Mortgage FAQ

Q. Can I buy a home if I have less-than-perfect credit?
A. Yes. Keep in mind that lenders don't just look at your past history, but also at your ability and willingness to pay in the future. At Mainstreet Financial Inc, we may be able to help you buy a home, even if your credit isn't great.

Q. Which is better: a fixed or adjustable interest rate?
A. If you plan to be in your home for more than seven years, you may want to consider a fixed rate mortgage, which offers predictable payments and long-term protection against rising mortgage interest rates. If you plan to be in your home for seven years or less, an adjustable rate mortgage could be attractive. Keep in mind that with an adjustable rate mortgage, your monthly payments have the potential to go up each time your interest rate adjusts.

Q. When should you pay discount points?
A. When you pay a discount point, you are essentially paying part of your interest to the lender up front. This will lower your interest rate — as well as your monthly payment — over the life of the loan. One discount point is typically equal to 1% of the loan amount. For example, one point on a $100,000 loan would require payment of $1,000 at closing. Generally speaking, the longer you plan to remain in a property or hold your mortgage, the more advantageous it is to pay points. There is no requirement to pay discount points; whether or not you decide to pay points is completely up to you.

• Your Social Security number
• Pay stubs for the last two months
• W-2 forms for the past two years
• Bank statements for the past two months
• Two years of federal tax returns
• A signed contract of sale (if you've already chosen your new home)
• Information on current debt, including car loans, student loans and credit cards

Q. Which mortgage and homeowners costs are tax-deductible?
A. Three types of mortgage and homeowners costs may be tax-deductible: discount points, interest paid on a home loan or home equity loan and property taxes. After the year of sale, your mortgage interest and annual property taxes are the only deductible costs. For a refinanced loan, points must be deducted over time. Consult your tax advisor for advice about your situation.   

Q. When does it make sense to refinance?
A. Generally speaking, one or more of the following conditions needs to be present before you should consider refinancing your mortgage:

• Mortgage interest rates are falling.
• Your home has significantly appreciated in market value.
• You've been making payments on your original 30-year mortgage for less than ten years.

Q. Can I refinance to take cash out of my house?
A. Yes. Chase offers a variety of options that allow you to tap into your home's equity and take cash out. Consult your loan officer for the best cash-out refinancing option for you.

Q. How can I consolidate debt when refinancing my mortgage?
A. Cash-out refinancing can help homeowners who want to consolidate high-interest, nondeductible debt. Because your mortgage interest rate is likely to be lower than rates on credit cards or other types of bank loans, consolidating debt may reduce your overall monthly debt payments. In addition, your mortgage interest may be tax-deductible, while your credit card interest is not.<sup>1

1</sup> The amount you save on loan consolidation may vary by loan. Since a home loan may have a longer term than some of the bills you may be consolidating, you may not realize savings over the entire term of your new loan. In addition, your loan may require you to incur premiums for hazard and, if applicable, flood insurance and mortgage insurance which would affect your monthly payment reduction. Federally Guaranteed Student Loans should not be consolidated because you will lose important federal benefits.