Frequently Asked Mortgage Questions

A mortgage broker is an independent mortgage professional who is working hard to save you time and money on your loan, and to keep you educated and informed throughout the loan process. We receive many various rate sheets and so have a multitude of options and loan terms to discuss with clients. As a third party originator, we are a lower cost option for a bank/lender, and this often shows in the more favorable rates that are made available for the benefit of our clients.

Savvy borrowers use MDI Mortgage for the value we add to their loan process. (See more details below).

A mortgage broker is an independent loan originator who specializes in residential mortgage loans. The fact that we are independent allows us to work with a number of different lenders, which then enables us to have many different loan programs and pricing structures to offer our clients. We are sometimes provided with access to pricing specials for our clients' benefit. Our sole focus is residential lending, and by having no other business distractions, we can fully concentrate on you and your home loan.

As your broker, we provide an efficient way to obtain the financing which is most beneficial for you.

Our goal is to try and help you save as much as possible on your home loan rate, and closing costs. Because mortgage brokers deal with multiple lenders, they can shop for the best terms available on any given day. In addition, they can find the lenders who specialize in various market niches that many other lenders avoid, such as loans to applicants with poor credit ratings, loans to borrowers who do not intend to occupy the property, loans with minimal or no down payment, and so on.

Mortgage brokers do not add any net cost to the lending process, because they perform functions that would otherwise have to be done by employees of the lender. We are a lower cost option, and that savings shows up in the rate sheets provided for the benefit of our clients.

Our job as a professional mortgage broker is to continually research the mortgage markets, local and national housing trends, pricing, and loan program guides so that we can be a knowledgable market leader in our industry. We act as a liason between all the different parties involved in the loan process such as: real estate agents, home builders, title attorneys, appraisers, credit agencies, insurance agents, etc. 

As your mortgage broker, we will handle all these details to guide you through your loan application:

-PreApproval

-Educating and discussing all the different loan options and discovering which one will be the best match for you.

-Explaining the loan process, from application to closing, and after closing.

-Providing you with a comprehensive estimate of costs to expect at your loan closing.

-Completing the loan application form and thoroughly explaining all the loan disclosures.

-Requesting and reviewing the documentation which may be needed for loan approval.

-Providing interest rate lock options (MDI Mortgage does not charge any type of lock-in fee).

-Communicating with you and your authorized agents in a timely manner.

-Ordering the appraisal

-Ordering the title work

-Helping you acquire homeowner's insurance.

-Coordinating the loan closing and attending the loan closing when possible

-Answering all your questions which may arise during the loan process.

We will be there for you each step of the way.

Typically, a mortgage broker is paid at closing, and by the lender. Lenders enjoy working with a skilled loan broker, and they pay them to do this work instead of having to cover the expenses of their own staff to originate and process the loan applications. The mortgage broker is not paid if the loan does not close.

MDI Mortgage also provides preapproval services at no charge, and we do not collect any type of application fee.

Generally speaking, you can purchase a home with a mortgage payment that does not exceed 50% of your gross annual income.  However, the amount that you can borrow will also depend upon your employment history, credit history, 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 homebuyers to purchase a home with a higher value.

Because you can often be qualified for much more than you actually want, we view the most important factor in determining how much you should borrow as your own personal comfort level and budget. Give us a call, and we can help you determine how much you can afford.

There are some loan programs, and ways to structure a home purchase, so that little to no cash is needed. Generally speaking, the amount of cash that is necessary depends on a number of items:

-Earnest Money: The deposit that is supplied when you make an offer on a house.

-Down Payment: A percentage of the cost of the home that is due at settlement, less any earnest deposit you paid at the time of the offer. Part of our initial discussion will be to review down payment options and to see what might amount and option might work best for you.

-Closing Costs: Costs associated with processing the loan, such as the title search, appraisal, taxes, recording fees and processing paperwork. A loan specific, comprehensive estimate will be provided as part of your loan application process.

There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture, and how long you intend to keep the house.

MDI Mortgage will use their extensive industry experience and help you evaluate your choices and assist you in making the most appropriate decision.

A borrower can choose to pay additional closing costs to help buy down their rate. Because points add to the upfront cost at closing, it is important to review that amount compared to the monthly payment savings with the discounted rate and analyze how long it will take to recoup. Any discount points are expressed as a percent of the loan amount; e.g., "1.25 points" means a charge equal to 1.25% of the loan balance.

As part of the loan process, we will review the various rate options with and without points, and make recommendations and answer questions as they come up.

For most homeowners, the monthly mortgage payment includes three separate parts:

-Principal repayment on the amount borrowed. T

-Interest payment to the lender for the amount borrowed, which is impacted by the interest rate.

-Taxes and Insurance: Monthly payments can be made into a special escrow account for items like the homeowner's insurance and property taxes. This feature is sometimes optional, in which case the payments will be paid by you directly to the city/town tax assessor and the property insurance company.

Usually, people refinance to save money either by obtaining a lower interest rate and reducing their monthly payment obligation, or by reducing the term of the loan to pay it off sooner which will result in interest savings. Refinancing is also a way to convert an adjustable loan to a fixed loan or to take cash-out and consolidate other debts.  The timing of a refinance is a nuanced topic, and we enjoy reviewing the scenarios and putting together an analysis for each individual who is interested in the option.

With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable rate mortgage (ARM), the interest rate changes periodically, typically in relation to an index plus a margin. The payments on an ARM loan will likely change over the duration of the mortgage, and they have caps on how much they can increase or decrease each change period.

There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking with us and reviewing the current terms being offered and your personal situation and goals at the time.

An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally, the interest rate that you pay is a combination of the index rate plus a pre-specified margin over that index. Three commonly used indices are the One-Year Treasury Bill, the Federal Cost of Funds Index (COFI), and the London InterBank Offering Rate (LIBOR).