What different types of mortgages are there? I dont want to be scammed?

Question

I dont want to get scammed into taking a mortgage I dont need. Can a mortgage expert enlighten me on mortgages. i would also like to hear the laymans views as well. How many types are out there; Pros and cons. I just heard of an inerest only but the only sense I can make from it is that there is no principal on the loan. Does that mean I would have to take another mortgage on the principal. What a balloon mortgage? Sounds like something that would blow up if I'm not careful. Once I decide on the mortgage that would best suite me do I then look for a bank. I dont want 5 different bank looking into my credit report. Can I run my own and hand each one a copy? What are the pros and con of using a bank instead of a mortgage boker and vice versa.

Answer 1

Ok first off:

What is your main reason for wanting to refinance?

There are litereally hundreds of loan programs on the market today. Some are horrible for one person and the best for another.

Interest only loans are great if you want to keep your monthly obligation to your mortgage payment at a minimum. However if you simply make the required monthly payment nothing goes to principle. But you can always make additional payment to the principle.

You can run a copy of your credit at www.annualcreditreport.com this is the website the FTC recommends to use for a free credit report. However when you do go to apply, the lending institution will still need to run your credit.

A balloon mortgage is a loan amortized over say 30 years but the balanced is owed say in 15 years. So if you refinance before the 15 years is up you would not need to pay off the loan on the 15 year. These are usually for 2nd mortgages or people with bad credit.

Across the nation, it has been proven that Mortgage Brokers have an average interest rate & fees that are less then Banks (because they are more competitive. So I would recommend using a licensed agent at a broker's office. Make sure the loan agent/officer is licensed!

If you live in California, I am a licensed Loan Officer and I would be happy to show you your options.

The best thing for any loan officer to do for you is find out what your future plans are for the property as well as future financial goals, then customize a loan program to meet those goals & needs.

Answer 2

There are so many different programs out there and no none here will be able to tell you what's best without knowing your financial story inside and out. So instead of that, I'd recommend you interview several different mortgage brokers. Stick with larger companies that are more likely to have a broad variety of options for you. Ask the brokers to explain the different offerings to you in generic terms then to get a little more specific about what they recommend for you. A good, honest mortgage broker will do this without running your credit. You'll have to give them a basic idea of your financial status, and if you have your FICO score that will help. Then together you pick the package that works best for you, and make a formal application. Your credit should only be run ONCE, only when you've agreed to a loan package.

Any mortgage broker that won't take the time to explain the pro's and con's of their various products is not worth doing business with. Move along to the next company. There are a TON of mortgage companies and brokers out there. When you enter into a contract with one, you've basically hired them as your employee. Make sure they really want the job before you hire them.

Answer 3

There are an almost infinite number of loan programs available since each borrower has specific needs and lenders want to meet all of those needs.

You need an expert to guide you through the process. This is way too complex to go into it with limited knowledge and try to figure it out yourself.

With a 20+ year history as a mortgage lender, the following are the steps I reccomend:

Ask friends, co-workers and relatives for referrals to mortgage lenders. There are basically three types; mortgage bankers, mortgage brokers, and mortgage professionals.

Mortgage bankers work for a direct lender. The funds being advanced for the loan are the bank's own funds and the loans are either securitized with a federal mortgage security entity or held in the bank's portfolio. Mortgage banks may be slightly more conservative, seeking only the most highly qualified borrowers, and may have a limited number of loan programs but may also have access to some specialized or portfolio prrograms that brokers cannot access.

Mortgage brokers are independent and close their loans through a variety of wholesale lenders. They may advertise lower rates but, being a third party, their fees may be higher.

Mortgage professionals have access to both loans funded by their own bank and the ability to broker as necessary. Since, at the core, they are direct lenders, their fee structure may be the most competetive and their interest rates also.

Speak to all of your referrals on the phone and narrow your choices to 3. Remember, their object is to get you make application at first contact. Resist that urge until you have done your homework.

Your ideal choice is someone who has great references, very strong communication skills, and with whom you connect. Go with your gut.

The right loan officer will take the time to listen to your needs and goals and then explain all of your options to you so that you may make the best choice. Remember, it is your loan, your choice.

Lenders must use credit reports that they have ordered, they cannot use one you supply.

There are some things you will want to consider in order to help your loan officer limit your choices to only those loans which will suit your needs; are you a first time buyer, how long to you think you will stay in this house, are you anticipating income increases or decreases in the foreeable future, what would be a comfortable monthly payment amount for you including property taxes and fire insurance.

The right loan officer will pre-approve you free of charge so that you can present a letter confirming your pre-approved status to your Realtor to be given to the seller along with your offer.

Good luck

Answer 4

Adjustable Rate Mtgs., these usually have a low intro. rate, then they adjust to the mkt. Interest Only, which is where you only pay the interest, the mortgage comes due later, for example a balloon, you pay interest only for 10 years, then you pay the balance, pay off the loan or go into foreclosure. These listed are the reason many people now and in the next few years will be going into foreclosure. Your best bet is a standard mtg. if you have 20% to put down you can avoid paying PMI, if not you can do two loans, one for 80% and one for 20% and avoid PMI, although the one for 20% may be an interest only. Go to several places if they all pull your credit report in one month it shouldn't have an adverse effect on your credit score.

Answer 5

Every mortgage program has an applicable time and borrower for it. To determine the right program a serires of questions will need to be answered many of which are already addressed here.

Here is some additional info. Hope this helps.

Answer 6

Once you are educated and feel comfortable speaking with a broker call me up, I will do good by you and hope to get your referral once the job is done right.

Manolo Borja, Senior Account Executive

Aapex Mortgage Corp. and Modern Tech Industries, Inc.

366 North Broadway, Suite 206

Jericho, NY 11753

[phone] Phone

[phone] Fax

Email: [e-mail]

Websites: www.aapex.com

www.18776loanyes.com

Answer 7

Lol I know what you mean, it's a jungle out there, you should hear the nightmares I hear in court when I go to testify. But in any event here are links that you really need to research even though some are not directly related to mortgages they will have an impact on the amounts of the mortgages and the methods used to provide such mortgages:
Fair Housing brochure: http://www.hud.gov/offices/fheo/FHLaws/FairHousingJan2002.pdf
The HUD-1 closing costs form explained: http://www.alta.org/consumer/hud1.cfm
HUD Private Mortgage Insurance (PMI) Information: http://www.hud.gov/offices/hsg/sfh/res/respapmi.cfm
HUD Borrower rights and responsibilities of Mortgage Servicer: http://www.hud.gov/offices/hsg/sfh/res/rightsmtgesrvcr.cfm
HUD Looking up mortgage limits for FHA mortgage loans: https://entp.hud.gov/idapp/html/hicostlook.cfm
HUD Revised Borrower’s Closing costs guidelines: http://www.hudclips.org/sub_nonhud/cgi/nph-brs.cgi?d=MLET&s1=06-$[no]&op1=AND&SECT1=TXTHLB&SECT5=MLET&u=./hudclips.cgi&p=1&r=23&f=G
FHA Federal Housing Administration loan programs: http://www.fha.com/
FHA Rural Housing loan programs: http://www.rurdev.usda.gov/rhs/common/indiv_intro.htm
US Government Housing assistance grants all areas:
http://12.46.245.173/pls/portal30/catalo...
US Government Grants page: http://www.grants.gov/
US Federal Domestic Assistance catalog for all Federal Programs available to State & Local Governments & the Public
http://12.46.245.173/cfda/cfda.html
All government Benefit Programs http://www.govbenefits.gov/govbenefits_en.portal
Department of Veteran Affairs – Home buying programs for Veterans:
http://www.homeloans.va.gov/veteran.htm
Federal Reserve, pamphlet on acquiring the best mortgage: http://www.federalreserve.gov/pubs/mortgage/mortb_1.htm
US GOVERNMENT CONSUMER TIPS ON HOMES: http://www.consumer.gov/yourhome.htm
Real Estate Settlement Procedures Act (RESPA) [about closing costs & settlement procedures]: http://www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm
Mortgage Calculators – Includes finding if you will qualify for a mortgage:
http://www.mortgage-x.com/calculators/Pre-Qualifier.htm
Biweekly mortgage calculator: http://mortgage-x.com/calculators/biweekly.htm
Closing costs comparisons by States: http://www.bankrate.com/brm/news/mortgages/ccrank.asp
Calculator to compute an estimate of the total cost of closing: http://www.myfico.com/LoanCenter/Mortgage/Calculators/ClosingCosts.aspx
Predatory Lending information from ABA: http://www.aba.com/Consumer+Connection/CNC_pred1.htm
There are many more links available but these should give you a pretty good idea
Buena Suerte

Answer 8

You do not want to be scammed, Heck I never see that on yahoo answer, Realtor and loan officer seem to be so trusted and honest.

You are doing the right thing and that is studying what is out there. Good job there for becoming informed. Since you do not want to be scammed check out this web site also it tell how the bubble was made.
http://www.breakingbubble.com/index.htm

Good Luck, and keep learning.

Answer 9

Lending Tree gives your info as a "lead" to other lenders who have paid to be on Lending Tree's network. Get ready for a lot of contact from them if you give your info! To stay in control, I would contact the lenders yourself instead. Try Eloan, Ditech, and Choice Finance.

Answer 10

Why do you need the money?
How do you want to pay it back?
What kind of property do you plan to use as collateral?
No inteligent lender would allow you to provide a credit report by hand (it could be fake).