Frequently Asked Questions.

Do I need a down payment to purchase a home?
What is the most I can borrow against my home when refinancing?
What if I'm self employed?
What is an Option 2 mortgage?
Does taking an Option 2 mortgage mean I have bad credit?
How do Option 2 loans differ from conforming loans?
Do Option 2 mortgages have high rates?
What about PMI?
Are there penalties if I prepay my mortgage?
What is a balloon payment?
Does it take longer to get an Option 2 mortgage?
How do I know how much house I can afford?
What is the difference between a fixed-rate loan and an adjustable-rate loan?
How is an ind ex and margin used in an ARM?
How do I know which type of mortgage is best for me?
What does my mortgage payment include?
How much cash will I need to purchase a home?
What is the difference between pre-approval and pre-qualification?
When does it make sense to refinance?
What is a rate lock?
What are the benefits of refinancing?
Am I better off refinancing?
What will my refinancing costs be?
How much will my payments be?
Should I pay points to lower the rate ?
Which is better: 15 or 30 year term?
Who is Smart Advertising Solutions?

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Do I need a down payment to purchase a home?
Maybe not. Smart Lending Solutions has mortgage programs available that start with NO MONEY DOWN. Tell us what your purchase requirements are using any combination of your own money, gift money, grants or contribution from the seller. Then, we'll find the best plan for you and give you all the options. No money down programs include purchases made with a single 100% loan or a combination of first and second mortages totalling 100%. Conventional loans starting with 2% down, FHA, VA and non-traditional financing (see OPTION 2) are all available from your single mortgage source; Smart Lending Solutions.com.

What is the most I can borrow against my home when refinancing?
Thanks to Smart Lending Solutions extensive experience and relationships with regional and national lenders, we are able to offer homeowners up to 125% of the value of their home. If you need cash to consolidate debt, pay college tuition, do some home improvements, invest in real estate or stocks, or if you're just looking to lower your current interest rate....equity in your home may not be a factor. Some programs will not even require a current home appraisal. Tell us what you're trying to accomplish. Then we can help you achieve your goal.

What if I'm self employed?
Self employed borrowers enjoy a wide selection of mortgages at Smart Lendi ng Solutions. Many times, standard tax deductions leave some borrowers with a bottom line that doesn't allow them to qualify for conventional financing. At Smart Lending Solutions, our selection of No Doc, Light Doc, No Stated Income and No Income Verification programs offer borrowers the ability to achieve the best of both worlds. No Doc programs start with NO MONEY DOWN for the qualified homeowner. Many of these programs are available for applicants with 'Less than Perfect Credit' (see Option 2) as well.

What is an Option 2 mortgage?
Most people have heard names such as Fannie Mae and Freddie Mac. These are typically referred to as 'conforming' or 'conventional' loans with minimal flexibility for the homebuyer with special needs. Option 2 (also referred to as non-conforming, B/C or subprime) loans are constructed with the idea that not all situations are created equal. Non-conforming mortgages can be the answer when particular attention is needed in any one or all areas of importance including employment, credit, income or downpayment.

Does taking an Option 2 mortgage mean I have bad credit?
Absolutely not. More and more Option 2 mortgage programs are being developed for people who have proven their excellent credit rating but can't qualify for a conforming mortgage. This could be due to income or employment const raints or even the ability to show a down payment. Whatever the reason, simply maintaining excellent credit can open more doors than ever before.

How do Option 2 loans differ from conforming loans?
Simply put, the major difference lies in the flexibility of the guidelines. For instance, standard conventional guidelines call for your housing debt to be limited to 28% of your gross income and your total debt (including your home) not to exceed 36% or your gross income. These calculations are referred to as your debt-to-income ratios. With an Option 2 mortgage, there is only one ratio calculation - total debt. This means that if you have little debt other than your home that you may be able to purchase more of a home than you otherwise would have thought possible. Another restriction in conforming loans call for 2 years of self employment or continued employment whereas some non-conforming mortgages look for 1 year or may not even ask if you are employed at all. At Smart Lending Solutions, our job is to examine your specific requirements and find the particular mortgage product that best suits your needs.

Do Option 2 mortgages have high rates?
Not necessarily. Many Option 2 programs offer very competitive rates while, at the same time, opening up opportunities that may not have otherwise existed. We look at Option 2 mortgag es as a solution to a sp ecific and immediate need. If the resulting payment fits your budget, then we have found the solution. Most people who choose an Option 2 mortgage anticipate refinancing within a few years. Those with credit related issues realize that good credit is the key to the best rates. Taking an Option 2 mortgage allows them to build mortgage credit, a necessary ingredient in their future credit portfolio. Smart Lending Solutions's loan officers start with the lowest rates and down payment available and then find the solution to best suit your request.

What about PMI?
Private mortgage insurance (PMI) is needed on any conventional loan where the down payment is less than 20% of the purchase price or appraised value (whichever is less). With refinances, if the pending mortgage exceeds 80% of the value of the property, PMI is also required. Depending on the ultimate loan to value (mortgage amount divided by appraised value) PMI could add the equivalent of almost 1% to the interest rate of the loan. FHA and VA have their own versions of mortgage insurance as well. Option 2 mortgage lenders do not require mortgage insurance.

Are there penalties if I prepay my mortgage?
When the term 'prepayment penalty' is mentioned, the common fear is that the homeowner will pay a penalty even if they just send in extra money to be applied to the principal balan ce. That is not the case. Many people look forward to reducing the number of years they will be paying on their mortgage by making one extra payment a year. The standard rule says that would reduce a 30 year mortgage to only 21 years! And, there is no penalty for that! With most conventional and government programs, there is no penalty for full prepayment. Some Option 2 programs will charge the borrower if the mortgage is paid in its entirety within the first few years. The prepayment time period and the payment imposed will differ from lender to lender and from state to state. Many lenders will offer borrowers the ability to lessen or even eliminate the prepayment penalty. Your Smart Lending Solutions loan officer will help you determine how the prepayment feature works with your overall financing strategy.

What is a balloon payment?
A balloon payment is a feature offered with some mortgages whereby the borrower must pay the remaining principal balance at the end of the balloon term. Often you will see terms such as '30 due in 15' or '30 due in 10'. What this means is that you get the benefit of the lowest possible payment by amortizing your mortgage over a 30 year period but in 10 or 15 years, the note must be paid in full. Borrowers choose balloon programs because they know that the rate is lower than the 30 year fixed rate. This type of mortgage may also be preferrable if you intend to sell your house within the balloon period. If you are repairing your credit as you build your new mortgage history, and expect to refinance in just a few years, then, again, a balloon mortgage could very well work in your favor. Let your Smart Lending Solutions representative show you all the options and then you can decide what works best for you.
 
Does it take longer to get an Option 2 mortgage?
No. Actually it may take less time than you might imagine. Depending on the mortgage program for which you apply, documentation is kept as streamlined as possible. And, the underwriters we work with approach your mortgage with a 'common sense' attitude. That means less time spent picking away at a problem and more time spent helping you get the mortgage you need. At Smart Lending Solutions we usually say that the average mortgage process is 3-4 weeks. However, if you need money in a matter of days, it can be done. We gear the process to your needs. You will have a personal loan processor that you can speak to at any time. Try getting service like that at any of the Mega-Banks in your town!
 
 
How do I know how much house I can afford?
Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will als o depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford.
 

What is the difference between a fixed-rate loan and an adjustable-rate loan?
With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.
 

How is an index and margin used in an ARM?
An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).
 

How do I know which type of mortgage is best for me?
There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. Smart Lending Solutions can help you evaluate your choices and help you make the most appropriate decision.
 

What does my mortgage payment include?
For most homeowners, the monthly mortgage payments include three separate parts:
- Principal: Repayment on the amount borrowed
- Interest: Payment to the lender for the amount borrowed
- Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.
 
How much cash will I need to purchase a home?
The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
- Earnest Money: The deposit that is supplied when you make an offer on the house
- Down Payment: A percentage of the cost of the home that is due at settlement
- Closing Costs: C osts associated with processing paperwork to purchase or refinance a house
 
 
What is the difference between pre-approval and pre-qualification?
The pre-approval process is much more complete than pre-qualification. For pre-qualification, the loan officer asks you a few questions and provides you with a pre-qual letter. Pre-approval includes all the steps of a full approval, except for the appraisal and title search. Pre-approval can put you in a better negotiating position, much like a cash buyer.

When does it make sense to refinance?
Usually people refinance to save money, either by obtaining a lower interest rate or by reducing the term of the loan. Refinancing is also a way to convert an adjustable loan to a fixed loan or to consolidate debts. The decision to refinance can be difficult, since there are several reasons to refinance. However, if you are looking to save money, try this calculation:

1. Calculate the total cost of the refinance
2. Calculate the monthly savings
3. Divide the total cost of the refinance by the monthly savings
- This is the 'break even' time. If you own the house longer than this, you will save money by refinancing.

What is a rate lock?
A rate lock is a contractual agreement between the lender and buyer. There are four components to a rate lock: loan program, interest rate, points, and the length of the lock.

What are the benefits of refinancing?
Whether you want to lower your monthly mortgage payments, get cash for remodeling or subsidize a college education, Smart Lending Solutions can help. We have a variety of loans with different options to suit your needs and lifestyle.
   
Am I better off refinancing?
Is it a good time for you to refinance? This calculator will help you determine that answer and recommend the best kind of loan for you.

What will my refinancing costs be?
Determine your refinancing costs with a few quick calculations.

How much will my payments be?
Not sure if you can afford it? Use this calculator to fit monthly mortgage payments into your financial situation.

Should I pay points to lower the rate?
How do points impact you? See how the number of discount points you pay up-front will affect the cost of the loan?
     
Which is better: 15 or 30 year term?
Decide whi ch term is best for you. This calculator shows how different term lengths affect monthly payments and total costs.
Who is Smart Advertising Solutions?
Smart Lending Solutions, a division of Smart Advertising Solutions, an Arizona corporation.? Smart Lending Solutions is computerized loan lead generator.? Smart Lending Solutions is not a lender. Smart Lending Solutions does not make loans or credit decisions in connection with loans, nor does Smart Lending Solutions issue commitments or lock-in agreements. Smart Lending Solutions is not an agent of either you, the consumer, or any participating bank, lender or loan broker (we refer to all of these as "Lenders"). Smart Lending Solutions' services are administrative and consultative only. You should rely on your own judgment in deciding which available loan product best suits your needs and financial means. You are under no obligation to use Smart Lending Solutions to commence the financing process and Smart Lending Solutions does not guarantee that completing a loan request will result in your receiving a loan from a Lender.

 

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