Refinancing
Questions and Concerns
I have bad credit can I get a loan?
Poor credit ratings are caused by negative financial
practices such as defaulting on payments, charge-offs, judgments,
making late payments, declaring bankruptcy, exceeding credit card
limits or even credit report errors. The best way to overcome
a bad credit rating when looking to lower your monthly payments
and interest rate, consolidate debt, or make home improvements
is to have Top Gun Mortgage search for a lender that allows less
than perfect credit. These lenders offer aggressive interest rates
and programs. Top Gun Mortgage will assist you in improving your
credit situation so that you can obtain the mortgage you want.
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I don't want you 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 (not enough to be denied). Less than
5 in a three month period is fine and will not hurt your score.
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 rarely or never 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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