Frequently Asked Questions

What is a balloon mortgage? What is a fixed-rate mortgage? Why use a mortgage broker? What are prepayment penalties? What happens at closing? What is a commitment letter? What is the typical down payment? What is a loan-to-value ratio? How can I rate lock? How do I know if it makes sense for me to refinance? What is the best way to shop for a mortgage? What documentation and information will I need to get the process started? Will the lender require a fee to lock in my interest rate?

What is a balloon mortgage?
A type of mortgage loan that is amortized exactly like a traditional fixed rate mortgage, but is not self amortizing and it becomes 100% due after a specified amount of time has elapsed (usually five or seven years).  When the loan matures, you must pay the loan off in cash (Balloon Payment) or refinance. The advantage of this type of loan is that the initial rate is usually lower than a normal fixed rate loan.

What is a fixed-rate mortgage?
A fixed-rate mortgage is a type of mortgage in which the interest rate is fixed for the life of the loan. A mortgage secured by real property featuring a constant interest rate for the term of the loan. Example: A fixed-rate mortgage is originated with an interest of 5% for a term of 30 years. The rate will remain at 5% until the loan is paid off , sold, or refinanced.

Why use a mortgage broker?
A mortgage broker is an independent contractor who acts as a middleman between borrowers and lenders. Our mortgage broker will be able to check available loans from dozens of banks and lending institutions, many of which are not available to the general public, and can seek out the best rates and programs possible for the client. Some people may have troubled credit histories, which make it difficult for them to locate reasonably priced credit. A mortgage broker will be able to locate a lender who offers better terms than they can find on their own.  Although the mortgage broker charges a fee for this service, most borrowers will still save money by using a broker, as the broker is performing services which would otherwise be performed by employees of the lender. Thus, there are again cost savings to the borrower. A mortgage broker represents you in obtaining financing that best fits your specific financial goals.

What are prepayment penalties?
A fee assessed by a lender on a borrower who repays all or part of the principal of a loan before it is due. The prepayment penalty compensates the lender for the loss of interest that would have been earned had the loan remained in effect for its full term. Prepayment penalties are not inherently predatory, but they can be set so high that borrowers cannot refinance into lower-rate products. 

What happens at closing?
Closing day is the day the buyer and the seller complete the legal transfer of the property, usually several months after the offer is formally accepted. On the closing date, the parties consummate the purchase contract, and ownership of the property is officially transferred to the buyer.

During closing:

• The buyer delivers the check for the purchase price.
• The seller signs the deed over to the buyer, and gives them the keys.
• The lawyer registers the new deed with the local land registry office.
• The seller receives a check for the proceeds of the sale, less closing costs and mortgage payouts.

What is the typical down payment?
An initial, partial payment made at the time of purchase to permit the buyer to take delivery of the purchase. Additionally, the down payment is a partial payment made to evidence good faith that the buyer will complete the purchase transaction at the time of closing.

How can I rate lock?
A rate lock is a commitment issued by a lender to a homebuyer or to the mortgage broker guaranteeing a specific interest rate for a specified amount of time.

How do I know if it makes sense for me to refinance?
First determine your financial mortgage related goals: i.e. are you looking to improve your monthly cash flow, reduce your mortgage term, do you need to take out cash utilizing the equity from your Property? Obtaining the right mortgage for your particular needs could make sense even when rates are not at their lowest levels. First identify your goals and contact a mortgage professional for suggestions on mortgage programs that would best help you meet your objectives. Then work with your mortgage professional to shop for rates after you have selected the appropriate mortgage program.

What is the best way to shop for a mortgage?
That's where Besen Capital steps in. It is a good idea for several lenders to be approached for input on mortgage programs and rates. Let Besen Capital do the shopping for you. Given our strong banking relationships, and volume of business, we are able to procure the best rates and terms for our clients. In addition, If there are any usual twists to your mortgage scenario, it is best to allow us to navigate the sometimes arduous process for you.

 What documentation and information will I need to get the process started?
1. Purchase: Brokers Package/setup, rent roll, income and expenses, pictures, purchase contract, personal financial statement for a personally guaranteed loan, business financial statements for owner-occupied properties.

2. Refinance: Rent roll, income and expenses, personal financial statements for a personally guaranteed loan, business financial statements for owner occupied properties.

3. Construction: Plans, breakdown of hard and soft costs, resume of principle/developer, personal financial statement, rental fallback scenario, comparable sales, and project projections.

 Will the lender require a fee to lock in my interest rate?
For a traditional 60-day rate lock, the lender will not require the borrower to pay a lock fee, but for the privilege of locking for a period beyond 90 days they typically charge the borrower a fee of ½-1% of the mortgage amount which is then credited (or refunded) to the borrower at closing. It is a lock fee the lender requires to insure the transaction will in fact close.

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