Whether you are buying a new home, or refinancing your current mortgage, Lending Star Capital LLC is here to help you find the right mortgage to meet your need. Our team has over 20 years’ professional experience in mortgage and real estate, with extensive product knowledge and client-centered customer service. Our goal is to provide competitive rates, minimum costs, prompt support, and stress-free closing for our clients, making your home loan journey a pleasurable experience!
Your home loan choices:
Purchase VS. Refinance
Purchase loan: A type of mortgage loan used to buy a residential property secured by deed of trust. A purchasing contract is required to apply for this type of loans.
Refinance: Get a new mortgage to take place of current mortgage on a property to meet your needs, such as lowering interest rate, decreasing monthly mortgage payment, switching to more favorable term, taking equity out etc.
No Cash-Out Refinance VS. Cash Out Refinance
No Cash Out Refinance: the refinancing of an existing mortgage for an amount equal to or less than the existing loan outstanding balance, plus new loan settlement cost and prepaid items such as interests, unpaid insurance premium and initial escrow account deposits if applicable. It is also called limited cash-out refinance,
Cash-Out Refinance: the refinancing of an existing mortgage for more than you owe on your house, or taking equity out from previously lien-free property. The “cash” you get from cash-out refinance can be used on home improvements, debt consolidation or other financial needs. The cash-out amount is limited up to 80% to 90% of your house’s equity, and the loan has slightly higher interest rate comparing to no cash-out refinance,
Fixed Rate VS. Adjustable Rate
Fixed Rate Mortgage: the interest rate stays the same through out the mortgage repayment period, and the monthly payment amount will never change until the mortgage is refinanced or paid off.
Adjustable Rate Mortgage (ARM): the interest rate stays the same at the initial period of time, and then changes periodically throughout the repayment period based on market variables, mainly index. The initial interest rate of ARM loan is usually lower that the rate for fixed rate mortgage.
Conforming Loan VS. Jumbo Loan
Conforming Loan: the loan amount of a conforming loan is equal to or less than the dollar amount established by the conforming loan limit set by the Federal Housing Finance Agency (FHFA), and the loan meets Fannie Mae and Freddie Mac guidelines. In 2020, the conforming loan limit is generally $510,400 for one-unit property in 48 continental states.
Jumbo Loan: loans above the conforming loan limit are knows as “jumbo” loans, also knows as non-conforming loans. Jumbo loans typically have higher interest rates, and need to meet stricter criteria.
20% Down Payment/Equity VS. Mortgage Insurance
When the loan amount is higher than 80% of the appraisal value of a property, a mortgage insurance is required. It is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan. Borrowers can choose lender-paid mortgage insurance. If borrowers choose to pay MI by themselves, they can choose to pay premium monthly or make one-time payment upfront. A typical option to avoid MI is to apply for both first mortgage (which amount is 80% or less than the appraisal value) and second mortgage (which amount is difference between appraisal value/purchase price and the total of down payment and first mortgage amount).
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