Mortgage Lending
There is a lot of available information on home mortgage loan rates and terms, but we often hear our customers wanting guidance beyond just what mortgage products are available. We are often asked these questions:
WHAT ARE THE ADVANTAGES OF PRIVATE MORTGAGE INSURANCE?
Mortgage insurance is required on all conventional loans where the loan to value is above 80 percent to provide additional security for the lender. For the borrower, PMI is an excel-lent tool to help purchase a house with less than a 20 percent down payment. A good mortgage lender can help a borrower compare the cost and benefits of utilizing PMI rather than using a second mortgage loan and can determine the best way to pay the premium.
We help our borrowers analyze three ways of using mortgage insurance to determine the best solution. The most common approach is Monthly Mortgage Insurance, which is simply a monthly premium added to your payment, and it drops off once the loan is paid down to 78 percent of the value. The second option is Lender Paid Mortgage Insurance in which the borrower opts for a slightly higher interest rate, and in turn, the lender pays on behalf of the borrower a one-time mortgage insurance premium. The third option is a Borrower Paid Upfront premium, whereby the borrower will prepay the mortgage insurance premium at closing and will never pay monthly for mort-gage insurance.
WHAT OPTIONS DO I HAVE TO FINANCE THE CONSTRUCTION OF A NEW HOUSE?
Home construction is generally a two-step process of first arranging a construction loan and then transitioning into a fixed-rate mort-gage loan once the house is complete. We provide both of these steps, which is a great convenience to the borrower and provides cost savings as well.
WHAT ARE THINGS I NEED TO BE AWARE OF WHILE IN THE PRO-CESS OF FINANCING A HOUSE?
THIS IS IMPORTANT: A loan decision is based upon information provided at the time of application. If financial circumstances change after the application is created, it can affect your loan. Once the mortgage process begins, it is important to avoid incurring new debts when possible (for example: a car, a boat, maybe even appliances), co-signing on a loan, or making a job change with a change in income, as these can delay a closing. Similarly, it is smart to keep your lender informed if your income changes, if you make a large bank deposit or sell investment assets.
If home buying, building or refinancing is on your mind, let the experienced team of bankers at River Bank help you get started.
MEET THE EXPERT
Gene Crane, Executive Vice President River Bank & Trust
Gene Crane has worked as a banker in Montgomery for 31 years. In 2011, he joined River Bank & Trust, a local community bank, where he is an Executive Vice President and a member of the bank’s management team. GCrane@river.bank / NMLS 708667
