1) Why should I use a broker such as Financial Dynamics Mortgage Corporation when determining where I should shop for home loans or mortgages?

Many entities, including banks, credit unions, savings and loans, insurance companies and lenders, make home loans. Lenders and terms change frequently as new companies appear; old ones merge, and market conditions fluctuate.

An experienced mortgage broker like Financial Dynamics Mortgage Corporation will help you sift through the latest offerings and offer you the best possible options for your situation. Financial Dynamics Mortgage Corporation deals with multiple lenders, over 60 at this present time. Financial Dynamics Mortgage Corporation can shop for the best terms available on any given day.

In addition, Financial Dynamics Mortgage Corporation can find the lenders that 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 and loans with minimal or no down payment, and so on.

2) What are the factors in becoming qualified for mortgage approval?

3) What are low down payment options, for buyers who can't afford a 20% down payment?

Assuming you can afford (and qualify for) high monthly mortgage payments and have a high credit score, you should be able to find a low (5% to 15%) or even no down payment loan. However, you may have to pay a higher interest rate and loan fees (points) than someone making a larger down payment.

If you put down less than 20%, you may have to either pay for private mortgage insurance (PMI) or, to avoid PMI, take out two separate loans (a first mortgage and a second mortgage).

4) What is private mortgage insurance (PMI)?

Private mortgage insurance or "PMI" policies are designed to reimburse a mortgage lender up to a certain amount if you default on your loan and your house isn't worth enough to entirely repay the lender through a foreclosure sale. Many lenders require PMI on loans where the borrower makes a down payment of less than 20%.

Premiums are usually paid monthly and typically yearly costs average one-half of one percent of the mortgage loan. You can normally cancel the PMI once your equity in the house reaches 20-25%, so long as you've made timely mortgage payments.

5) What kinds of government loans are available to homebuyers?

Financial Dynamics Mortgage Corporation offers the following federal program:
FHA loans. The Federal Housing Administration (FHA), an agency of the Department of Housing and Urban Development (HUD), insures loans made to all U.S. citizens, permanent residents, and noncitizens with work permits that meet financial qualification rules. Under its most popular program (203b), if the buyer defaults and the lender forecloses, the FHA pays 100% of the amount insured. This loan insurance lets qualified people buy affordable houses. The major attraction of an FHA-insured loan is that it requires a low down payment, usually about 3% to 5%.

6) What's the difference between a fixed and adjustable rate mortgage?

With a fixed rate mortgage, the interest rate and the amount you pay for principal and interest each month remain the same over the entire mortgage term, traditionally 15, 20 or 30 years. A number of variations are available, including fixed rate loans with balloon payments at the end.

With an adjustable rate mortgage (ARM), the interest rate fluctuates according to the interest rates in the economy after an initial fixed rate term. Initial fixed interest rates of ARMs are typically offered at a discounted interest rate that is lower than the rate for fixed rate mortgages for the shorter fixed rate term, though the amortization is still for 30 years. Over time, when the initial term is over, ARM rates will fluctuate as general interest rates go up and down. Different ARMs are tied to different financial indexes, some of which fluctuate up or down more quickly than others.

To avoid constant and drastic changes, ARMs typically regulate (cap) how much and how often the interest rate and/or payments can change in a year and over the life of the loan. A number of variations are available for adjustable rate mortgages, including hybrids that change from a fixed to an adjustable rate after a period of years, or "option ARMs" that allow you to choose, on a monthly basis, whether to pay a minimum amount, an interest-only amount, an ordinary principal plus interest amount, or an accelerated payment amount.

7) Which is better -- a fixed or adjustable rate mortgage?

It depends. Because interest rates and mortgage options change often, your choice of a fixed or adjustable rate mortgage should depend on:

• the interest rates and mortgage options available when you're buying a house or refinancing
• your view of the future (generally, high inflation will mean ARM rates will go up and lower inflation means that they will fall)
• your personal financial and investment goals, and
• how willing you are to take a risk.

Financial Dynamics Mortgage Corporation consultants will walk you through the process to determine what product options are best for you.