| FAQs
WHY CHOOSE A BROKER OVER
A BANK?
A bank, whether local, or national, only has a select few mortgage programs
to offer it’s customers. By contrast, a broker can literally shop
your loan to hundreds of lenders, from local banks to far away lenders,
each eager for your business. The result, by organizing your financing
through a broker, you get the best loan for your situation. As a broker,
Cedar Coast Mortgage will shop relentlessly to save you money.
WHAT AFFECTS CREDIT SCORES? ARE THEY IMPORTANT? HOW CAN
I IMPROVE MY SITUATION?
In the modern era of banking, credit scoring has become almost entirely
automated. Credit Scores are assigned by computer to an individual by
each of three independent credit agencies. When you fill out a loan application
with Cedar Coast Mortgage, you will sign some paperwork that authorizes
Cedar Coast Mortgage to obtain your credit report.
Many things can affect one’s credit score. Most people know that
paying credit cards, auto loans, and existing real estate loans on time
each month is the best way to keep your credit in shape. Another sometimes
overlooked fact is that pulling your credit often, alerts the credit agencies
that you may have been applying for several loans or credit cards in a
short period of time, and may have a negative affect on your credit score.
Additionally, don’t close out those old credit card accounts even
though you are no longer using them. By closing out these accounts you’ve
decreased the maximum credit available to you and increased your debt-to-credit
limit ratio. Having open, established accounts on your credit report shows
stability, and evidences your ability to manage your spending. Never maintain
a balance on your credit card that is equal to more than 50% of the available
credit limit.
High credit scores will save you money when it
comes to financing! With high credit scores, an individual has access
to a greater variety of loan programs that offer financing at significantly
better rates. Keeping your credit clean by paying bills on time will ensure
you have the easiest time to get financing for your next big purchase.
Good scores are important, but not critical.
Don’t Panic. There are hundreds of sub-prime
lenders that can offer financing to individuals with low credit scores,
or past bankruptcies. Excellent credit is by no means a requirement. At
Cedar Coast Mortgage, we pride ourselves in being able to offer the best
possible programs for everybody, no matter their past. In addition to
finding you the best deal, we will also teach you how to improve your
credit rating, so when it’s time to refinance, you will be ready
to step into the best loan with the lowest interest rate.
Learn
More About How Credit Scores are Calculated...
WHAT
TYPE OF LOAN PROGRAMS DOES CEDAR COAST MORTGAGE OFFER?
Cedar Coast Mortgage specializes in all types of real estate financing.
There are literally dozens of different types of loans. The best program
for you depends a lot on your unique situation. Here is a quick overview
of the most common loans, along with a list of their strengths and weaknesses.
Fixed
Rate Mortgage
(FRM)
Fixed rate mortgages are very popular right now as rates have been close
to historic lows. A fixed rate mortgage locks in at a specific interest
rate and is guaranteed for the term of the loan. The most common loan
in the USA is a 30 year fixed mortgage. With this type of program, you
are ensured that your rate and principle and interest payment will not
change throughout the life of the loan. Fixed loans also come in other
lengths, the second most popular being a 15 year fixed. With rates at
historic lows, fixed rate mortgages are the most conservative and often
the best option.
ARMs
(Adjustable Rate Mortgage)
Common ARM products work to lower your payment for the first part of the
loan term. There are a variety of ARMS out there that have the advantage
of keeping your payment low in the first years you are into your new house.
For example, a 5 year ARM will stay locked at a fairly low interest rate
for five years, then shift to a market interest rate thereafter. ARMs
have limits, or caps on the amount your interest rate can increase each
year, and are also capped on the total amount the interest rate can rise
over the life of the loan. These programs can be very good if you are
stretching a little trying to get into your dream home and expect your
income levels to rise down the road. The disadvantage is that if the market
changes, and rates go up, you can find yourself with a big payment once
the inital fixed interest rate period has expired.
Interest
Only
Interest only is not really a loan type, but an option that can be applied
to FRMs and ARMs. Currently there are a wide array of lenders offering
Interest Only loans. These loans work that you only pay the interest,
but nothing towards the loan's principle. In affect, these loans carry
some risk because you are not making progress in buying your house. At
the end of the Interest Only period, then you can expect to paying increased
principle and interest since your payments will be amoritized according
to the time left on the loan. The advantage, of course, is that your monthly
payment will be at an absolute minimum during the early part of your loan
term. These programs are good for rental properties, where you are looking
to cash flow, or for primary resident cases where you foresee refinancing
in the future when you’re in a better position to handle a bigger
monthly payment.
Pay
Option ARMs
You hear Pay Option ARMs advertised a lot on TV and radio. They are the
new hot product in the mortgage industry due to super low initial interest
rates. These low initial rates make these products very easy for the lenders
to attract customers. The reason they are called Pay Option ARMs refers
to the fact that each month you are given four payment options: 30 year
fixed, 15 year fixed, Interest Only, or Negative Amortization. It’s
important to fully understand these products before you choose to go this
route. The Pay Option ARM programs can be a good solution for the right
person, but at Cedar Coast Mortgage we believe some care must be taken
to make sure that the consumer understands this product thoroughly.
Reverse
Mortgage
Reverse amortization loans can be good in a few specific cases. With these
loans, you actually draw from the equity in your house, and receive rather
a payback from the lender. For Port Angeles and Sequim, these loans work
well for retirees that need extra income. For some, as property taxes
continue to rise, and with social security and Medicare’s future
looking bleak, reverse mortgages will be the answer to a comfortable retirement.
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