What is a mortgage banker?

 

A mortgage banker – like USA Mortgage – can be best defined as a company that retains control of a mortgage transaction from start to finish. In-house staff originate, process, underwrite and close on loans. Using their own funds and making their own underwriting decisions, customers have the convenience of working with one single company.

 

 

What is an interest rate lock?

 

An interest rate lock is a lender’s promise to hold a certain interest rate and number of points for a loan applicant – usually for a specific period of time – while a loan is being processed. They may also be referred to as a “lock-in” or “rate commitment.” An interest rate lock comes into play when applying for a home loan that can take weeks to process as rates can fluctuate up and down several times within just days. Therefore, if you find a rate you like, you can secure it during the application process even if the rates climb the next day.

What goes into a mortgage payment?

After purchasing a home and acquiring a mortgage, the closing agent will collect interest from the buyer, which is also known as a closing cost.

A homeowner will shortly begin monthly payments that have two main components: mortgage interest and mortgage principal. So in addition to the flat payment of the home loan, homeowners must pay dues (interest) to the lender for taking the risk of lending money for a homeowner to pay off a home. The home and the surrounding land serve as collateral to the lender should the homeowner fail to make payments. During the first few years in which someone is paying off their home, the payment structure is set up so they are primarily making interest payments. The final years of payment are mostly allocated to principal dues.

The principal amount is in direct correlation to the interest rate. Thus, a higher interest rate means a higher mortgage payment. For the average homebuyer, a higher interest rate reduces the amount of money they can borrow and a lower interest rate increases it.

Becoming a new homeowner is no simple process. Fortunately, the professionals at USA Mortgage are equipped with the industry experience and knowledge to make buying a home within reach. For more related information, be sure to check back in with our blog.