Loans frequently asked questions - Find information on loans & mortgages available in US

FAQs

1.What is PMI? Can I cancel the PMI on my loan?

If you have a PMI (Private Mortgage Insurance) then you can easily purchase a house without a fixed down payment. The down payment can be reduced to 5%. Mortgage Insurance works as a surety and provides insurance protection against the cost of foreclosure. If any unfortunate event occurs then mortgage insurance compensates with a genuine interest. If you want a house loan without down payment then Mortgage Insurance is indispensable.
You can cancel mortgage insurance after repaying 80% from the actual loan.

2. What is an Annual Percentage Rate (APR)?

Annual Percentage Rate (APR) varies from lender to lender. The amount of APR you see on advertise may vary slightly i.e. if you took a 30 years of fixed loan at 8% interest the lender may take 8.107% as APR. APR come into consideration when someone compares the varied loan programs of different lenders.
APR has no such role affecting your monthly repayment. But APR can measure the real cost of your loan. Although APR prevents lenders from hiding any fees yet they calculate APR differently from each other. As the rules to compute APR are yet to be defined so still it is under confusion.

3. What fees are included in the APR?

Different fees are included in the APR. The main points are: Loan processing fee, Document preparation fee, Private Mortgage Insurance, Loan application fee, underwriting fee, etc.

4.Can my loan be sold? What happens if my lender goes out of business?

As far as selling a loan is concerned you can do it anytime. The secondary mortgage market in USA is very active so selling a loan is very easy. In loan/mortgage selling process the existing lender communicates the borrower and repayment occurs as per the new lender’s instruction. Sometimes lenders go out of business and in that case selling of loan is inevitable. When repayment of mortgage loan comes into consideration until your existing lender informs you repayment will be made as usual

5. Should I refinance?

You can be benefited in many ways by refinancing you’re a long-term loan.
If you do refinance and shorten your repayment duration from 30 years to 15 years then the interest rates will be reduced significantly.
If you make your existing adjustable loan to a fixed loan by refinancing then the stability and security will be enhanced and interest rate will be reduced.
Debt consolidation, second mortgage, and refinance are tax deductible.
Above all it is up to you whether you will apply for a refinance or not.