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What
is a Mortgage? |
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A mortgage is a loan you use to purchase a home or some other piece of property. The amount you borrow is called the principal and each mortgage payment is a combination of principal and interest. The property remains in the possession of the borrower, but it may be re-claimed by the lender if the loan and interest are not paid as agreed. |
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What
is a Mortgage Broker? |
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An individual
or company that matches borrowers with lenders. A mortgage
broker will submit your loan to many different lenders,
have access to many different types of loan programs,
can shop around for the best and most competitive mortgage
rates and terms available tailored to meet your particular
needs. |
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What
is the difference between Mortgage Brokers and banks? |
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Banks,
similar to mortgage brokers, have a wide variety of
loans to offer. However, at a bank all of the loans
offered originate from that specific lender. Mortgage
brokers usually work with dozens or even hundreds of
lenders, not as employees, but as freelance agents.
Because of this, mortgage brokers can often find a lender
who will make loans that a bank refuses. Problem credit
is one example. Loans for unique or commercial properties
might be easier to secure through a broker. |
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How
long does it take to complete a Mortgage transaction? |
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If all
information requested by the lender (i.e. Income verification,
down payment verification and property details) are
given to the broker in a timely matter than the transaction
can be completed in as little as 2 weeks. However it's recommended to expect 4-6 weeks to account for last minute problems. |
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How
do Mortgage Brokers find superior rates? |
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Interest
rates are a concern to borrowers. Because of their daily
contact with lenders, brokers know which project or
home attracts a favorable interest rate from one institution,
but a higher rate at another. Some institutions, in
fact, will only accept mortgage submissions from mortgage
brokers.
These rates, and preferences for types of mortgages,
can change daily, depending on economic circumstances
or based on the size of an institution's portfolio in
a particular type of mortgage. Your Mortgage Broker
keeps current and knows which lender to approach first.
As a result, mortgage rates obtained by Brokers are
among the best available at the time of placement. |
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Other
than rates, why should I use a Mortgage Broker? |
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In addition
to rates, because mortgage-based financing is the broker's
primary business, he or she has developed expertise
in what type of mortgage financing each lender prefers
to pursue. This kind of knowledge not only results in
the most favorable rates for each project, but often
whether a project is funded at all. |
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Why
should I go to a Mortgage Broker first? |
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A professional
presentation to a lender on the first application will
get the best response and save you valuable time and
money. Secondary applications with previous credit bureau
inquiries may be more costly.
Often the success of obtaining mortgage approval depends
on the way a proposal is presented and to whom it is
sent. Your Mortgage Broker is trained to present your
mortgage proposal where and how it will get the most
immediate, positive result. |
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What is an Adjustable Rate Mortgage? |
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An ARM is an Adjustable Rate Mortgage, meaning the interest rate adjusts on a regular schedule to correspond to current rates, usually once or twice a year. The interest rate and payments rise and fall with the index, such as the Treasury Bill rate, Prime rate or LIBOR. You agree to the amounts and times of adjustment when you set up the loan. Also, ARMs come with an interest rate cap that limits the total amount your rate can change over the life of the loan. |
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Why would I choose an ARM over a fixed rate mortgage? |
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An Adjustable Rate Mortgage can be appealing because it offers you a lower interest rate than a conventional loan, which in turn means a lower monthly payment. An ARM may be a good match for you when you only expect to spend a few years in your home, or if you want to purchase a larger home than you could otherwise buy without this option. |
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