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Suzanne
May the Force Be With You!
Member since 5/05 2083 total posts
Name:
Suzanne
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We got a loan committment letter and I am confused
We got a loan committment letter from a bank that the mortgage broker set us up with. We are doing a 80/10/10. The second 10% mortgage says it is an interest only mortgage. Does it have to be this way since it is a second mortgage? I would prefer not to have an interest only. Any thoughts?
Also, the forst mortgage states "20-30 yr fixed non-relo" as the product. Is this different than a 30 year fixed?
Also, do we have to go with this bank now or are we still free to shop around a little more?
This whole mortgage process is so foreign to me
Message edited 4/25/2006 5:19:56 PM.
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Posted 4/25/06 4:58 PM  |
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: We got a loan committment letter and I am confused
You are not stuck with them. You should be able to change banks whenever you want. But check to see if you are responsible for any fees.
IO loan on the HELOC 10% part isn't too bad. I would be more concerned with what interest rate you are getting on that 10% over the fact that its IO.
A lot of HELOC loans are interest only. Mine was. Its not that big of a deal. Just pay extra principal every month on that portion of the payment.
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| Posted 4/25/06 5:32 PM |
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Suzanne
May the Force Be With You!
Member since 5/05 2083 total posts
Name:
Suzanne
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Re: We got a loan committment letter and I am confused
Posted by DjPiLL
You are not stuck with them. You should be able to change banks whenever you want. But check to see if you are responsible for any fees.
IO loan on the HELOC 10% part isn't too bad. I would be more concerned with what interest rate you are getting on that 10% over the fact that its IO.
A lot of HELOC loans are interest only. Mine was. Its not that big of a deal. Just pay extra principal every month on that portion of the payment.
Responsible for fees for not going with that bank since we have a committement letter? Like a termination fee?
The letter does not give an interest rate or a length of the loan for the 10%. It just gives and estimated monthly payment.
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| Posted 4/25/06 5:36 PM |
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: We got a loan committment letter and I am confused
It depends on what your bank contract says. Did they take an application fee from you? If they did... you won't get that back.
They must have based the monthly payment around some interest rate. Was it prime?
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| Posted 4/25/06 5:43 PM |
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Suzanne
May the Force Be With You!
Member since 5/05 2083 total posts
Name:
Suzanne
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Re: We got a loan committment letter and I am confused
Posted by DjPiLL
It depends on what your bank contract says. Did they take an application fee from you? If they did... you won't get that back.
They must have based the monthly payment around some interest rate. Was it prime?
No application fee. We just spoke with the broker over the phone and gave him some info and he took it from there.
It doesn't say an interest rate at all for the second mortgage. Weird. I am going to have to call the broker I guess.
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| Posted 4/25/06 6:08 PM |
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Blu-ize
Plan B is Now Plan A
Member since 7/05 32475 total posts
Name:
Susan
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Re: We got a loan committment letter and I am confused
that's not a formal committment. It's also not final until you sign it and commit.
It should have the interest rate for the 80% loan and the length of the loan. The HELOC won't have a definite interest rate until you make your first payment most likely then it will be locked. That's how mine works.
Message edited 4/25/2006 7:51:03 PM.
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| Posted 4/25/06 7:50 PM |
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: We got a loan committment letter and I am confused
Posted by Blu-ize
The HELOC won't have a definite interest rate until you make your first payment most likely then it will be locked. That's how mine works.
They should still give you a formula to figure out if you are getting a good deal or not.
Are you getting prime? Prime plus a half point? Point below prime?
These are questions I would ask.
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| Posted 4/25/06 8:26 PM |
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Suzanne
May the Force Be With You!
Member since 5/05 2083 total posts
Name:
Suzanne
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Re: We got a loan committment letter and I am confused
Thanks everyone. I am going to call the broker tomorrow to find this out.
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| Posted 4/25/06 10:16 PM |
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LIMOMx2
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Member since 5/05 24989 total posts
Name:
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Re: We got a loan committment letter and I am confused
We have an interset only HELOC too as our 2nd mortgage. We love it If we were to have anything different the payment would be so high.
We figure when we move, we can pay it off with the equity in the house
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| Posted 4/26/06 8:23 AM |
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