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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