FREQUENTLY ASKED QUESTIONS
WHEN SHOULD I REFINANCE?
If your mortgage has a higher interest rate compared to ones in the current market, then refinancing could be a smart financial move. If you can find a loan that offers a reduction of 1–2% in its interest rate, you should consider it.
Remember to factor in your break-even analysis! Refinance only if you’re planning to stay in your home for a long time, because it will give you time to make up those closing costs.
WHAT IS A SUBPRIME MORTGAGE?
"Subprime” refers to the below-average credit score of the individual taking out the mortgage, indicating that they might be a credit risk.
The interest rate associated with a subprime mortgage is usually high to compensate lenders for taking the risk that the borrower will default on the loan.
WILL MY FIXED RATE MORTGAGE PAYMENT FLUCTUATE THROUGHOUT THE LIFE OF THE LOAN?
Even if you have a fixed rate mortgage the monthly payment amount may fluctuate during the life of the loan. A fixed rate loan offers a fixed term (for example, 15 or 30 years) as well as a fixed interest rate, so the monthly amount for the payment of principal and interest will not change during the term of the mortgage.
However, your monthly mortgage payment may also include interest, taxes and insurance. While your principal and interest amounts will not change, the amount needed for taxes and insurance may.
SHOULD I GET A FIXED RATE OR ADJUSTABLE RATE LOAN?
Fixed-rate mortgages are usually the better choice for most people. This is especially true if you plan on being in your home for more than five years or if interest rates are historically low, as they are now.
You may want to consider an ARM if you'll only be in the home for a few years, if you think interest rates will decrease, and/or you expect your income to rise enough to absorb higher mortgage payments. change over the lifetime of your loan to make sure it's still something you could afford.