Mortgage FAQs

Closing Costs

“Closing costs are also known as “Settlement Costs,” these costs are split into two categories. Nonrecurring costs and Prepaid costs.

Nonrecurring costs are a one-time fee that is charged during the process of buying a home or refinancing. Some of these fees include:

  • Realtors fees
  • Originations fees
  • Discount points
  • Title searches
  • Title insurance
  • Surveys
  • Lawyer’s fees
  • Appraisal fees
  • Credit report fees

Recurring costs that occur over the life of the loan are prepaid at closing the include property taxes and homeowner’s insurance.

For more information please call Raleigh’s Local Loan Experts at 919-866-0212 to answer any questions you may have!

Fixed Rate Mortgages

With a fixed rate mortgage the interest rate does not change for the term of the loan. The principal and interest portion of the monthly mortgage payment remains constant for the life of the loan.

Typically, the shorter the loan period, the more attractive the interest rate will be i.e. a fifteen year fixed rate mortgage will carry a more favorable interest rate than a thirty year fixed rate mortgage.
Payments on fixed-rate fully amortizing loans are calculated so that the loan is paid in full at the end of the term. In the early amortization period of the mortgage, a larger percentage of the monthly principal and interest payment is applied towards interest.. As the mortgage is paid down, an increasingly larger portion of the monthly principal and interest payment is applied toward the principal.

A 30 year fixed rate mortgage is the most popular type of loan when borrowers are able to lock into a low rate.

Benefits:
  • Lower monthly payments than a 15 year fixed rate mortgage
  • Interest rate does not go up if interest rates go up
  • Payment does not go up, it stays the same for 30 years
Drawbacks:
  • Higher interest rate than a 15 year fixed rate mortgage
  • Interest rate stays the same even if interest rates go down

A 15 year fixed rate mortgage allows you to pay off your loan quicker and lock into an attractive lower interest rate.

Benefits:
  • Lower interest rate
  • Build equity faster
  • Interest rate does not go up if interest rates go up
Drawbacks:
  • Higher monthly payment stays the same if interest rates go down
  • Interest rate stays the same even if interest rates go down

The knowledgeable mortgage professionals at Raleigh Mortgage Group, Inc. will analyze your current situation and to make sure you get the very best deal. Call 919-866-0212 or Apply online today.

Mortgage Insurance vs. Private Mortgage Insurance

Mortgage Insurance come is the equation for a borrower when a home is less than 20% of the appraised value or sales price. Mortgage insurance (MI) is also referred to Private Mortgage Insurance (PMI). The two names differ when it comes to the type of government program that is backing the loan, VA and FHA carry PMI.

When a borrower is required to carry MI or PMI, the borrowers pays the premiums, but the lender is the beneficiary. The coverage protects the lenders against a default by the borrower. For instance, if a borrower decides or cannot make their mortgage payments, the mortgage insurance company ensures that the lender will be paid the full loan amount.

When it comes to picking a mortgage company, the lenders have the final say; the borrower has two ways of paying for MI or PMI. One is to make monthly installments and the other is to pay a onetime fee at closing. In some cases if the borrower decides to pay a onetime fee, the lender will offer a special program to the borrower.

For more information please call 919-866-0212 Raleigh’s Local Loan Expert at Raleigh Mortgage Group to answer any questions you may have!

What NOT to do when applying for a Mortgage

If you are thinking about purchasing or refinancing, there are some things that you should not do. Now is the time to keep your financing stable and unchanged, until after closing. If you need to make any changes to your financialsituation you should always call your qualified Raleigh Mortgage Group Loan Officer at 919-866-0212 to discuss the changes to ensure that your loan is not at risk of being denied or suspended.

DO NOT STOP PAYING ON YOUR EXISTING ACCOUNTS
Late payments on your existing accounts can be reported to the three credit agencies and can put your loan at risk. One 30‐day late payment can lower your credit score by 30‐75 points and get your loan denied.

DO NOT APPLY FOR NEW DEBTS
Applying for any new debt during your loan process can savage your loan. New monthly payments will affectyour debt-to-income (DTI) ratio and could affect your interest rate or get your loan denied.

DO NOT CO-SIGN A LOAN FOR ANYONE
Whether you are making the payments or not, the Lender will look at that debt as if it is your debt and it will be calculated into your debt-to-income ratio and could disqualify you for your loan.

DO NOT MAX OUT YOUR CREDIT CARDS
Maxing out your credit cards is the fastest way to lower your credit score. When applying for a loan, keep your credit cards below 30% or lower then available limit.

DO NOT CLOSE ANY ACCOUNTS
Closing any accounts can have a huge impact on lowering your credit score. Once an account is closed the damaging information is held against you and good history will no longer positively effect your credit scores.

DO NOT MAKE RANDOM, UNDOCUMENTED DEPOSITS INTO YOUR BANK ACCOUNTS
Keep good records of large deposits other than payroll deposits and avoid moving money around from different accounts. Avoiding this will increase your chances of a smooth and easy loan process.

DO NOT MAKE CHANGES WITH YOUR EMPLOYMENT OR INCOME
Employment stability is key during the loan process. Quitting, changing jobs or even positions within the same company can greatly put your loan approval at risk. This is especially important for commission employees as they must have a two year history to calculate their income.

For more information please call Raleigh’s Local Loan Experts at 919-866-0212 to answer any questions you may have!