Should I refinance now?

The decision to refinance should be based on several factors. If you are considering refinancing purely due to an interest rate reduction, you simply need to divide the cost to refinance by the amount of monthly savings. If you intend to stay in your home longer than it takes to recoup your closing costs, you should consider refinancing. For example if it will cost you $1000 to refinance and you will save a hundred dollars per month, it will take you 10 months to recoup your $1,000 investment. However you may be considering refinancing to cash out some of your homes equity for debt consolidation, home improvement, college tuition etc, in which case you should carefully consider taking advantage of the current low rates.

What is Mortgage Insurance?: Mortgage Insurance (PMI) is insurance secured by your lender to offset the risk of loan default if you are putting less than 20% down payment toward the purchase of your home. PMI premiums are based on your actual down payment in three increments. The table below may help you get a better understanding of the various PMI rates.

What is Mortgage Insurance?

Mortgage Insurance (PMI) is insurance secured by your lender to offset the risk of loan default if you are putting less than 20% down payment toward the purchase of your home. PMI premiums are based on your actual down payment in three increments. The table below may help you get a better understanding of the various PMI rates.

• PMI premiums shown are annual, payable monthly. For example for a 30 year
  fixed loan you will pay $7.80 per year per thousand dollars borrowed
   

• 5, 7, AND 10 YEAR ARMS & 7 YEAR BALLOONS ARE CHARGED AT THE SAME
  RATES AS 30 YEAR FIXED

Currently there are several loan programs available that allow borrowers to put as little as 5% down and get mortgages without PMI. The programs involve either a higher interest rate where the lender offsets the risk of a loan with less than 20% borrower equity by charging a higher interest rate or by obtaining two mortgages simultaneously, one for 80% and the other one for the balance upto 95%. The cost to the borrower on a monthly basis is usually the same or slightly lower as paying monthly mortgage insurance, however in most cases there is additional interest deductibility from borrower's income which may ultimately result in lower cost. First Illinois offers both of the above pmi alternatives and can analyze your particular situation to determine the best option.

Should I take a fixed rate, balloon or adjustable rate mortgage (ARM)?

A very personal discussion. Fixed rates are obviously the most conservative, however also carry the highest rate. Fixed rate loans are fully amortizing and are paid in full at the end of their term. First Illinois offers fixed rates mortgages from 10 years to 30 years.

In most cases borrowers can save money by taking an adjustable rate or balloon mortgage, which carry a lower interest rate however they are exposed to possible higher interest rates when their initial arm or balloon term ends. First Illinois offers arms initial terms of 1, 3, 5, 7 and 10 years converting to 1 year arms after the initial term. We also offer a 7 Year Balloon, which is due and payable at the end of the 7th year.

Do I have to escrow for taxes and insurance?

If you have 20% equity in your property you do not have to escrow for taxes and insurance. However there may be a fee involved with waiving escrow. Please discuss this with your loan officer. If you have less than 20% equity escrows are mandatory.

Do I have to come to your office for my loan application?

No, the entire process can be handled by mail and phone. We can arrange for a closing at a location close to your home or you can come to our Wheaton, IL office. We offer flexible hours including evenings and Saturdays for closings.

What is a Jumbo (Non-Conforming mortgage)?

Any loan greater than $417,000 for 1-unit properties.