FAQ

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The most common mortgages are fixed and adjustable-rate mortgages:

• Fixed-rate mortgages offer the stability of regular monthly payments over a given length of time, or term.
• Adjustable-rate mortgage (ARM) programs offer an initial interest rate and payment lower than a standard fixed-rate mortgage.

If you plan to be in your home for more than seven years, you may want to consider a fixed-rate mortgage, which offers predictable payments and long-term protection against rising mortgage interest rates.

If you plan to be in your home for seven years or less, an adjustable-rate mortgage (ARM) could be attractive. Keep in mind that with an ARM, your monthly payments have the potential to go up each time your interest rate adjusts.

The Veteran’s Administration (VA) loan program is guaranteed by the U.S. Government’s Department of Veteran’s Affairs. VA loans may be available to the following individuals:

• Honorably discharged veteran
• Active duty service member
• Un-remarried surviving spouse of a military service member
• Reservist
• National Guardsperson

Federal Housing Administration (FHA) loans are insured by the U.S. Government through the U.S. Department of Housing and Urban Development, also called HUD. FHA loans offer an excellent start to first-time home buyers, with options such as a low down payment or low closing costs.

The Home Equity Conversion Mortgage (HECM) is the Federal Housing Administration’s (FHA) reverse mortgage program which enables seniors age 62 and older to withdraw some of the equity in your home. You choose how you want to withdraw your funds, whether in a fixed monthly amount or a line of credit or a combination of both. You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

That depends. Many first-time homebuyer programs require as little as 3.5% down. Today, there are many loan programs that can be tailored to fit your lifestyle and financial resources. However, for conventional loans with down payments of less than 20%, private mortgage insurance (PMI) will be required.

PMI is insurance provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders require mortgage insurance for loans with a loan-to-value ratio above 80% (less than 20% equity).

Perhaps. Keep in mind that lenders don’t just look at your credit history, but also at your ability and willingness to pay in the future. At Network Mortgage we may be able to help you buy a home even if your credit isn’t perfect.

Three types of mortgage and homeowners costs may be tax-deductible:

• Discount points
• Interest paid on a home loan or home equity loan
• Property taxes

After the year that you buy your house, only your mortgage interest and annual property taxes are deductible. Be sure to consult your tax advisor for advice about your specific situation.

You should consider refinancing if you want to pay off high-interest-rate debt, shorten the length of your repayment term, or lower your monthly mortgage payment.

In general, one or more of the following conditions should be present before you should consider refinancing:

• Mortgage interest rates are falling
• Your home has significantly appreciated in market value
• You’ve been making payments on your original 30-year mortgage for less than ten years

Yes. There are a variety of options that allow you to tap into your home’s equity and take cash out. Consult your loan advisor for the best cash-out refinancing plan for you.

Yes. Cash-out refinancing can help homeowners consolidate high-interest, non tax-deductible debt. Because your mortgage interest rate is likely to be lower than your credit card rates or personal bank loans, consolidating debt may reduce your overall monthly debt payments. In addition, your mortgage interest may be tax-deductible, while your credit card interest is not.