Should you select a fixed-rate or adjustable-rate home loan?

19750953 - mortgage application form with a calculator and house  3dMost home buyers today opt for fixed-rate home loans. With consistent monthly principal and interest payments, it’s an ideal choice if you plan to stay in your home seven years or longer. But if you’re planning on staying put for less time than that, an ARM could be a good option for you.

With an adjustable-rate loan, you also get a fixed rate, but only for a set number of years — typically 3, 5, 7 or 10 years — before the mortgage adjusts annually based on a particular index. With an ARM, your introductory rate is typically lower than the rate you would get with a fixed-rate loan. But with an ARM, you run the risk of a higher mortgage rate once the fixed-rate period is over and the rate adjusts.

While fixed-rate mortgages often make sense for people who plan to live in their home for seven years or longer, adjustable-rate loans can be a good choice for home buyers who are planning to sell or refinance their homes before their rate adjusts. Questions? We have offices in 49 states. Give us a call at 844-500-2845.

Five of the most common questions we get about mortgages

45858911 - portrait of happy couple sitting in new house

At PRMI, we get a lot of questions about mortgages. And we’re happy to answer them! We love educating families about the home-buying process. Here are five of the most common questions from first-time home buyers – along with the answers.

What is the difference between pre-approved and pre-qualified? There is a big difference between the two. When a homebuyer is pre-qualified, he or she has provided the lender with basic information to determine which loan program the homebuyer may qualify for. When a homebuyer is pre-approved, the lender has collected, verified and presented the information needed for underwriting and approval. Many home sellers will accept offers only from pre-approved home buyers.

What is the difference between interest rate and APR? Your interest rate is the monthly cost of the unpaid balance of your home loan. An Annual Percentage Rate (APR) includes both your interest rate and any additional costs or prepaid finance charges such as the origination fee, points, private mortgage insurance, underwriting and processing fees (your actual fees may not include all of these items). While your interest rate is the rate at which you will make your monthly mortgage payments, the APR is a universal measurement that can assist you in comparing the cost of mortgage loans offered by different lenders.

What are closing costs? Closing costs include an assortment of costs, such as appraisal fees, title insurance fees, attorney fees, pre-paid interest and documentation fees. These items are usually different for each customer due to differences in the type of mortgage, the property location and other factors. You will receive a Good Faith Estimate of your closing costs in advance of your closing date for your review.

Which amounts are included in my monthly payments? If you have a fully amortizing mortgage, portions of your monthly mortgage payment go toward loan principal and interest.(Interest-only mortgage payments include only the interest that is due on the outstanding principal balance.) If your mortgage carries mortgage insurance, a portion of your monthly mortgage payment will include this as well, unless the lender has paid your mortgage insurance or you have paid your mortgage insurance upfront. If you have set up an escrow account for your mortgage, then a portion of your monthly payment will go toward your property taxes and homeowners insurance.

What is PMI? Private Mortgage Insurance is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Studies show that generally, the lower the downpayment a homebuyer makes, the greater the risk of default. That’s why typically, PMI is required if your down payment is less than 20 percent of the value of the home you are purchasing or refinancing. The cost of PMI is customarily added to your monthly mortgage payment.

An incredible journey of public service

Screen Shot 2017-01-04 at 8.34.13 PMAt PRMI, we strive to be much more than a great mortgage lender and employer. We also are dedicated to being a company that gives back — not only to the communities we serve but those in need around the world. Join us in looking back at our incredible journey of public service in 2016.

In early December, more than 30 PRMI employees from across the nation flew to Montego Bay, Jamaica, to help 79 children living at the SOS Children’s Village. The private, non-profit organization helps protect orphaned and abandoned children, ensuring that each child grows up with love, security, education and respect.

PRMI employees planted fruit trees, shrubs and a garden, painted homes, served food and provided early Christmas gifts to the children and caretakers. The group also gave a fresh makeover of paint to the tennis court and playground area.

Screen Shot 2017-01-04 at 8.26.36 PMAlso in December, PRMI’s corporate office held its annual winter clothing drive and donated more than 200 articles of clothing to the Road Home shelter in Salt Lake City and volunteered to help sort and distribute donations. PRMI employees also volunteered at the Rescue Mission of Salt Lake to help prepare its annual Christmas dinner, which served more than 1,400 people in need.

image003Earlier in the year, PRMI partnered with Feeding America during its annual Hunger Action Month campaign. We were able to raise $152,052 in just eight weeks! The donations will help provide more than 1.68 million meals to children, families and seniors nationwide. It was an amazing way to give back to the communities we serve.

“Primary Residential Mortgage has fully embraced the need for a strong, united hunger-relief effort in order to feed the individuals and families struggling with hunger in the United States,” said Nancy Curby, interim senior vice president of development at Feeding America. “We’re grateful to have their support and know that the meals they’ve raised will provide hope for thousands of people.”

At PRMI, everyone — from our employees to our executive team — are involved in giving back to our communities. It was an extraordinary year for our company and we’re looking forward to making an even greater impact in 2017.

You can let your home work for you

41521125 - happy elderly couple posing against the skyAt PRMI, we are dedicated to providing a wide range of options, including reverse mortgages. Reverse mortgages give seniors the ability to use their home’s equity as cash and eliminate monthly mortgage payments. Common uses of reverse mortgage income include paying off debt, assisting with everyday living, covering costly medical bills, home repairs, vacations and more! We offer a type of reverse mortgage called a Home Equity Conversion Mortgage (HECM), a federally-insured reverse mortgage backed by the U.S. Department of Housing and Urban Development.

Reverse mortgage programs can be an important financial tool for seniors, especially those with low to moderate incomes. This type of mortgage has no credit or income requirements other than the borrower must demonstrate a financial ability to pay ongoing property expenses.

To be eligible for a reverse mortgage, a borrower must be at least 62 year of age and have the ability to pay ongoing property expenses, including taxes and insurance. Borrowers must occupy the property as their primary residence and either own their property outright or have only a small mortgage balance. They must not be delinquent on their mortgage or have any federal debt.

Since reverse mortgages are much different than traditional mortgage loans, borrowers must meet with a counselor from an independent government-approved housing counseling agency before applying for one. Once they know it’s right for them, it’s important to contact a lender that is experienced in these types of loans. That’s us! Contact one of our offices today to learn more about reverse mortgages.

What is in store for the housing market in 2017?

45858733 - cheerful young couple relaxing in new houseThe National Association of Realtors has released its 2017 National Housing Forecast, which provides a glimpse at projected trends in home sales, prices, mortgage rates and changing buyer demographics nationwide for the year ahead. Here are some of the most interesting takeaways of the report:

1. Demand for homes is highest in the West. The association projects that Western U.S. metro areas will see a price increase of 5.8 percent and sales increase of 4.7 percent in 2017, significantly higher than the nation as a whole. Phoenix, Ariz., is ranked No. 1 in terms of expected sales and price increases, with a projected increase in prices of 5.9 percent and an increase in sales of 7.2 percent for next year. Also in Arizona, Tucson is No. 9. Utah’s housing market shows continued strength with Salt Lake City ranked 16th among 100 metro areas with a projected increase in prices of 6.7 percent and an increase in sales of 4.7 percent. Provo-Orem is No. 18 with a forecasted rise in prices of 5.2 percent and sales of 5.8 percent.

2. Millennials will be out in force buying homes. The National Association of Realtors predicts that one-third of all buyers will be young adults, many of which have limited savings and less-than-perfect credit. Baby boomers, with more significant financial resources, are expected to make up 30 percent of buyers in 2017. Simply put, there’s a diverse group of home buyers today, and that’s why at PRMI we offer a wide variety of mortgage options for home buyers of all incomes and in all financial situations.

4. Mortgage rates could remain extremely attractive. Although mortgage rates have increased in recent weeks, its important to remember that they remain historically low. Remember back to the 1980s and double digit mortgage rates? Or the rates in the 7 percent, 8 percent or even 9 percent range that were common in the 1990s? For 2017, Fannie Mae and Freddie Mac — and others — are projecting 30-year mortgage rates to remain in the low 4 percent range. Looking at rates over several decades, today’s rates are extremely attractive.

The benefits of the VA home loan program

50864661 - adorable little girl standing in front of parents outdoorsDid you know that the VA home loan program has helped more than 20 million military families nationwide? Yet this program could help so many more! Many military personnel, veterans, reservists and National Guard members don’t realize that they are eligible for this incredible type of mortgage. Most spouses of military members who died while on active duty or as a result of a service-connected disability don’t realize they can apply, too. At PRMI, we are dedicated to helping military families take advantage of this incredible benefit.

With a VA home loan, eligible borrowers can choose from various term options — 15, 20, 25, 30 years — and fixed or adjustable rates. Eligible borrowers can get 100 percent financing with no down payment requirements. They also can enjoy lower monthly payments because they don’t need to pay mortgage insurance.

The VA home loan program is one of the few mortgage programs that lets you finance 100 percent of the home’s value with $0 down. Equally impressive is that it doesn’t require Private Mortgage Insurance (PMI) on loans of more than 80 percent of a home’s appraised value, potentially saving borrowers $100 to $200 a month.

VA home loans also often have lower interest rates than the rates of conventional loans, and the minimum credit score requirements of VA home loans are lower than many other types of programs. There are strict limits on the closing costs borrowers are required to pay and a simplified approval process. Simply put, it’s a great way to finance a home.

Less-than-perfect credit history? Get to know the FHA Choice loan

45857361 - couple carrying boxes moving in new houseAt PRMI, we know that bad things can happen to good people. That’s why there’s the FHA Choice loan program. It’s designed to help borrowers whose less-than-perfect credit history makes it difficult for them to qualify for a traditional mortgage.

It’s a 30-year mortgage with a fixed rate designed for borrowers with low credit scores — as low as in the 500s. If approved, borrowers must provide a down payment of only 3.5 percent of the final loan amount.

It’s one of the many home loan options we have available. At PRMI, we work with the Federal Housing Administration loan programs, including the 203k, which allows qualified buyers to finance the purchase and renovation of a property.

We also work the VA (Veterans Affairs) and USDA (U.S. Department of Agriculture) home loan programs, as well as the federal government’s HARP — Home Affordable Refinance Program. Jumbo loans? Reverse mortgages? We offer those types of loans, too.

Whether you’re a first time or move-up buyer or an investor, we have loan programs designed with you in mind. We also have a variety of lending options for homeowners who want to lower their monthly mortgage payment or renovate their property.

Finance your home with Primary Residential Mortgage. Where the primary focus is you.

Do you know the four main parts of your mortgage payment?

10618762 - pieces of puzzle game for abstract connection or integration designHow much house can you afford? It helps to know the four components of a monthly mortgage payment. They are the principal, interest, taxes and insurance.

Let’s take a closer look at each.

Principal
Mortgage payments include money dedicated to repaying the amount borrowed, known as the principal. For instance, if you borrow $200,000, that’s the principal. At the start of your mortgage’s term, your payments go largely to paying off the loan’s interest. As the term of the loan progresses, an increasing amount of money goes to pay down the principal.

Interest
Loaning money is always a risk, so lenders charge a percentage of the principal to offset that risk. Rates vary depending on the economy, but also based on the borrower’s credit-worthiness — a low credit score means more risk and a higher interest rate. Of course, higher interest rates mean higher monthly payments for borrowers.

Taxes
Property taxes can be a big part of your mortgage payment, depending on where you’ve bought. That part of your monthly payment helps fund schools, city and county services and other local government functions. It’s based on the tax rate for each of those taxing authorities, applied to the appraised value of your property. Usually, you can pay the taxes in a lump sum every year or divide the bill over your 12 monthly payments.

Insurance
Insurance payments also can be made with each monthly mortgage payment. It’s typically a requirement by the lender. You might also need private mortgage insurance (PMI),  if you pay less than 20 percent of the property’s price as a down payment. PMI protects a lender in the event a borrower defaults on his or her loan.

A goal to provide 1.65 million meals to hungry people nationwide

image001It’s estimated that 48 million Americans struggle with hunger, including 15 million children and 5.7 million seniors. At PRMI, we have partnered with the nation’s largest hunger-relief organization, Feeding America, to help provide food to those who need it most.

We’re participating in an eight-week fundraising campaign to benefit Feeding America and its nationwide network of food banks. PRMI’s goal is to raise $150,000 to help provide 1.65 million meals to individuals and families across America who struggle to put meals on their tables. Feeding America is able to provide 11 meals to people in need for each dollar donated.

PRMI employees across the country are teaming up in a competition to raise funds with each donation helping the community from which it is made. To help PRMI reach its goal of providing 1.65 million meals nationwide, please visit www.feedingamerica.org/prmi to donate. The exciting part of this campaign is that even small donations can make a huge difference. For example, $25 can provide 3 months of meals for one person through the Feeding America network of food banks!

Is it time to refinance?

39205630 - a picture of a worried couple with documents at homeShould you take advantage of today’s low mortgage rates and refinance?

Done correctly, refinancing could help you lower your monthly payment, tap some of your home equity or help you pay off your mortgage earlier. Here are some questions you’ll want to ask yourself if you’re thinking about refinancing.

What is your current interest rate?
The larger the gap between your current mortgage rate and your refinance rate, the stronger the case for refinancing. For instance, if you have a $220,000 home loan with a 30-year mortgage at 5.5%, your monthly principal and interest payment would be about $1,249. If you refinanced at 3.5% for 30 years, your new principal and interest payment would be just under $988.

Are the costs of refinancing worth it?
Just like with your original home loan, there are fees and closing costs associated with refinancing that can add up into thousands of dollars.

Will refinancing help you meet your goals?
Refinancing for a shorter duration —15 years instead of 30, for instance — could save you a significant amount of money over the term of the loan, though your monthly payment will be higher than your current payment. You also could be mortgage-free much faster. For those with enough equity, refinancing also can help provide cash for home renovations and other big-ticket items. For many, it’s a matter of simply lowering their monthly payment and having extra cash each month for other expenses or to save.

Will you be in your house long enough to benefit?
If you might have to move in the next couple of years, a few years of refinancing savings might not be enough to offset the costs of the refinance.

Talk to your lender. There are many variables that go into a decision to refinance. Your PRMI loan officer is best equipped to discuss the pros and cons of your particular situation, and what refinancing now might be able to accomplish for you.