in market conditions (provided the loan funds within the lock period). Given that, the rate is also locked in should market conditions improve. Locking in a rate is like marriage – for better or worse – with one exception: if rates improve significantly (typically about .375% or more) most lenders offer what is called a “float-down.” This is when the borrower can take advantage of the improved rate environment for a premium. This premium is not paid for as additional closing costs but rather through the lower rate’s new price. To put more simply, when you “float-down” you will indeed get a lower rate but not quite as low as you would have if you had not initially locked in.
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