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Frequently Asked Questions
- How does the zenloans.com lowest rate guarantee work?
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Zenloans.com understands that you want to make sure that you are getting the best rate and closing costs possible. Our guarantee simply states that if you can get a better offer from another mortgage company on the conventional first trust financing of your primary residence, just bring us a valid copy of their good faith estimate and we'll do our best match or beat their rate offer. If we can't get you the best rate, we'll buy you dinner! This is our promise to you. For more details on the lowest rate guarantee click here.
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- How do adjustable-rate loans work?
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Adjustable-rate mortgages (ARM) have interest rates that change periodically, typically in relation to an index. While the monthly principle and interest payments that you make with a fixed-rate mortgage stay the same, payments on an ARM loan will change at the adjustment date set forth in your loan terms. ARM mortgages are typically fixed for the first two to seven years before the payment and rate adjust (the rates typically adjust every six to twelve months after the initial 2 to 7 year fixed period). There are advantages and disadvantages to an adjustable rate mortgage. ARM loans can be a good option for customers who don't plan to live in their home longer than the 2 to 7 year period the adjustable rate loans are typically fixed for, meaning you'll have a lower payment during this period of time than you would with a fixed rate mortgage. ARM mortgages can also be great for people who anticipate making more money in the future, but want a lower and more affordable payment on their home loan right now. Of course, ARM loans have their disadvantages, and there is no guarantee of what your rate will be after the fixed term period. If having no knowledge of what you rate will be in the future seems intimidating to you, or you plan on living in your home for a long period of time, then you would be better served by a fixed rate loan.
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- How is an index and margin used in an adjustable rate mortgage?
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An index is an economic indicator that lenders use to set the interest rate for an adjustable rate mortgage. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London Inter Bank Offering Rate (LIBOR).
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- How do I know which type of mortgage is best for me?
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There is no simple formula to determine the type of mortgage that's best for you, the choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. Zenloans.com can help you evaluate your choices and help you make the most appropriate decision.
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- What does my mortgage payment include?
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For most homeowners, the monthly mortgage payments include three separate parts:
- Principal: Repayment on the amount borrowed
- Interest: Payment to the lender for the amount borrowed
- Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company
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- How much cash will I need to purchase a home?
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The amount of cash that is necessary depends on a number of items. Generally you'll need to supply:
- Earnest Money: The deposit that is supplied when you make an offer on the house
- Down Payment: A percentage of the cost of the home that is due at settlement
- Closing Costs: Costs associated with processing paperwork to purchase or refinance a house
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- How does an interest only loan work?
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With the rising costs of new homes, an interest only loan gives you the opportunity to buy a pricier than you could normally afford by delaying the full principle payments for several years. Interest only loans are typically adjustable rate mortgages with an initial period of 3 to 5 years, during which the rates are fixed and your payments consist only of the interest due to the lender. Typically, interest only loans have monthly payments that are 15 to 20% less than that of a fully amortized loan. But be warned: there are drawbacks to interest only loans. During the interest only period you pay no money towards the balance of your loan and you have to prepare yourself for the increase in payment at the end of the interest only term. It's up to you to weigh out whether or not an interest only loan is right for your needs, although people who expect their incomes to increase more than average over the next 3 to 5 years are usually the best candidates for these types of loans. For more information and questions about whether an interest only loan is right for you please contact us.
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- Will I have to pay any fees up front when applying for a loan?
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Zenloans.com charges not upfront fees to the borrower, such as an application fee or a lock-in fee for applying for a loan. Simply applying for a loan doesn't usually cost the borrower a thing. The loan experts at Zenloans.com typically review your loan application and discuss programs that you qualify for before proceeding with the loan process, and if you decide that our programs and rates meet your needs we will then, and only then, proceed. Once you've begun the process, you may be required to pay a third party appraiser of your choice for a home appraisal. Zenloans.com does not require any payment from you for our services until closing.
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- How do I know how much house I can afford?
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Generally, you can purchase a home valued at three or four times your annual household income. However, the amount that you can borrow will depend upon your employment and credit histories, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value, or you can check out an interest only loan, which can also enable borrowers to buy more house for their money. Contact us and we can help you determine exactly how much you can afford.
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- Am I obligated to take the loan if I apply?
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Absolutely not!!!! At no time during the application process does zenloans.com obligate you to do business with us, and you are more than welcome to apply with us at no obligation to see what you will qualify for. We are happy to assist you in finding out what type of mortgage loan is best for your situation without obligating you to use our company for your mortgage financing. We are so confident in our service, products and rates that we're you'll choose us as your mortgage solution without us forcing your hand.
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- How much upfront cash will I need in order to refinance or consolidate my bills?
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Most often you'll need little to none. Zenloans.com usually incorporates all of the closing costs associated with refinancing your home into the loan itself. We understand that most people who refinance do so to consolidate debt or to cash out their equity and don't have the extra cash on hand to pay their closing costs upfront. This option makes it much easier for you and your bank account when refinancing.
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- What if I have credit problems, can I still get a loan?
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At zenloans.com, our loan experts stay current on today's market place to insure that we can find a mortgage option that's right for you, no matter what your credit's like. In fact, our loan experts have helped people who have declared bankruptcy, as well as clients who needed to pay off outstanding collections, judgments and even back taxes using their home equity. In cases where there may be extensive problems with your credit, and we are unable to acquire a loan for you, our experts may be able to advise and guide you through the process of repairing your credit. Customers are often unaware that the items that appear as negatives on their credit report may be issues that are simple and easy to address, the only way to find out what you qualify for is to contact us.
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- How long does it take to get a loan approval?
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Zenloans.com prides itself on staying up to date with the most current technology in the mortgage industry. With the automated underwriting systems many of our affiliate lenders use, and our processing software linked with the website, it only takes hours, or in some cases, even minutes to get a loan approval once we have all of your necessary information.
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- My realtor says I need a commitment letter or pre-approval letter in order to look at homes, how do I get this?
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Many realtors require that you be pre-approved or even approved for a loan before looking at homes for sale. In order to get a pre-approval letter from Zenloans.com, you just need to apply for a loan. Many times, we can have a pre-approval letter to you within one or two business days, getting you started promptly on the road to finding that new home.
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- What is a balloon payment mortgage?
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A balloon payment mortgage is simply a mortgage that has the total balance due before the term of the loan is up. An example of a balloon would be a mortgage that has a payment amortized over 30 years, but the total principle balance is due in 10 or 15 years. The advantage of a balloon mortgage is that it allows the lender to give you a slightly lower interest rate due to the terms of the loan.
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- What is a pre-payment penalty and why would my loan have one?
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Most lenders charge pre-payment penalties on loans for damaged credit customers who are considered high risk. This is done so the lender can keep interest rates lower on these types of loans and guarantee their investment by lending to a damaged credit customer. Most prepayment penalties are two to three percent of the loan amount and are typically charged only if you pay off or refinance your mortgage in the first 2 to 3 years.
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- What is the advantage of consolidating my credit card bills by refinancing my mortgage?
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Consolidating your credit card bills and other debt into your mortgage has a many great benefits.
- Tax advantage: The interest paid on your credit card and personal loan debts are not tax deductible at years end. By consolidating your bills with a mortgage refinance you're moving your debt from a non-deductible debt to a tax deductible mortgage where you can write off the yearly interest paid. By consolidating your debt, you can potentially save thousands in tax liability each year.
- Fixed Term: Most credit cards are a revolving form of debt and have no fixed term to be paid off. The average consumer only pays the minimum payment on the credit potentially extending this debt forever with no fixed term to be paid off. This can cost you tens of thousands of dollars in lost interest payments over the life of the credit card debt. When consolidating this debt into a mortgage you will not only have a tax deductible debt but you will know that it will be paid off in a fixed term.
- Low interest rates: The rates on mortgages are typically the lowest rates to be found. Many times the rate you pay on a mortgage is one half to one third of the rates found one most credit cards.
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- What if I am self-employed or can't document my income with a paycheck or W-2?
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Being self employed and trying to get a loan can be a very frustrating process. In the past there were very few choices available for customers who owned their own businesses or did not receive a W-2 at years end. If you are self employed, you need not worry anymore. Recently, many programs have become available for customers who can't document their income with a W-2 or pay stub. These programs have rates that are comparable to those found on regular conventional financing, so contact us if you'd like to learn more about programs that require no income documentation.
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- What is an A.P.R.?
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Annual Percentage Rate is the note interest rate considering all the added cost (closing costs) to a given loan. Naturally, it is a function of the loan amount, the interest rate, the total added cost, and the terms of the loan. The APR would be equal the note rate if there is no additional cost to a given loan. APR is an effective way to measure the true cost of your loan including the closing costs paid. The APR makes it much easier to compare offers from various lenders breaking the true costs of the loan down into terms that anyone can understand. Please note that your actual monthly payment is calculated using the note rate and not your APR. Also note that the APR is typically higher than the actual note rate of your loan.
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