Mortgage Rates in Illinois with KeyBank
Home loans in Illinois are available from several mortgage lenders. Finding the best mortgage for a purchase or mortgage refinance in Illinois can be challenging. The one key tactic is to shop around, to compare costs and terms, and to negotiate for the best deal.
Shopping around for a home loan or mortgage will help you to get the best financing deal. KeyBank is one of the top twenty largest banks in the U.S. that offers competitive mortgage rates in Illinois.
KeyBank offers fixed rate loans that have repayment terms of 15, 20, or 30 years. The mortgage lender also offer variety of adjustable rate mortgages in Illinois.
Borrowers should compare all the costs involved in obtaining a mortgage and estimate how long they plan to own the home to determine whether an ARM is more appropriate than a fixed rate mortgage.
The following list is a sampling of the varying terms, products, and rates available for mortgage loans for purchases and refinances in Illinois through KeyBank on February 9, 2010. The mortgage rates are based on loan type, down payment, and location selections made for a single family, primary residence.
30 year fixed rate mortgage rate is 5.000% with 0.000% points and a 5.135% APR.
15 year fixed rate mortgage rate is 4.375% with 0.000% points and a 4.596% APR.
5/1 ARM mortgage rate is 4.250% with 0.375% points and a 3.653% APR.
30 year fixed FHA loan mortgage rate is 5.125% with 0.000% points and a 5.262% APR.
30 year jumbo loan mortgage rate is 7.375% with 0.000% points and a 7.513% APR.
Mortgage loan rates in Illinois may change daily. These interest rates and/or points are subject to change without notice by the bank, and may vary based on credit quality, loan amount, and property type. All home loan products offered by the bank are subject to credit approval.
The APRs for the listed loans assume a 20.00% down payment on the purchase of an owner occupied one unit dwelling and with no secondary financing. The APR may not include all closing costs.
For current mortgage rates in Illinois from KeyBank a mortgage representative from the bank can be reached at 1-800-422-2442.
Regions Mortgage Locations South Carolina
Regions Mortgage offers a variety of residential mortgage loans. Regions Mortgage is based in Birmingham, Alabama and operates as a subsidiary of Regions Financial. Regions Mortgage offers homebuyers and existing home owners loan products with fixed rates and adjustable rate terms, including FHA loans and VA home loans. The Regions Mortgage website provides timely mortgage rate information as well as an abundance of information on the mortgage loans that are available for both purchasing and refinances.
Regions Financial Corporation operates as the holding company for Regions Bank which provides a range of commercial, retail, and mortgage banking services. The bank operates approximately 1,900 full-service banking offices and 2,300 automated teller machines in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, Texas, and Virginia.
Regions Mortgage locations in South Carolina:
Regions Mortgage
146 Sea Island Pkwy
Beaufort, SC 29907
843-525-8427 – Phone
843-524-1135 – Fax
Regions Mortgage
2 Lafayette Place
Hilton Head Island, SC 29926
843-342-2661 – Phone
843-342-2667 – Fax
Regions Mortgage
107 Chesterfield St S
Aiken, SC 29801
803-641-8690 – Phone
803-641-8696 – Fax
Regions Mortgage
112 Haywood Road
Greenville, SC 29607
864-289-2172 – Phone
864-289-2117 – Fax
Regions Mortgage
1200 Two Island Ct
Mount Pleasant, SC 29466
843-849-5798 – Phone
843-849-5799 – Fax
Regions Mortgage
1010 Gervais Street
Columbia, SC 29201
803-779-3836 – Phone
803-779-9214 – Fax
Regions Mortgage
170 Meeting Street
Charleston, SC 29401
843-937-4144 – Phone
Regions Mortgage
149 Columbiana Drive
Columbia, SC 29212
803-832-0221 – Phone
803-749-3478 – Fax
Regions Mortgage
216 E Main Street
Lexington, SC 29072
803-957-8454 – Phone
803-951-1981 – Fax
Regions Mortgage
1210 Ben Sawyer Blvd
Mount Pleasant, SC 29464
843-971-1291 – Phone
843-971-0548 – Fax
GMAC Mortgage Rates February 7, 2010
GMAC Mortgage Corporation is among the largest residential mortgage servicers and originators in the U.S. GMAC Mortgage originates first and second residential mortgage loans. Mortgage loans offered by GMAC Mortgage encompass a wide assortment of mortgage loan programs and options for both home purchases and refinances.
GMAC Mortgage is an indirect wholly owned subsidiary of GMAC LLC which includes several financial services companies including Ally Bank, Capmark Financial Group, GMAC Mortgage Subservicing and Ditech Funding.
With GMAC Mortgage, prospective home loan borrowers have several mortgage products to choose from depending on their personal financial situation. GMAC Mortgage traditional mortgage products include fixed rate mortgages, adjustable rate mortgages and FHA loans. All loans come with competitive rates and some of the loans offered include flexible down payment options.
Current mortgage rates and terms offered by GMAC mortgage include the following:
A 30 year fixed rate loan that has a mortgage rate of 5.125% with 0.195 points and an APR of 5.180%.
For buyers that would like a lower a mortgage rate and are willing to pay slightly higher closing costs, GMAC mortgage offers a 30 year fixed rate loan with a mortgage rate of 4.625% and 2.570 points and an APR of 4.888%.
15 year fixed rate loan has a mortgage rate of 4.375% with 0.320 points and an APR of 4.487%.
As an adjustable rate mortgage option, GMAC offers a 5/1 LIBOR ARM that has a mortgage rate of 3.875% with 0.070 points and an APR of 3.916%.
Mortgage interest rates are subject to change, and closing costs depend on the property location and the home loan options. All mortgages are subject to approval and additional conditions will apply.
The mortgage rates and terms listed are based on a home loan of $250,000.00 for a purchase transaction on a single family home valued at $325,000.00 in the state of Illinois.
The mortgage loan process with GMAC can be started easily online at their website or by calling 1.877.941.4622 and speaking with a loan representative.
Before choosing any mortgage loan product, make sure to fully understand the terms and conditions offered.
US Bank Home Mortgage Arkansas Heber Springs
US Bank home mortgage loan officer contact for Mountain Home, Arkansas. US Bank’s mortgage division can assist with a variety of mortgage loan needs through the local loan officer, on the bank website or via the home mortgage toll free number at 888-831-7524.
U.S. Bank National Association provides various banking and financial services in the United States. U.S. Bank home mortgage offers a range of mortgage loans and mortgage services throughout the United States.
In addition to traditional home loan purchases, jumbo home loans and FHA loans, US Bank offers a number of mortgage refinance options such as fixed rate and adjustable rate mortgage refinances, streamline refinancing for current US Bank home mortgage customers and FHA streamline refinance loans.
Brandon Clemons
Mortgage Sales Manager
U.S. Bank Home Mortgage
821 West Main Street
Heber Springs, AR 72543
Office: 501-362-7346
Cell: 501-831-5034
Fax: 501-362-2132
Brandon.clemons@usbank.com
Along with the information that is available from the local loan officer, there is a abundance of information available on the bank website to help consumers make informed choices about the best options regarding home loans mortgage services.
For consumers in the market for a new home or seeking to refinance, you can learn about every step in the mortgage process, from pre-qualifying to closing the mortgage loan from the bank website, the local loan officer or the toll free number for US Bank home mortgage at 888-831-7524.
US Bank Home Mortgage Arkansas Little Rock
US Bank home mortgage loan officer contact for Mountain Home, Arkansas. US Bank home mortgage offers a wide variety of mortgage financing products suited for variety needs. Mortgage applications can be completed with the loan officer listed or online through the US Bank website or through the main toll free number at 888-831-7524.
US Bank home mortgage loan programs include loans for purchases and refinances, FHA loans, jumbo loans and more.
US Bank home mortgage can provide fixed rate loans for terms include 15, 20 and 30 year loans, adjustable rate loans with different fixed rate periods as well as low down payment loans.
For Mountain Home, Arkansas the listed US Bank home mortgage contact is:
Joe Keene
Mortgage Loan Officer
U.S. Bank Home Mortgage
#1 Riverfront Place
Third Floor
Little Rock, AR 72114
Office: 501-688-1370
Pager: 501-714-0240
Fax: 501-370-4390
Joe.w.keene@usbank.com
U.S. Bank is one of the top ten largest banks in the US listed by assets. The parent company of U.S. Bank is US Bancorp. US Bank provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions
The consumer banking division of US Bank delivers products and services through the retail branch banking offices, telephone servicing and sales, on-line services, direct mail and ATM processing.
Consumer banking includes community banking, in-store banking, small business banking, consumer lending, mortgage banking, consumer finance, workplace banking, student banking and 24-hour banking.
US Bank Home Mortgage Arkansas Mountain Home
US Bank home mortgage loan officer contact for Mountain Home, Arkansas. US Bank has six loan officers listed as contact personnel in the state of Arkansas. Home loan applications with US Bank can be completed with the loan officer or the mortgage loan application can be completed online.
US Bank operates in 24 states and has over 2,851 bank branches. A U.S. Bank Home mortgage consultant can be reached at the US Bank home mortgage phone number 888-831-7524.
The contact information for the US Bank mortgage loan officer in Mountain Home is:
Rhonda Reaves
Mortgage Loan Officer
U.S. Bank Home Mortgage
100 South Main Street
Mountain Home, AR 72653
Office: 870-424-9182
Cell: 870-421-3879
Fax: 870-424-4478
Rhonda.Reaves@usbank.com
US Bank home mortgage loan officers can assist with purchasing a new home, refinancing an existing home loan, first time home buyers and mortgage calculations regarding how much a borrower can afford and monthly mortgage payments.
Mortgage rates for single-family, primary residences can be found on the US Bank website. US Bank home mortgages are available for conforming fixed, ARM loans or adjustable rate mortgages, Jumbo fixed rate mortgages, FHA loans and VA loans.
U.S. Bank is the 6th largest commercial bank in the United States. US Bank provides a wide assortment of bank products and services including home mortgages, home equity loans, personal loans, deposit products and more.
Mortgage Rates and Home Loans at Gate City Bank
For consumer searching for mortgage rates and mortgage loans in North Dakota, one bank mortgage lender to consider is Gate City Bank. Gate City Bank is headquartered in Fargo, ND. The bank offers a variety of consumer loan products including home loans.
Gate City Bank is a mutual bank which means it is owned by its customers. The bank uses the deposit funds held at the bank to serve and invest in the communities in which the bank branches are located. Gate City Bank operates over 30 bank branches in the North Dakota and Minnesota.
Gate City Bank has been offering mortgage loans since 1923, and continues to offer a variety of home loan products. The bank prides itself on good customer service and mortgage loan customers are invited to call should they have any question regarding their loan, payments, taxes, and insurance, for the entire life of their home loan.
With Gate City Bank mortgages the home loans are locally approved, locally financed and locally serviced.
Gate City Bank offers a full range of products, each with different features and advantages. Gate City Bank offers free pre-approval programs, first-time home buyers loans, conventional loans with adjustable rates or fixed rates, VA and FHA loans, new construction loans, construction to permanent loans with one-time loan closing and more.
Current mortgage rates and terms offered by Gate City Bank include:
30 year fixed rate of 5.250% with 0 points and an APR of 5.357%.
20 year fixed rate of 5.125% with 0 points and an APR of 5.268%.
15 year fixed rate of 4.625% with 0 points and an APR of 4.804%.
1 year adjustable rate mortgage has a rate of 3.875% with 0 points and an APR of 2.578%.
3/1 year adjustable rate mortgage has a rate of 4.375% with 0 points and an APR of 3.120%.
Gate City Bank has a promotional offer they are currently running on their website that involves a coupon for $100 off the closing costs on any Gate City Bank mortgage loan. Additional home loan programs, mortgage rates and point options are available.
The interest rates, annual percentage rates (APRs) and points shown are subject to change without notice. Mortgage rates and fees are based on borrowers with an excellent credit history. Mortgage rates and APR’s may vary depending on the borrower’s credit history and other attributes regarding income, employment and collateral. All home loans are subject to bank approval and additional conditions may apply.
The mortgage rates and points are not locked until confirmed by a Gate City Bank mortgage loan officer. For current mortgage rates and terms, a bank loan officer can be reached at 800-423-3344.
A New Mortgage Loan, Is It Time To Buy a Home
If you’ve wavering between buying and renting, there is more than the pride of ownership to consider. Buying a home comes with additional costs, but it also has many more perks than renting. Even with the possible financial advantages of homeownership over renting, if you’re beginning to itch to buy your own home be sure you’re truly ready.
A home should be first viewed as a place to live, it can also be considered an asset for future plans, an investment in a community and possibly and financial asset as well. This unquestionably does not mean the house buying is one big bonanza.
Renting allows an individual or family the ability to be generally free of most maintenance responsibilities that would come with a home. By renting you do lose the chance to build equity, by property appreciation and mortgage balance reduction, take advantage of tax benefits, and protect yourself against the inconvenience of rent increases.
For first time home buyers, purchasing a new home can be overwhelming and comes with the uncomfortable process of obtaining financing or getting a home loan. Unfortunately, the home loan process is simply overly complicated because of the confusing expressions and rules in the mortgage lending industry. A few steps taken in advance to prepare for the home purchase can go a long way to facilitating the purchase and mortgage loan transaction.
Given the asset value, stability of payments, freedom, stability, and security of owning a home, potential new buyers have to consider whether they are prepared to make the leap into a new home and new home loan.
You Have the Down Payment
The first step to decide if you can buy a home is not the monthly costs. It is the initial costs of a home. If you can afford a true down payment on a home including closing costs and possible points, it most likely makes sense for you to buy. Home owners get serious tax breaks, but that tax break will be lost if you’re paying a penalty for not having an adequate down payment or are struggling with a subprime mortgage that is too much for your income to bear.
Save at least five percent of the home’s value before purchasing and push for up to 20 percent. In addition to having immediate home equity, you’ll also find that your mortgage loan options are much more attractive without trying to find loans which require low down payments that will also require higher credit scores and mortgage insurance. The exception would be loans for qualified veterans and FHA loans which are subsidized by the government.
Can You Afford It Long Term
A home is an excellent investment, but the bulk of homes are an investment that should be considered over the long-term. Despite television shows to the contrary, flipping a home or selling it after a few well chosen modifications, is often not a lucrative option in the majority of housing markets. Invest your money first is proper securities and market options.
With this sort of investment you are able to access your money quickly in case of emergency. By tying up all of your money in your home and a home loan, you will have to take out a new mortagge loan or sell your home, which can take months, to access funds should a financial crisis arise. And as recent markets have shown, home values can go down as well as up.
You must also consider your income in the long-term. If you’re stretching to meet your monthly mortgage payments, but know that you’ll need a new car in a year or less, buying a home may not be a wise use of your money. Either invest in a smaller, more affordable home, with a smaller mortgage loan or continue renting until your income rises to the level you need to afford the sort of home you’d prefer.
There is a tremendous array of mortgages available today, but all of the varieties fall into two main categories, fixed rate mortgage loans and adjustable rate mortgages - all carry quite long repayment terms.
You Have Done Your Homework
Arranging financing on a home is likely one of your first steps in buying. Begin working with a bank to arrange a prequalification or preapproval which is an estimated amount of financing before making any offers on a home. This will facilitate the sale and make the sale itself much cleaner and faster. To arrange mortgage loan financing, anticipate 6-8 weeks for the complete home loan underwriting process and closing. Home loan preapproval takes far less time, however.
Knowledge is the key to successful homeownership with regards to the dwelling as well the home loan used to secure the purchase. To become a first time homebuyer, it’s important to know where and how to begin the home buying process.
Evaluate whether you have a steady source of income to handle the monthly mortgage payment. Investigate your credit report to see that you have a good credit record and credit score. Look at your outstanding debts as wells, looking especially close at outstanding long-term debts, like car payments. Review your monthly budget to be prepared for the mortgage payment, mortgage loan costs, moving and ongoing expenses such as home maintenance and repair.
Consider Whether You Have Time
Another major consideration for homeownership is that you have the time to deal with the upkeep of that house itself. When will you mow the yard and repair any little problems that arise? Renting makes these little tasks other people’s problems. You can hire a cleaning or lawn service, but you still must be around enough to facilitate any workers in or around your home.
Examine Potential Homes Thoroughly
When it’s time to begin actively searching for a new home, look at all manners of homes within your price range. Travel the area where you’ll be moving and consider various locations and neighborhoods. As you view each house, try to minimize the emotional response, although that is important, and instead work through your checklist. In addition to the features you’ve listed, you should also be comparing each home on the basis of cost, convenience, condition, and capacity. When you compare homes on a logical basis, it will soon be evident which home is the best investment for you and your family.
You’re Staying Put
If you move constantly or have a career that takes you far from home on a regular basis, you may be better off renting a while longer. Owning a home means putting down roots in a particular community. You’ll be paying for the upkeep of the neighborhood as well as school taxes. You will be paying a monthly mortgage payment that requires timely payments. Your children will be friends with other kids nearby and you may enjoy getting to know your neighbors at backyard grills or such.
If you’re constantly moving around the country or even the globe, owning a home may be a commitment you’re not willing to endure. You’ll be responsible for the home’s upkeep even while traveling and selling a home after a short-term will likely cost you far more than you’ve made in equity.
Follow the boy scouts motto and be prepared before you decide the time is right to buy a new home and obtain a new mortgage.
Mortgage Servicing
A mortgage servicer is a company responsible for collecting the monthly mortgage payments, disbursing the taxes and insurance if necessary and crediting the balance to the borrower’s mortgage loan account. The company that handles the mortgage servicing may engage in this activity for another mortgage lender or the company may be servicing the mortgage loan for their own portfolio of home loans.
The mortgage loan servicer receives a fee from each loan for the payment processing involved in servicing that loan. The fee is usually a percentage of the payment on the loan. Approximately ¼ of one percent is the standard fee for mortgage servicing. But the service fees will depend on many factors including the mortgage loan type. Fixed rate mortgages generally pay the smallest servicing fee followed by adjustable rate mortgages and then FHA loans and VA loans. Generally, the more work to do as servicer such as collection calls and notices the greater the servicing fee.
Often a home loan will have its servicing sold shortly after the mortgage loan closing. A home loan may in fact, have its servicing rights sold multiple times over the life of the loan. If your home loan is about to have its servicing sold or transferred to another company, the new servicing company must notify you within 15 days after the transferred occurred. Within the notice, the new servicing company must notify you of:
The new mortgage servicer’s name and address.
The date that your old servicer will no longer be able to accept payments.
The date this new servicer will begin accepting the monthly mortgage payments
A toll free phone number for the new servicer.
If you have optional insurance coverages, the terms to continue must be spelled out.
A statement will be included that clarifies there is no changes to the terms and
conditions of your original home loan and mortgage.
If your home loan has an escrow account, the servicer is required under the RESPA statute, to send an annual statement that illustrates the activity of the escrow account. The statement will show the account balance for the escrowed funds and reflect the payments made for property taxes and insurance over the prior 12 months.
New mortgage loan servicers are not allowed to require an escrow of taxes and insurance if the terms of the original do not call for an escrow.
After the servicing of a loan is transferred there is a 60 day grace period that bars the servicer from charging a late fee should the borrower inadvertently send their mortgage payment to the previous servicer or mortgage lender.
Usually the transition from mortgage loan servicing company to another goes smoothly, but errors do occur. It is always a good idea to check to make sure that the existing mortgage lender is selling the loan or the servicing rights and when they received your last payment. Then, check to see when the next monthly mortgage payment is due and to which address that payment should be sent.
Should you have a complaint regarding the servicing of your home loan, notify the servicer in writing of the complaint with as much supporting documentation as possible. Under RESPA regulations, the servicer has 20 business days from the time they receive your complaint to acknowledge the dispute and 60 business to settle the dispute. If you are not satisfied with the resolution and wish to file a complaint with Department of Housing and Urban Development, the contact location for such a complaint is:
Department of Housing and Urban Development
451 Seventh St. SW Room 9154
Washington, DC 20410
Mortgage Loans and Loan to Value
LTV, or loan to value, is only one of the factors mortgage lenders use to evaluate or underwrite a home loan. LTV is expressed as a percentage or ratio. The ratio is calculated by dividing the mortgage loan amount by the value of the property. An example of this ratio is if someone was obtaining a $200,000 mortgage loan for a property that is valued at $400,000, the LTV of this transaction is 50%. Mortgage lenders use the loan to value ratio as a significant measure of risk in making a mortgage loan decisions.
The LTV is a very important consideration for the mortgage lender and the mortgage applicant for several different reasons and its risk measure will change with the home loan type and request. As a simple tool to measure risk, the higher the loan to value on a home loan, the riskier the home loan is perceived to be. Loan to value is essentially measuring the amount of equity in a property. This equity is a result of either the down payment amount, a larger down payment would equal more equity, or a reduced balance on a existing mortgage loan for a refinance request or an increase in property value.
Loan to values therefore measure the amount of equity in a property. The greater the equity, whether it be with a large down payment or appreciation when you already own the property, the more committed to the property a borrower generally will be and the larger the cushion there is to absorb losses by the mortgage lender should a borrower default on their home loan. Not only our borrowers more committed when there is more equity in the property, but the lenders loan balance has a greater level of protection should a borrower default. Certainly, 100% loan to value home loan transactions are defaulting at a higher rate than lower loan to value home loan transactions are.
If you are applying for a mortgage to purchase a home, the loan to value is measure of how much money has to be placed as a down payment to buy the property. In order for the mortgage lender to determine the value aspect of the loan to value ratio they will look at the lower of the purchase price, or appraised value of a home, when you are purchasing a new house. If the home appraises for an amount greater than the purchase price, this may make the transaction more desirable for you the borrower, but the mortgage lender will now use the lower sales price figure to determine the mortgage loan underwriting evaluation. Because of this, the mortgage lender will not have to worry about lending more money than the actual property is worth or lending more than you would be willing to purchase the property for or got caught in an over inflated purchase transaction.
The importance of the amount down payment for the borrower can’t be disregarded either. An important item to remember, when a property is purchased, the total down payment you make will have to come from your source of money, borrowed funds are unacceptable. If your down payment is less than 20%, you will need private mortgage insurance (PMI). This is insurance you pay to protect the mortgage lender if you don’t repay your home loan in full. With mortgage insurance coverage an extra premium or fee is included within your monthly mortgage payments. The type of home loan you receive, the insurance company as well as the home’s LTV determines the exact premium amount for the private mortgage insurance. Higher loan to value loans or home loans with smaller down payments will have a higher mortgage insurance payment, adjustable rate mortgages will also have a larger mortgage insurance cost.
When an existing home owner is refinancing their home, the appraised value is what will be used to find the value part of the loan to value equation. The biggest component in calculating your home’s appraisal value is by analyzing past sales of comparable homes that are within one mile of your property and were sold within the past year. Houses for sales or listings do not count towards this amount because they are not finalized sales and their prices can either rise or drop.
Mortgage refinances fall into two categories, cash out refinances and rate and term refinances. A cash out mortgage refinance is when you take out funds with the new home loan for anything other than paying off the existing mortgage and closing costs. A rate and term refinance is for paying off just the mortgages and closing costs. In these cases, the new home loan is changing either with a new mortgage rate or a new loan term. When you have to combine a first and second mortgages within a mortgage refinance transaction, you will want to remember than the second mortgage loan needs to have been open for at least twelve months. If your second loan is not “seasoned” long enough, the mortgage lender will consider the consolidation of the two mortgages as cash out refinance loan, thus you are subject to all LTV guidelines and their associated mortgage rate adjustments.
With all mortgage refinance transaction, you will find that the ratio used with the loan amount to appraised value is will be a big determinant of the home loan approval. This is especially true if the borrower wishes to cash out within the transaction. The typical rule for cash out transaction is a maximum amount of 90% of the appraised value for the entire loan amount, which also includes any cash out. And a 90% cash out refinance is the absolute high end of the approval range, meaning the mortgage lender considers this loan the riskiest loan is less likely to approve such a request.
When your LTV is over 75%, you will usually experience a minimum .125%, or 1/8th of a point, increase within the mortgage rate for every 5% in the LTV. An example of this would be when a person takes 85% cash out mortgage loan; their mortgage rate would generally be .25%, or 1/4th of a point, higher than with a 75% cash out mortgage with established mortgage rates. The main reason for the mortgage rate increase is the increased risk factor on the home loan, there is now less equity in the property.
If you require more than 90% cash out rate, there are lenders that will supply this to you. However, the mortgage rates are generally significantly higher than standard rates with the exception of FHA loans. FHA loans allow 85% cash out LTVs without a significant impact on the mortgage rate.
The lower the ratio between the loan amount to the appraised value, the loan to value, the more likely a mortgage lender will accept the risk of the home loan. The risk considerations will be different in owner occupant versus non-owner or rental situations. Loan to values will be more significant in cash out transactions versus rate and term refinance loan requests. As you compare mortgage lender costs and qualification requirements you will see how loan to value can play a key role in the final outcome.
Mortgage calculators are a great tool to evaluate the loan to value on a home loan. www.selectcalculators.com offers a wide assortment of mortgage calculators to help determine LTV and evaluate home loan products and mortgage rates.
Can You Save Money by Closing a Home Loan at the End of the Month?
In order to understand if you will be able to save money from closing at the end of the month, you have to learn some background information on how the mortgage loan closing costs are determined. You will want to start by comparing renting or rental payments to a mortgage payment. When you pay rent, you normally have to pay the bill at the start of each month for the forthcoming month, which is basically paying in advance. However, with your mortgage payments, the monthly mortgage payment normally pay off the interest that was built up on the principle balance throughout the previous month. Mortgage payments pay the interest in arrears as opposed to how the rent payment is paying for future use.
When you want to close on your house, you are generally able to do so at any time during the month. As an example let’s say your closing date is on October 15, which would mean that your first mortgage payment is due on December 1st. In order to maintain a level of homogeneity in the mortgage securities market most all primary mortgage payments are due on the first of the month. This payment on December 1st would include the interest for November since monthly mortgage payments pay the interest in arrears. However, what about the 16 days of October that remains between the closing on October 15 when you receive the money or the keys to the new home and November 1? The amount of interest that would be due for the rest of that month is paid at closing, which is sometimes called pre-paid interest or interim interest. You will notice that the closer to the latter part of the month you close on your house, the smaller the interim interest payment will be since there are fewer days from the home loan closing to the beginning of the next month.
If you are currently renting, but intend on purchasing a home, you will probably want to settle for an end-of-the-month closing because you will be able to be moved out of your rental home and into their new house before the next month’s rent is due.
Because of this, many people decide to close at the end of the month. By closing at the end of the month you wont save money but since the purchase closing requires the down payment, closing costs and the interim interest, it does reduce the cash needed to close significantly. On a standard purchase transaction this is a real financial outlay, which many homebuyers could desperately do without. However, if you aren’t concerned with having to pay an interim interest payment, than you will not likely be concerned about which day you close on the new home loan.
The role of interim interest in a refinance may be very different. In many cases a homeowner will add the amount of money needed for their refinance based on their home mortgage balance including any type of closing costs and escrows and any interim interest that is involved. Therefore, many homeowners considering a mortgage refinance assume that if they close at the end of the month the closing costs are lower. However, the main calculation many borrowers forget is the build-up of interim interest within their old mortgage loan.
You will find that many borrowers will call their current mortgage lender at the very beginning of the month to find out how much their principle balance is so they can make a payoff. The borrowers intention is to make the last payment on the old mortgage and keep the interim interest down on the new one. Many borrowers will find that if they decide to close near the end of the month, their payoff is much higher than the original quote. This is because of the amount of interest that has accumulated throughout that month on this home loan.
These individuals who are considering a mortgage refinance will not pay that month’s mortgage payment. An example of this would be if the closing on your mortgage refinance wasn’t until October 15, many borrowers wouldn’t pay their October 1st payment. They can successfully do this because many mortgage lenders will not count a payment as late till the 15th of each month. While this is not suggested many individuals still continue to perform their home mortgage refinance in this manner. However, they will quickly find out that at closing they will have to pay interest not only for September (which was what the October 1st bill was covering) but also interest for half of October.
If you wait to close at the end of the month it may seem like you are saving money. Of course, you are doing a mortgage refinancing for a reason. If that reason is a lower mortgage interest rate or a consolidation to pay off debts at a higher rate, it never pays to wait. The longer you wait to close the more interest you are accruing on your existing mortgage, since its rate is higher than the new mortgage refinance, you are paying more money each day you wait to refinance. Better to pay interim interest on the lower mortgage rate of the new home loan than a higher mortgage rate on the home mortgage you are refinancing.
There are some mortgage lenders that will give you something called an “interest credit” when you close for the first five days of a month. This is a credit of interest during these five days, which will ultimately be included within the upcoming payment. When there is an interest credit, the first payment will be on the very next month. An example is if you close on the 2nd of January, instead of 28 days of interim interest and a first payment March 1st, you will get a two day interest credit and the first payment will be due February 1st.
FHA loans actually accumulate interest from the beginning of the month to the end of the month no matter when they were paid off. Because of this, when you’re paying off an FHA home loan, you will need to properly time the closing so you do not have to pay double interest. FHA does not calculate the interest daily on an existing mortgage loan.
The bottom line is that the closing date may save money for out of pocket costs versus costs added to the loan amount but the ultimate savings is really only an accounting issue. The interest for the mortgage loan has to be paid one way or another regardless of when the loan closes.