What is the difference between ARM and FRM?
An adjustable rate mortgage fluctuates based on a market index while a fixed rate mortgage stays constant over the life of the mortgage.
What are discount points?
Discount points are equal to 1% of the total mortgage. You have to pay discount points, so if you have a $150,000 mortgage and you buy 2 discount points it will cost you $3,000. This gets subtracted from the total amount of the mortgage thus lowering your monthly payment and the interest rate. Buying discount points is a lot like making a down payment.
How does my credit score affect my mortgage?
The lower credit score you have, the higher interest rates you are going to have to pay.
How much of a down payment do I have to make?
This will depend on your credit score, usually lenders like to see a 20% down payment but if your credit is really solid you can pay less then that.
When should I refinance my mortgage?
The rule of 2 is popular when it comes to refinancing mortgages. The rule states that you should refinance whenever market interest rate is less than 2% of your current rate. However, you can save money even if you lower your interest less then 2%, so if you feel you can save money then refinance your mortgage whenever.
Refinancing sounds too good to be true, what's the catch?
The catch is that the money savings are only short-term. The length of your mortgage will be extended, so even though you are saving money with lower monthly payments you will be paying more in the long run. However, it still makes sense to save in the short-term so you have more money to spend in the long term, thus offsetting the extended length of the mortgage.
What's the difference between home equity loans and home equity lines of credit?
A home equity loan is a fixed amount made at a certain interest rate. You receive it all in one lump sum and can not borrow any further. A home equity line of credit establishes a certain amount for your loan, then you can borrow up to that limit as often as you want.
What's the difference between home equity loans and home equity lines of credit?
This depends on what you need, if you have a sudden expense that you do not see occurring again, like a one time medical fee, than just getting the loan is probably the way to go. But if you need to make multiple payments, college tuition being an example, then it might be a good idea to take out the home equity line of credit.
How much equity do I have?
The value of your house subtracted by the amount of your mortgage is how much equity you have on your house.
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