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Refinancing Questions and Concerns
If I refinance, can I lower my monthly mortgage payment?
Pre-qualification is an informal way to see if you would
qualify for a new mortgage with lower monthly payments. You can be pre-qualified by calling
us and telling us your income, your long-term debts, your credit scores and
what you think your home would appraise for. Without any
obligation, this helps you determine if we can lower your current monthly
mortgage payments. We can also
assist you in obtaining your credit report so that you will know what your
FICO scores are.
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I don't want to pull my credit because the inquiry will
bring my credit score down.
Overall, credit inquiries account for only about 5% of the
total score. However, it is true that multiple inquires can hurt your
credit. What is too many inquires and what is acceptable? 12 inquires in a
three month period are too many. That may lower your score 15 or 20 points.
Furthermore, inquiries only lower your score if they are less then 3 months
old. Keep in mind that the main components that make up your score are your
payment history and the amounts you owe on your accounts. A bankruptcy
filing, mortgage lates, or a foreclosure can significantly lower your
score. You should avoid taking on more credit than you can handle. Late
payments will also work against you, so it is important to make all loan
payments on time even if it means paying the minimum payment. Ideally, you
should avoid having high balances on your credit lines and strive instead
to maintain low balances. This will improve your score over time, because
people owing smaller amounts on their credit accounts are viewed as having
a lower repayment risk than those who owe more.
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What is your rate?
Since Top Gun Mortgage is not a direct lender, we have access
to hundreds of banks and financial institutions from across the country. We
fund so many loans that these banks will reduce the rates for Top Gun
Mortgage in order for us to send them our business. This means we can get
the lowest wholesale rates because the banks compete for our loans. These
discounted rates are then passed on to our clients. The placement of any loan
for a particular client can vary due to literally hundreds of different
variables. You can, however, always be sure that Top Gun Mortgage will
offer you the best loan for your situation. It is best to call us and talk
with one of our expert Mortgage Specialists. Together we can find you the
most competitive rate.
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I'm worried about rates going up. What do you suggest I
do?
While the mortgage market varies day to day like any other
market, the days of sky rocketing interest rates are likely over. In the
past, the Federal Reserve did not control the economy like it does today.
Rates would go up when there was runaway inflation. Today, the Federal
Reserve controls inflation by raising short term interest rates (like the
ones tied to Home Equity Lines of Credit) keeping the economy from
overheating, and thus mortgage rates on your primary first mortgage low.
Also, mortgage bonds are a far larger market than in the past, creating
more money out there to lend, and lowering rates.
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What happens when my ARM starts to adjust?
Many consumers who are wary of an adjustable rate mortgage
(ARM) are afraid that once the fixed period is over (2, 3, or 5 yrs.), the
interest rate on his or her loan will drastically increase. This, however,
is not always the case. The rate ARM loans adjust to after the fixed period
is the fully indexed rate (FIR). It is determined by the sum of two
factors: your index and your margin. The index is what determines if your
rate and your monthly payment may go up slightly or down slightly. Most
indexes are within the range of 2.00-5.00%, moving hundredths (0.01%) at a
time. Your margin never changes. It is a fixed number decided at the
beginning of the loan and ranges between 1.00-5.00%. The margin is added to
the index to determine your FIR. While no one can predict the future,
examining the mortgage indexes during economic cycles has proven to be a
good indicator of what your interest rate will do. Mortgage indexes usually
move slower than the national inflation rate. Ideally, you'll want an ARM
to stay fixed during the inflation and start adjusting during economic
growth.
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