Frequently Ask Questions
How does ChangeMyRate use my credit report?
ChangeMyRate uses your credit report to evaluate your mortgage request and determine how you have handled your credit obligations in the past. The following companies can provide you with a copy of your credit report, often free of charge. You can obtain a free credit report as a matter of federal law at www.annualcreditreport.com.
Can I buy a home if I have less-than-perfect credit?
Yes. Keep in mind that lenders don't just look at your credit history, but also at your ability and willingness to pay in the future. At ChangeMyRate, we may be able to help you buy a home, even if your credit isn't perfect.
Which is better: a fixed or adjustable interest rate?
If you plan to be in your home for more than seven years, you may want to consider a fixed-rate mortgage, which offers predictable payments and long-term protection against rising mortgage interest rates. If you plan to be in your home for seven years or less, an adjustable-rate mortgage (ARM) could be attractive. Keep in mind that with an ARM, your monthly payments have the potential to go up each time your interest rate adjusts.
Should I pay discount points?
When you pay a discount point, you are essentially paying part of your interest to the lender up front. This will lower your interest rate—as well as your monthly payment—over the life of the loan. One discount point is always equal to 1% of the loan amount. For example, one point on a $100,000 loan would require payment of $1,000 at closing. Generally speaking, the longer you plan to remain in a property or hold your mortgage, the more advantageous it is to pay points. There is no requirement to pay discount points; whether or not you decide to pay points is completely up to you.
What documents will I need to apply for a mortgage?
Traditional loans usually require documents that verify your employment, income and assets, and may include:
· Your Social Security number
· Pay stubs for the last two months
· W-2 forms for the past two years
· Bank statements for the past two or three months
· One to two years of federal tax returns
· A signed contract of sale (if you've already chosen your new home)
· Information on current debt, including car loans, student loans and credit cards
How much do I need for a down payment?
There is no set amount. In fact, you might be surprised to learn that many first-time homebuyer programs require as little as 3.5% down. Today, there are many loan programs that can be tailored to fit your needs and financial resources. Keep in mind that for down payments of less than 20% on conventional loans, private mortgage insurance (PMI) will be required.
Which mortgage and homeowners costs are tax-deductible?
Three types of mortgage and homeowners costs may be tax-deductible: discount points, interest paid on a home loan or home equity loan and property taxes. After the year that you buy your house, only your mortgage interest and annual property taxes are deductible. For a refinanced loan, points must be deducted over time. Consult your tax advisor for advice about your situation.
Refinancing Your Mortgage
What are the benefits of refinancing?
You may want to consider refinancing if you are interested in paying off high-interest-rate debt, shortening the length of your repayment term for your mortgage or lowering your monthly mortgage payment.
When does it make sense to refinance?
Generally speaking, one or more of the following conditions needs to be present before you should consider refinancing your mortgage:
· Mortgage interest rates are falling
· Your home has significantly appreciated in market value
· You've been making payments on your original 30-year mortgage for less than ten years
Can I refinance to take cash out of my house?
Yes. ChangeMyRate offers a variety of options that allow you to tap into your home's equity and take cash out. Consult your Mortgage Broker for the best cash-out refinancing option for you.
How can I consolidate debt when refinancing my mortgage?
Cash-out refinancing can help homeowners who want to consolidate high-interest, non tax-deductible debt. Because your mortgage interest rate is likely to be lower than rates on credit cards or other types of bank loans, consolidating debt may reduce your overall monthly debt payments. In addition, your mortgage interest may be tax-deductible, while your credit card interest is not.
Do I need to have my house appraised in order to refinance?
Yes, in most cases. However, depending on the circumstances, an appraisal may not be required.
Closing Cost Slasher®
- Only ChangeMyRate offers you the Closing Cost Slasher®, a unique method we use to virtually eliminate closing costs