Frequently Asked Questions

Why did I get REFERRED to The Spiegel Group of Republic State Mortgage? Why should I use a REALTOR? Why and how do interest rates change? What happens once I am pre-approved? When should I consider refinancing? What is an origination fee? Should I pay points? Does a zero-point/zero-fee loan really exist? What is title insurance? What is mortgage insurance? What does it mean to be a correspondent/DIRECT lender? Does it cost more to use a correspondent/DIRECT lender? Credit Concerns?

Your TRUSTED ADVISORS know that the key to a successful transaction means TEAMWORK with a professional ADVISOR. For example, any experienced Realtor could tell you horror stories about times when a client made a poor choice of mortgage company, and ended up with big surprises at the closing table, or worse, no closing taking place at all! Your ADVISORS have formed relationships with trusted individuals who have proven themselves time and time again, so that they know you will be given the excellent service that you deserve. It is important to know that WHOEVER REFERRED YOU is NOT given any compensation or "kickbacks" for referring you to us. As mortgage professionals, we desire more referrals, both from you and your ADVISORS, so consider the extra motivation this provides for us to take great care with your satisfaction! Go to Top

First and foremost, because you need an experienced professional working on your behalf. The Realtor's commission is not paid by the buyer, but by the seller of the home being purchased, and it is in each party's best interest to have professional representation. As a seller, profits are generally maximized by having an experienced Realtor market and sell your home, rather than deal with the headaches of trying to do it all on your own. Go to Top

Many people are surprised to learn that rates change on a daily and sometimes hourly basis. Interest rates fluctuate in response to changes in the financial markets. The bond market is generally a good indicator of the general trend of interest rates. Go to Top

You are ready to buy a home! Remember that it is very important to inform me of any changes in the financial information that was provided at the time of approval, as it may make a change in the amount or type of loan that you can qualify for. Go to Top

The old rule of thumb was at least 2%, but this is no longer the case. Many different individual factors need to be analyzed to determine if refinancing is right for you, such as the length of time you intend to stay in your home, or the type of loan you currently hold. I will provide you a recommendation to you for your particular circumstances. Remember that rates are at the lowest point they have been at for 40 years and they are not going to stay there! Go to Top

Typically, it is 1% of your loan amount, and works exactly like a discount point. It is a fee paid to the mortgage banker for their services. You can avoid all or part of this fee by paying a higher interest rate. Note that we usually always quote rates with and without origination fees. Go to Top

The best way to decide whether you should pay points or not is to perform a break-even analysis. This is done as follows: Calculate the cost of the points. Example: 2 points on a $100,000 loan is $2,000. Calculate the monthly savings on the loan as a result of obtaining a lower interest rate. Example: $50 per month Divide the cost of the points by the monthly savings to come up with the number of months to break even. In the above example, this number is 40 months. If you plan to keep the house for longer than the break-even number of months, then it makes sense to pay points; otherwise it does not. The above calculation does not take into account the tax advantages of points. When you are buying a house the points you pay are tax-deductible, so you realize some savings immediately. On the other hand, when you get a lower payment, your tax deduction reduces! This makes it a little difficult to calculate the break-even time taking taxes into account. In the case of a purchase, taxes definitely reduce the break-even time. However, in the case of a refinance, the points are NOT tax-deductible, but have to be amortized over the life of the loan. This results in few tax benefits or none at all, so there is little or no effect on the time to break even. If none of the above makes sense, use this simple rule of thumb: If you plan to stay in the house for less than 3 years, do not pay points. If you plan to stay in the house for more than 5 years, pay 1 to 2 points. If you plan to stay in the house for between 3 and 5 years, it does not make a significant difference whether you pay points or not! Go to Top

The way this works is based on rebate pricing, sometimes also known as yield-spread pricing, and sometimes known as a service-release premium. The basic idea is that you pay a higher rate in exchange for cash up front, which is then used to pay the closing costs. You will pay a higher monthly payment––so the money is really coming from future payments that you will make. You can also think of this as negative points! For example, a 30-year fixed loan may be available at a retail price of : 5.00% with 2 points or 5.25% with 1 point or 5.50% with 0 points or 5.75% with -1 point or 6.00% with -2 points On a $200,000 loan, the loan officer can offer you 5.25%% with a cost of -1 point, which is a $2,000 credit towards your closing costs. Since I am a mortgage broker/correspondent lender, I can use rebate pricing to pay for your closing costs and keep the balance of the rebate as profit. What are the benefits of a zero-point/zero-fee loan? The main benefit is that you have no out-of-pocket costs. As a result, if the rates drop in the future, you could refinance again even for a small drop in rates. The zero-point/zero-fee loan eliminates the need to do a break-even analysis since there is no up-front expense that needs to be recovered. It also is a great way to take advantage of falling rates. Some consumers have used zero-point/zero-fee loans on adjustable loans to refinance their adjustables every year and pay a very low teaser rate. What are the disadvantages of a zero-point/zero-fee loan? The main disadvantage is that you are paying a higher rate than you would be paying if you had paid points and closing costs. If you keep the loan for long enough, you will pay more––since you have higher mortgage payments. In the scenario where you plan to stay in the house for more than 5 years, and if rates never drop for you to refinance, you could wind up paying more money. If, on the other hand, you plan to stay at a property for just 2-3 years, there really is no disadvantage of a zero-point/zero-fee loan. Whose money is it? Since you are being paid "cash" up-front in exchange for a higher rate, it really is your own money that will be paid in the future through higher payments. Investors who fund these loans hope that you will keep the loans for long enough to recoup their up-front investment. If you refinance the loans early, both the servicer and the investor could lose money. To summarize, zero-point/zero-fee loans in many cases are good deals. Make sure, however, that the lender pays for your closing costs from rebate points and NOT by increasing your loan amount. So if your old loan amount was $150,000, your new loan amount should also be $150,000. You may have to come up with some money at closing for recurring costs (taxes, insurance, and interest), but you would have to pay for these whether you refinanced or not. Zero-point/zero-fee loans are especially attractive when rates are declining or when you plan to sell your house in less than 2-3 years. Go to Top

It is a policy provided by the title company guaranteeing the accuracy of the title work done on your home at the time of purchase. As a buyer, you are required to purchase a lenders policy of title insurance as part of your standard closing costs, which only protects the mortgage company. You may also choose to purchase an owners policy, which would protect you against any loss in the event of any legal issues relating to the title of your home. Go to Top

This is generally required in one form or another when the down payment is less than 20%, and protects the lender in the event of loan default. The lower the down payment, the higher the risk for the lender, and thus the higher the monthly premium. Depending on your particulars, there are ways in which mortgage insurance can sometimes be avoided at purchase, or dropped altogether at some point in the future. Go to Top

Unlike banks, correspondent lenders specialize only in mortgage lending. Unlike mortgage companies who can only offer their own products, or mortgage brokers that are basically middlemen, correspondent lenders have the ability to use many different companies' products, thereby providing you with a larger variety of options and choices for your financing. Whereas a mortgage broker is just the middleman and ships your loan file out for underwriting, funding and closing, correspondent lenders do all of the functions in-house. Instead of being captive to whatever pricing one particular company chooses to offer, we can shop the competition and pass the savings on to you. Go to Top

Quite the contrary...because we are a CORRESPONDENT LENDER, the costs are less, and here's why: We originate, close and fund mortgage loans (in-house) and deliver them to the nation's largest mortgage servicers for less than the cost they would pay to originate the loan themselves. As a result our closing costs are usually lower. As one of the largest correspondent lenders, because of the volume of loans we originate, we receive better pricing on loans and you can benefit from our savings. Go to Top

Are you worried about your credit history? Just about everyone has something in their past credit that is less than perfect. The most important thing is to learn what is on your report, determine what impact that information has on your credit rating, and work on repairing and restoring any damage that may have been done. Mortgage loan options are rated by credit, labeled like school grades - "A" credit is the best, then down to A-, B, C, etc. Even if you do not have an A credit rating, we can let you know what your options are if you fall into an A- or lower category. The rates are generally going to be higher, and may require a down payment. If you determine that you are not satisfied with this type of financing, then together we can map out what you need to do with your credit and finances for the next six to twelve months in order to qualify for an A credit loan. There are three main credit bureaus that most creditors (such as credit card companies, banks, leasing companies, etc.) provide information to on a monthly basis. Each month, your credit holders report information to the credit bureaus about your current balance, minimum payment requirements, and credit history. If you need specific information from one of the major credit bureaus, following is the contact information for each of them: Experian Information Service (XPN), (888) 397-3742 TransUnion (TUC), (800) 916-8800 Equifax Information Services (EFX), (800) 685-1111 To order a free credit report analysis, please call us at 713.961.LEND Go to Top