Archive for Refinancing

Why I Love Ruoff Home Mortgage: A Loan Officer’s Perspective

I Love Ruoff Graphic

Alisa is buying her first home through Ruoff Home Mortgage and was scheduled to close tomorrow.  Earlier this week, Alisa made a boo-boo.  Not an intentional boo-boo.  Not even a really big boo-boo.  Never-the-less, it was a boo-boo and it broke some of the rules that need followed for mortgage lending these days.

Now, I’ve been a loan officer for over a decade.  I’ve worked at a few places.  I’ve talked to a ton of other mortgage lenders.  I know this boo-boo and I know what it typically does to the home loan process.  It typically stops everything dead it its tracks and – best case – gets the closing delayed by a week or more.  Sellers get mad.  Realtors breathe fire.  Underwriters pull their hair out.  Loan officers have to up their blood pressure meds.  You get the picture.

So, Alisa made a boo-boo and told me about it yesterday afternoon.  Did I mention she was scheduled to close tomorrow?  Yep, she was scheduled to close tomorrow until the brakes got hit with the “Oh, crap!” aforementioned mortgage rule breaking boo-boo.

So, why do I love Ruoff Home Mortgage, you ask?  This is why: When the boo-boo hit our radar, Ruoff Home Mortgage fixed it.  Fast.  We told Alisa what we needed from her and she got it to us this morning at 9:30.  It was to the mortgage underwriter by 10:00.  The underwriter reviewed it immediately and approved the file by 12:00.  The auditor reviewed it by 1:00 and YES, at 2:00 tomorrow Alisa will be signing the paperwork to own her very first home.

Alisa not only WAS closing on her mortgage tomorrow, Alisa IS closing on her mortgage tomorrow. All because the Ruoff team gets it!  They understand that these are people’s lives we’re dealing with.  They will do whatever they possibly can to make things work for our customers.

So, that is why I love Ruoff Home Mortgage.  If you work with us, I bet you’ll love us too.

In the meantime why not see if you recognize any of the happy faces over in our “We Love Our Customers” album on Facebook?

Lori Hiscock Loan OfficerLori Hiscock is a Sr. Loan Officer at Ruoff Home Mortgage‘s South Bend office.  Lori started her lending career in 1995 after obtaining her bachelor’s degree in Finance from Western Michigan University.  Lori has become one of the top mortgage lenders in Michiana. You can connect with Lori Hiscock or apply online here.

 

Glossary of Mortgage Loan Terms

glossary of mortgage loan terms

Mortgage lending has a whole language of its own.  Here is a helpful glossary of mortgage and home loan terms that you may come across during your home financing.  If you have questions we’re here for you!

Adjustable-rate mortgage (ARM): a mortgage in which the interest rate is adjusted periodically based on a pre-selected index. Also sometimes known as a variable-rate mortgage.

Amortization: loan payment by equal installments of principal and interest, calculated to pay off the debt at the end of a fixed period

Annual Percentage Rate (APR): the interest rate reflecting the cost of a mortgage as a yearly rate. It allows home buyers to compare different types of mortgages based on the annual cost for each loan.

Appraisal: a document giving an estimate of a property’s fair market value; generally required by a lender before loan approval.

Assessment: a local tax levied against a property for a specific purpose, such as a sewer or street lights.

Balloon (payment) mortgage: usually a short-term fixed-rate loan which involves small payments for a certain period of time; after that time period expires, the balance is due or is refinanced by the buyer.

Borrower (mortgagor): a person approved to receive a loan who is then obliged to repay it and any additional fees according to the loam terms.

Cap: a consumer safeguard on an adjustable-rate mortgage that limits how much a monthly payment or interest rate can increase or decrease.

Certificate of Eligibility: document given to qualified veterans entitling them to Veteran’s Administration guaranteed loans. Obtained by sending DD-214 (separation paper) to the local VA office with form 1880 (request for Certificate of Eligibility).

Certificate of reasonable value (CRV): appraisal issued by the Veteran’s Administration showing a property’s current market value.

Closing: the meeting between the buyer, seller, and lender or their agents where property and funds legally change hands.

Commitment: agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the completion of paper work or compliance with stated conditions.

Construction loan: short term interim loan to pay for the construction of buildings or homes. Usually written to provide periodic disbursements to the builder as progress is made.

Contract sale or deed: contract between buyer and seller of real estate to convey title after certain conditions have been met.

Conventional loan: a private sector loan, one that is not guaranteed or insured by the U.S. government.

Credit report: documents an individual’s credit history, listing all past and present debts and timeliness of their payment.

Debt-to-income ratio: the ratio, expressed as a percentage, which results when a borrower’s monthly payment obligation on long-term debt is divided by their gross monthly income.

Deed of trust: in many states, a document used instead of a mortgage to secure the payment of a note.

Default: failure to make the monthly payments on a mortgage.

Delinquency: failure to make payments on time. This can lead to foreclosure.

Down payment: the portion of a home’s purchase price paid in cash and not part of the mortgage loan.

Earnest money: money given by a buyer to seller as part of the purchase price to bind a transaction or assure payment.

Equal Credit Opportunity Act (ECOA): a federal law requiring lenders to make credit equally available without discrimination by race, color, religion, national origin, age, sex, marital status, or income from public assistance programs.

Equity: an owner’s financial interest in a property; calculated by subtracting the amount still owed on the mortgage from the fair market value of the property.

Escrow: an account held by the lender into which the home buyer pays money for tax or insurance payments.

FHA: the Federal Housing Administration provides mortgage insurance to lenders to cover most losses when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages.

FHA Loan: loan insured by the FHA open to all qualified home purchasers. While there are limits, they are generous enough to handle moderately priced homes almost anywhere in the country.

FHA mortgage insurance: a policy paid at closing to insure the loan with FHA.

Fixed-rate mortgage: mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed.

Foreclosure: a legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.

Hazard insurance: form of insurance in which the insurance company protects the insured from specified losses, such as fire or windstorm.

Lien: a legal claim against property that must be resolved before the property is sold.

Loan-to-value (LTV) ratio: a percentage calculated by dividing the amount borrowed by the sales price or appraised value of the home to be purchased.

Lock-in: guarantees a specific interest rate if the loan is closed within a specific time.

Market value: the highest price that a buyer would pay and the lowest price a seller would accept on a property.

Mortgage insurance: a policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; usually required with a down payment of less than 20%.

Mortgage modification: an option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments.

Origination fee: fee charged by a lender to prepare loan documents, make credit checks, inspect and sometimes appraise a property; usually a percentage of the loan’s amount.

Points: prepaid interest charged at closing by the lender. Each point equals 1 percent of the loan (e.g., 2 points on a $100,000 mortgage would be $2,000).

Prepayment: permits the borrower to make payments in advance of their due date, thus saving money in interest.

Prepayment penalty: charges for the early repayment of debt.

Principal: the borrowed amount, less interest or additional fees

Private mortgage insurance (PMI): insurance paid by the borrower. This may be required by the lender when the down payment is less than 20%.

Realtor: a real estate agent or broker affiliated with the National Association of Realtors and its local and state associations.

Recording fees: money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records.

Refinancing: paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).

RESPA: Real Estate Settlement Procedures Act that allows consumers to review information on known or estimated settlement costs once after application and once prior to or at a closing. The law requires lenders to furnish the information after application only.

Second mortgage: a mortgage made subsequent to another mortgage and subordinate to the first mortgage.

Survey: a measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to known points, its dimensions, and the location and dimensions of any buildings.

Title: a document that gives evidence of an individual’s ownership of property.

Title insurance: a policy, usually issued by a title insurance company, which insures a home buyer against errors in the title search. The cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or the seller.

Title search: a check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property.

Truth-in-lending: a federal law requiring disclosure of the annual percentage rate charged to home buyers shortly after they apply for the loan.

VA loan: a long-term, low or no-down payment loan to veterans guaranteed by the Department of Veterans Affairs.

Verification of Employment: a document signed by the borrower’s employer verifying his/her position and salary.

Wow!  That’s quite a list.  Again, let us know if you have additional questions or if we can help clarify things further for you.

Teeter Totters, Closing Costs and Refinancing

Teeter totter

“I’m shopping around…  What’s your rate?”

“We’re running a special – 11.5%!  Would you like me to go ahead and lock you in?”  That usually gets a good laugh, breaks the ice, and allows us to start asking some thought-provoking questions.  The answers to those questions will determine whether going forward with a refinance makes financial sense.

3 Major Questions

There are at least 3 major questions we need to answer before giving excellent advice on refinancing.

  1. What is your goal in refinancing?
  2. How long do you intend to own the home?
  3. What will the cost be to refinance (the teeter-totter)?

What is your goal?

Some examples of refinancing goals might be to:

  • Lower your monthly payments
  • Take cash out to consolidate some other monthly obligations
  • Decrease the term (length) of your mortgage
  • Remove a borrower from the note and ownership of the home (common in divorces)

How long do you intend to own the home?

The reason for this question SEEMS obvious, but it cannot be taken lightly.  Just because someone does not intend to own their home for decades doesn’t mean that they should automatically not refinance!  What it DOES mean is that we need to do a cost/benefit analysis to determine how many months will be required to recuperate the cost of refinancing.

What will it cost to refinance?

Here’s where you need to watch the video, because the answer to this question is not as simple as it seems.  Some refinances cost the buyer NOTHING.  Some costs thousands and thousands. Any company that is just giving you ONE option of rates and closing costs is not giving you good options.  Watch the video and you’ll see why.

As you can see, there’s a lot more to giving really top-notch financial advice than just quoting interest rates!

When you’re ready to talk to one of our mortgage professionals about your refinance in IN, MI, or IL, head on over to our list of locations and pick your loan pro!  We’ll be happy to give you some solid advice on whether refinancing makes sense in your particular situation.

As always, your mortgage matters!  Call us at 1-800-627-8633.

 

Chris Sanderson is Ruoff Home Mortgage’s people-encouraging, idea-sharing, public-speaking, nutritarian-eating, Dale Carnegie-teaching, Director of Training and Social Media Marketing.  You can connect with Chris on LinkedIn.