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Suitable Loan

North Star Mortgage has designed innovative and versatile methods that would enable their clients to qualify for loans. The company specializes in different types of loans and offer custom-made loans to suit your requirements. After deciding which loan suits you best then the buyer can produce the necessary documents that would help to buy the desired property.

When the buyer provides documentation of income, assets and debts, then the loan application would be completed. As the information is verified, the underwriter approves the loan. The application is completed when the purchase agreement is executed. The buyer's loan is then approved and would await appraisal of the home.

 

Pre-approved Loan

A statement from the lender is called a Pre-Approval, which declares that the lender is offering a loan for the purchase of a home that has a high-appraised value. This indicates that you are capable of purchasing the home and would estimate that you are in a position to fulfill the loan and complete the purchase. The seller would consider an offer from you as serious and worthwhile.

 

Right Choice

Fixed Rate Mortgage - This is a mortgage that is available with a variety of terms and also where the principal and interest payments would remain the same through the span of the loan.

Adjustable Rate Mortgage (ARM) - This is a mortgage that may be adjusted up or down throughout the term depending on the market conditions. This mortgage is available with a variety of terms and adjustment periods.

The Balloon Mortgage - This mortgage comes with a variety of terms and is a mortgage that does not require the principal and interest payments to be paid up fully towards the loan. The balance amount may be given at the end of the balloon term.

First-Time Buyer/Affordable Housing Mortgages - This is a mortgage where a group of mortgage programs are created to help first-time buyers and/or those with low-to moderate-income. This is available with a variety of terms.

New Construction Mortgages - This is a mortgage where programs are available that include fixed and adjustable with a variety of terms and is also a mortgage for those buying new constructions.

Interest First Mortgage - This mortgage has “interest only” payments for the first years of the loan. Monthly payments can be adjusted midway that would cover the principal and interest for the remaining term.

FHA - This mortgage is guaranteed by the Federal Housing Administration. This mortgage has available programs that include fixed and adjustable with a variety of terms.

VA - This mortgage allows for only veterans to qualify and is available as a fixed rate program. This mortgage is guaranteed by the Veterans Administration.

USDA - This mortgage has been designed for low to moderate income borrowers and rural areas.

Home Equity Line of Credit - This mortgage indicates that a second mortgage line of credit can be opened which is based on the equity in your property. Payments are not required to be made until the money is used and are based on the amount of line that is drawn.

Home Equity Loan - This is a second mortgage loan that is based on the amount of equity in your property. The payments can be made on a monthly basis and are fixed throughout the loan term.

 

Lock-in Rate

A mortgage loan cannot be closed unless the interest rate is locked in. The four important components to a rate lock are the Loan program, Interest rate, Points and the Length of the lock. If the length of the lock is longer, then the points of the interest rate are higher. This occurs because the longer the lock then the bigger the risk for the lender offering the lock. A rate lock should be in writing indicating the loan commitment from the lender. This is necessary as there are many risks, misunderstandings and confusion over rate quotes and rate locks.

 

Rate-lock basics

A legal commitment between the lender and the borrower is called a rate lock. A specified interest rate for the loan is promised by the lender. A buyer promises sometimes to pay points and fees if the lock lasts more than 30 days. It is understood that the borrower and the lender should close the loan at a specified time. If the loan is not closed, then it expires and becomes invalid. A lock lasts for 30, 45, 60 or more days usually. A fee has to be paid if the lock lasts longer. A rate lock is like an insurance where even, if the rate rises, the buyer will still get the loan at the agreed-upon rate. The lock is also beneficial for the lender as the buyer promises to pay the specified rate even if rates fall. Locking a rate depends on the dexterity of mind and the know-how. This depends on how much has to be paid to lock and the length of time of the mortgage.

Though some of the lenders do not charge a fee to lock within 30 days of closing, the buyer may decide to lock beyond 30 days and would have to pay a fee for this. These are not standardized fees but vary with different loans. This is expressed in points where 1 point is 1 percent of the loan amount. In order to extend a rate lock for more than 30 days, the buyer is expected to pay from a quarter of a point to half a point. If the lender agrees to let the buyer lock within 30 days of closing, then the buyer would have to pay one-quarter to one-half a point to lock for 60 days and a 90-day extension would cost a point or more as specified.

Rate caps are most often combined with rate locks by lenders. A cap is known as a margin, which is above today's rates. For example, if it's middle of March and today's rate for a 30-year fixed is 6 percent, the buyer decides to lock today paying 1 point. A quarter point cap may be placed on the rate by the lender, which means that the rate paid by the buyer would go as high as 6.25 percent. The lender would allow a one-time “float down” within 30 days of closing. This float-down option would give the buyer the opportunity to decide on a lower rate if the rates fall at that time.