Most Commonly Asked Questions about Mortgage Loans
If you’re looking to purchase a home using a mortgage or refinance an existing mortgage, online mortgage loans are an easy way to receive multiple offers and find a loan that suits you. Before starting a mortgage or refinancing an existing loan, it’s important to understand how mortgage loans works and the different options and features offered. To help you get started, we’ve answered some of the most commonly asked questions about mortgage loans below.
1. How do mortgage loan services work?
Many of the top mortgage loan providers function as a middleman between the borrower and lender. As an applicant, you are asked to fill out basic information on the mortgage service website, then the service will show you what options and rates are available to you. Lenders will make an offer as to how much money they can loan and the repayment conditions.
2. What kind of information do I need to provide to apply for a mortgage?
As a mortgage applicant, you can fill out basic information on the mortgage service website. This includes the type of home you plan on purchasing, the location of the home, and details about your current financial situation and anticipated down payment. Some mortgage services will ask for your Social Security number in order to accurately provide you with personalized rates. The mortgage service will then offer you several mortgage loan options or ask that you speak with a representative over the phone.
3. Can I refinance an existing mortgage loan?
There are many reasons to refinance and replace an existing mortgage. Many people refinance their mortgages in order to reduce monthly payments, switch from an adjustable-rate to a fixed-rate, or to pay off their mortgage early. Others refinance in order to access cash to pay off other high-interest loans such as car loans and credit card loans.
Virtually all online mortgage services offer mortgage refinance options, allowing you to view and compare refinance rates. Be sure to carefully consider your refinance options as it may mean using your home as collateral.
4. What is APR?
The APR (annual percentage rate) refers to the annualized interest rate charged on your mortgage. Typical APRs range from about 3% to 5% and are very dependant on the amount, length, and eligibility of your mortgage. The APR will also fluctuate depending on the type of mortgage you choose. Lenders may offer you fixed-rate mortgages, two-step mortgages, balloon mortgages, and more.
5. How much time do I have to repay the loan?
Your repayment agreement depends on the terms negotiated between you and the lender. Quicken Loans, for example, offer 15 and 30 year fixed rates, while other mortgage lenders such as J.G. Wentworth offer other options such as 20-year mortgages.
If you bought a home for $500,000 with a 25% down payment, at an APR of 3.5% and a 15-year fixed term, you would pay around $2,700 per month.