Frequently Asked Questions
Refinancing FAQSWhat does it mean to refinance?
When you refinance your home, you take out a new mortgage and use it to pay off your existing home loan. You could save money by shortening or lengthening your mortgage agreement. This gives you the option of paying off your loan quickly or lowering your monthly mortgage payments
Why should I consider refinancing?
You could save money by paying off your mortgage faster or lowering your monthly payments through refinancing. You can build home equity faster or use the savings to consolidate debt, pay for home improvements or life’s other big expenses. RPM Lending will help you determine whether refinancing your home mortgage could help you meet your financial goals.
How do I know what loan is right for me?
Choosing the right home loan is about a lot more than just a getting a low rate -- there are a lot of other factors to consider. Refinancing can be a complicated decision. We’ll listen to your needs and carefully assess your financial situation. Only then will we recommend a loan with the right rate, payment terms, and special features that are customized for you.
Is there anything I should do before starting the refinance process?
Before you refinance your mortgage, it's important that you’re as comfortable as possible with the process. You may also find that gathering some of the information below is helpful.
- Get an idea of your home's current value by seeing what homes are selling for in your area. This will help you estimate the amount of equity currently in your home before a formal appraisal is performed. These listings are often available online and in your local newspaper.
- Review your credit report online and make sure all the entries are accurate. If anything is incorrect, you can request a correction immediately.
- Collect any refinancing information you might need, such as recent mortgage statements and tax documents.
Home Purchase FAQS
What are the advantages of purchasing a home?
Buying a home gives you personal benefits such as a sense of buying a stake in your community, and pride for achieving the American dream of home ownership. However, there are some strong financial benefits as well.
One of the largest benefits of homeownership is the tax savings you receive. Interest payments on a home mortgage are 100% tax deductible (consult your tax advisor to learn more). And as you continue to pay your mortgage payment, you are building equity in your home, as opposed to a rent payment that goes into somebody else's pocket. You build equity faster as the value of your home increases, and you can borrow against that equity to pay off debts, send your child to college, make home improvements, or take a much needed vacation. With today's low or no down payment options, affording a home is a lot easier than you may think.
How much do I need for a down payment on a home?
RPM Lending offers a variety of different loan programs including first-time home buyer programs and low or no down payment options. Imagine getting into your very own home with little or no money down!
Each loan program we offer has different rules about the down payment amount required. Down payments can also vary by the amount you want to borrow, as well as factors like credit history.
Should I get pre-qualified before looking for a property?
You don't have to apply for a loan before looking for a property, but it's a good idea to get pre-qualified or pre-approved for a home loan before you find a home to purchase. When you get pre-approved, you know ahead of time how much house you can afford, what you can expect your monthly payment to be, and how much money you will need for the down payment and settlement costs at closing. Also, many realtors will take your offer more seriously if you have been pre-approved.
Will I have to pay PMI?
Private mortgage insurance (PMI) is required for all loans that exceed 80% loan-to-value (LTV). If you put less than a 20% down payment on your purchase loan, you will likely be required to pay mortgage insurance until your LTV reaches 80% or below. Once you dip below 80% loan-to-value, you can refinance your home loan to eliminate the insurance. RPM Lending may be able to help you avoid the expensive costs of PMI with one of our home mortgage programs.
Construction FAQS
How is interest calculated and paid during construction?
A: Interest is charged on disbursed balances, not the whole loan amount. Borrowers are billed every month the interest due on their loans. The interest amount due will be automatically charged to the allocated interest reserve account in the borrower’s loan budget, or paid directly from the borrower’s account.
What is a Draw?
A Draw is a request to have funds disbursed from your construction loan. Your disbursements are intended to cover specific expenses incurred during your home's construction, as itemized in the Cost Breakdown section of your Construction Loan Agreement. Construction expenses fall under two basic categories: direct and indirect costs. This distinction is important to keep in mind as disbursement procedures differ for direct and indirect costs.
What are "on-site" and "Off-Site" costs?
A: "on-site" are costs associated with the labor and materials used for your home's improvements. Also known as "board and nails" or "Direct Site cost improvements," direct costs typically include items such as lumber, appliances and plumbing -things used in the actual construction of your home. The direct costs will be disbursed based upon the percentage of completion as determined by the inspector.
"Off-Site", also called "indirect," are costs not directly related to labor or materials for the actual construction of your home. For example, building permits and architectural fees are off site itemized in the Cost Breakdown section of your Construction Loan Agreement. Builder Overhead/Supervision are disbursed in proportion to the percentage of completion of the home.
I heard that some improvements require deposits. Is that true?
A: Yes, some vendors for items such as cabinets, windows, or any specialty improvement that requires custom craftsmanship requires deposits. The amount of the deposit is typically 50% of the total cost of the improvement and paid directly to the vendor. The remaining 50% of the improvement is paid after installation.
Does this mean I have to sign new loan documents?
Absolutely not! That's the beauty of our Construction-to-Permanent Loan. Your loan documents were created specifically to cover both the construction and permanent phases of your loan. So you can rest assured that you have permanent financing when your home is completed.