Loan Process

The Home Loan Process

Applying for a home loan is a big decision whether you are just starting out and buying your first house or refinancing your current house. At Millennium Mortgage we make the home loan process as quick and hassle free for you as possible. We have loan programs to accommodate just about anyone in any situation. We have taken steps to ensure you are informed of your options during every step of the process. Below we have explained some of the common choices you will need to make when applying for your loan.

Choice 1 – Purpose of the Loan

Purchase – You’re buying your first home or looking to buy a new home.

Refinance – You have a mortgage and want to improve the terms of your loan to lower your monthly payment or decrease the length of time you have to repay your loan. You can even refinance to convert some of your equity into extra cash. You can use that cash to buy a new car, pay off your student loans or as extra savings towards your retirement.

Consolidate Debt – You want to wrap your current debts into one low interest rate loan. This will give you the convenience of one statement each month instead of keeping track of multiple bills.

Choice 2 – Fixed or ARM

Fixed – Fixed rate loans offer the dependability of the same monthly payments for the life of the loan.

ARM – Adjustable Rate Mortgage. Usually an ARM starts off with lower initial monthly payments than a fixed rate mortgage for the first 1-7 years before adjusting based on an interest rate index. When adjusting, your rate may go up or down depending on market conditions.

Choice 3 – Life of the Loan

The most common loans taken out run for 15 or 30 years, but you can choose terms that run for 10, 20 and 25 years as well. For simplicity’s sake, we’ll compare the advantages of the most common 15 and 30-year loan.

15-year – You build equity in your house faster and have a lower rate than a 30-year loan, but your monthly payments are higher since you are paying off the loan in a quicker time period.

30-year – Lowest monthly payments for a fixed loan, but over the life of the loan you pay more interest than the 15-year loan.

Choice 4 – Rates and Points

Once you know what type of loan you qualify for you may choose to lock in the rate for that particular loan request.

Rates – The lower the interest rate you lock in will result in lower monthly payments and total interest paid for a given set of loan terms.

Points – One way to save the maximum amount of money each month is to “buy down” your rate. Discount points may be paid to the lender to obtain a reduced rate. These discount points may be refinanced into the total loan amount, along with other closing costs. At application, you will be provided with a Good Faith Estimate that will disclose to you estimated Lender Fees, Third Party Fees and Prepaid/Escrow Fees.

Lender Fees – Lender fees may include such items as discount points, processing fees and underwriting fees.

Third Party Fees – These costs include charges paid to other entities for items like title policies, recording fees, appraisal fee, credit report fee and flood certification. These are items required to obtain a mortgage loan. Just remember that the exact amount of the third party charges may not be known at the time your Good Faith Estimate was prepared.

Prepaid/Escrow Fees – Each year property taxes and hazard insurance will need to be paid. You may choose to pay these itmes yourself or you may set-up an Escrow (or Impound) Account. By doing this, your taxes and insurance are added to your mortgage payment and these items are paid by you monthly, rather than annually in one lump sum.