There are normally 3 to 4 monthly payment options associted with this program. You will have the "Negative Amortization or Minimum Payment Option". This option allows the borrower to pay less than the interest that has accrued over the previous month. The interest that you don't pay is rolled back into your principal balance.

The next option is the "Interest Only". This allows the borrower to pay only the interest that has accrued over the last month. None of your payments will be applied to your principal balance, nor will you accrue any negative amortization.

Then you will have at least the traditional 30-year fully amortized payment. This option is what most borrowers are accustomed to. Most of your payment is applied to the interest with a small portion being applied towards the principal balance.

Lastly, depending on the investor, you may be afforded the 15 yr. fully amortized payment. This is when you are attempting to pay off your loan within 15 years. This payment option is rarely used, as the payments are substantially higher than the other options. It's normally a great tool for investors and borrowers with flucuating incomes, such as sales professionals, seasonal teachers, business owners, etc. Make sure to ask your Loan Officer about this program, as it's great for some, but not for others.
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Q: What is better, a Fixed Rate Mortgage or an Adjustable Rate Mortgage (ARM)?
A: There is not one good answer for every person. It's very important for your Loan Officer to get to know what your short and long-term goals are. A mortgage can be customized to fit your specific wants and needs. Our highly trained mortgage professionals can counsel you on what loan programs might be best serving for your individual needs.
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Q: What is an "Interest Only" loan program?
A: This is a great loan program that allows the borrower to only pay the interest that has accrued over the preceeding month. None of your payment is directed toward your principal balance, nor to your accumulated unpaid interest being applied to your principal. For most homeowners, there is no real expectation of ever paying off a home at the end of 30 years. With property values climbing, this is a great way to keep a low monthly payment without the risk.
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Q: Isn't it better for me to use my bank instead of a mortgage broker?
A: Great Question! This is normally a misconception with borrowers. According to many studies, brokers normally afford their borrowers a lower APR than a direct lender. Reason being, your bank sells only their rate, and it's their "retail" rate. As a brokerage, we shop many, many banks for our clients. On top of shopping with many banks, we have access to their "wholesale" rates. This is how Centerpointe Lending keeps our clients happy and coming back to us!
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Q: What is the difference between a "Note Rate" and an "APR"?
A: This is commonly confused with borrowers and even untrained Loan Officers. The Federal Government requires that any lender provide their borrowers with both the "Note Rate" and their "APR". The difference is that the note rate is simply the rate of return that you are agreeing to pay the lender on their money over an amortized period, normally 30 years.

An "APR" is the same as the note rate, but the "Non-Reoccurring" closing costs associated with funding your loan are incorporated into your rate. Simply put, the APR is a shopping device for a consumer. As a rule of thumb, a lower APR is better than one that is higher.
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Q: What is the difference between a HELOC (Home Equity Line of Credit) and a Fixed Rate 2nd?
A: Both allow the borrower to access their equity without disturbing their 1st Trust Deed. A HELOC (Home Equity Line of Credit) is a non-fixed line of credit with an adjustable rate based on Prime. It is based on your available equity, kind of like a credit card on your house. You only pay interest on the balance that you owe. Most are based on a 30-year amortization and you can access the monty for the first 10 years, then repay during the remaining 20 years. It's great for people who need immediate access to large sums of money such as investors, business owners, etc.

A Fixed Rate 2nd is just that, it's a fixed interest rate. However, you get all the money up front and pay the same amount each month until paid off. It's good for people who simply want to pay for a one time expense, such as a pool/spa, home improvements, debt consolidation, etc.
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Q: How do I know if my existing loan is good, or if I need to refinance?
A: Simple, give us a call and we'll analyze what you have, versus what the current market has to offer. If you are better off staying in your existing loan, we'll let you know. Even if your mortgage is perfect for you, placing a low cost Home Equity Line of Credit behind your loan is something that we strongly encourage. It allows you to capitalize on ventures that you may otherwise not be able to pay for. It is no secret that it takes money to make money!
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