LawHorn and Associates Mortgage Company, INC.

Lawhorn & Associates Mortgage Company

1. How long will the entire loan process take?

Usally it takes about 30 days. Try to stay within this 30-day period because usually this time span allows for the lowest lock-in-rate. The actual time depends on how quickly your mortgage company can obtain your credit report, appraisal, income verification and underwriter's approval.

2. What documents are needed to process the loan?

Be prepared to bring 30 days worth of income verification (paystubs), last 2 years income, last 3 months bank statements, copy of sales contract or deed (refinance) and survey.

3. What fees are required up front?

A credit report fee is the initial fee required to obtain preapproval. This can vary according to loan type and lender. This can range from $20 to $60. Make sure to get your loan preapproved before spending any more money on appraisals and title searches. The appraisal is the other fee required and ranges from $300-$350.

4. What closing costs am I required to pay?

Typically say on a $100,000 loan you would be required to pay: 1% origination fee; attorney fee (average $300); appraisal ($300-350); credit report ($20-60); underwriting fees (average $400); title insurance ($300); recording fee ($175); courier fees (average $50).

Mortgages: A How-To-Guide

Whether you're buying a home or refinancing, here's a sure way to make it easier to get a good deal.

Perhaps the largest financial transaction a consumer will make is purchasing or refinancing a home. Your monthly mortgage payment will be the heaviest financial burden. The task of shopping for a lender to guide you through the maze of mortgages, interest rates and available products can be quite frightening. With some careful planning, research information (The Mortgage Reporter) and a lot of patience, you can overcome this ordeal with ease and few worries. Everyone wants to get the best deal and pay the lowest monthly payment and least amount of fees.

Mortgage rates, products, terms and restrictions can vary according to lenders, regions, property types and the borrower's qualifications. Choose the features best suited for you and your family over the long term. For example, if you know for sure you're not going to be in a home 30 years, maybe a adjustable rate mortgage (ARM) might best fit your needs.

Types Of Mortgages

Fixed-rate or conventional mortgages have been around since the 1930s. The total interest and monthly payments are set at the closing. You repay the principal and interest in equal, usually monthly, installments over a 15-, 20- or 30-year period. You know right from the start what you'll pay and for how long. In most cases, though, you can choose to pay your mortgage more quickly, which means you'll owe less interest. Or you can renegotiate the loan to get a lower rate.

The traditional 30-year fixed rate mortgage is an industry standard as total monthly payments are spread out over so many years that your monthly payments are lower than they would be on a shorter-term loan. Consequently, you end up paying thousands of dollars more in interest on a 30-year loan compared with a shorter-term obligation, but this is 100% tax deductible, which reduces your actual after-tax cost of paying it.

The 15-year fixed rate mortgage is also becoming a common loan because borrowers pay a lower rate in exchange for larger monthly payments. However, with a 15-year note, your equity builds up faster because a larger portion of your payment is credited towards the principal balance and less to interest.

ADJUSTABLE-RATE MORTGAGES ARMs were introduced in the 1980s to help more buyers qualify for mortgages, and to protect lenders by letting them pass along anticipated higher interest costs to borrowers.

HOW ARMS WORK An ARM has a variable interest rate: The rate changes on a regular schedule — such as once a year — to reflect fluctuations in the cost of borrowing. Unlike fixed-rate mortgages, the total cost can't be figured in advance, and monthly payments may rise or fall over the term of the loan. Lenders determine the new rate using two measures: An index, which is often a published figure, like the rate on one-year U.S. Treasury securities or the cost-of-funds indexes from the Office of Thrift Supervision. Be sure to find out which index your lender refers to, since some fluctuate more — and change more rapidly — than others A margin, which is the number of hundredths of a percentage point added to the index to determine the new rate.

PLUSES- Low initial rates (sometimes called teaser rates) reduce your closing costs and early monthly payments Your interest rate will drop if interest rates go down.

MINUSES- It's hard to budget housing costs, since monthly payments can change yearly Interest costs may jump after the teaser rate expires You may have to pay more interest if rates go up.

CAPPED COSTS All ARMs have caps, or limits, on the amount the interest rate can change. An annual cap limits the rate change each year (usually by two percentage points), while a lifetime cap limits the change (typically by five or six points) over the life of the loan.