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DOWN PAYMENT AMOUNT, INCOME, and CREDIT SCORE. Based on these, the types of loan and interest rates are different for each individual.

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FAQ

In general, the process of finding a house, signing a contract, and closing typically takes about two months, as it involves many steps and detailed work.
For our lending process specifically, we require at least ten days after you submit all the necessary documents to proceed.
If you encounter an unexpected situation, such as a SUDDEN INCREASE IN INTEREST RATES, WE MAY ASSIST YOU.
Nothing happens.
In the past, borrowers who paid off their loans earlier than the scheduled term faced prepayment penalties. However, these penalties have been eliminated in most loan programs today.
When the price of crude oil rises, the gasoline prices we pay every day increase almost immediately. However, in the reverse situation, gasoline prices tend to decrease much more slowly. This behavior is similar to how adjustable rates function.
Additionally, many issues with loans often arise from ARMs (Adjustable Rate Mortgages), which is why these types of loans are becoming less common.
If you’re a first-time homebuyer in New Jersey, you may qualify for up to $15,000 in tax credits. Additionally, you could be eligible for up to $15,000 in down payment assistance, provided as a forgivable loan.
To qualify for these benefits, you must:
Work with an approved lender recognized by the State of New Jersey.
Reside in the home you purchase as your primary residence for at least five years.
Meet the income requirements, which vary by county and household size.
This assistance is typically available for full documentation loans, meaning you’ll need to verify your income through tax documents.
However, it’s important to note that the interest rates for these programs may not be as competitive as those offered by other lenders, including us.
If you’re interested in taking advantage of these first-time homebuyer benefits, we recommend checking the interest rates by contacting a participating lender. You can find the list of approved lenders on the New Jersey Housing and Mortgage Finance Agency (NJHMFA) website.
Please note that we do not offer this loan.
Approved Lender List – https://www.nj.gov/dca/hmfa/consumers/docs/hb_lender_list.pdf
FHA loans are well-known for requiring a smaller down payment and providing various benefits.
However, in practice, these advantages may not always be as substantial as they appear.
For example, FHA loans are only available as full-documentation loans, making them unsuitable for borrowers seeking no-documentation options.
It’s also important to understand that a lower down payment often results in higher interest rates. Borrowers should thoroughly assess all aspects of an FHA loan, including the interest rates and mortgage insurance costs, to determine whether it aligns with their financial needs and goals.
In addition, if the down payment is less than 10%, you are required to pay for separate loan insurance throughout the repayment period. Even if the down payment exceeds 10%, you must still pay an upfront fee of 1.75%, and additional insurance costs until your ownership of the home reaches 20%.
QM (Qualified Mortgage) refers to loans that are based solely on the income reported on your tax returns.
NonQM (Non-Qualified Mortgage) refers to situations where tax returns are not considered, and income is verified through alternative methods.
The primary difference between the two is that NonQM loans generally come with interest rates that are about 1% higher than those of QM loans.
For income verification in Non-QM loans, 12 or 24 months of bank statements, VOE (Verification of Employment), and a P&L (Profit & Loss) letter can be used.
When taking out a mortgage loan, it’s always a good idea to consider the possibility of refinancing in the future.
Refinancing involves replacing your current mortgage with a new one. If interest rates decrease, refinancing allows you to lower your mortgage interest rate. The process is typically straightforward and doesn’t require a significant amount of time or money.
Most of our clients who take out loans with us are offered refinancing free of charge.
There are three main types of refinancing:
Rate-and-term refinance: This option focuses on reducing your interest rate and/or adjusting the loan term to better suit your financial goals.
Cash-out refinance: With this option, you can borrow additional funds against your home’s equity while refinancing your mortgage.
The cash-out refinance is often referred to as borrowing money using your home as collateral. It enables homeowners to access the equity they’ve accumulated in their property. It it called HELOAN.
When determining a mortgage interest rate, several factors come into play. Three of the most critical factors are:
Credit score
Down payment amount
Loan amount

To secure the most favorable rates, we generally recommend:
A FICO score of at least 740
A down payment of 30% or more
A loan amount of $300,000 or higher
If you don’t meet these criteria, you may face higher interest rates.

Additionally, interest rates tend to rise if you’re purchasing:
A second home
A condominium
An investment property
The mortgage interest rate quoted during your initial conversation with a Mortgage Loan Officer (MLO) is not guaranteed to stay the same. Interest rates fluctuate daily based on market conditions. The process of securing the current rate at a specific point in time is referred to as “locking in” or a “rate lock.”
Typically, it’s advisable to lock in your rate 15 to 30 days before closing. Until then, monitoring market conditions is recommended.

In some instances, your lender might unexpectedly increase the interest rate at the time of locking in. If this happens, please don’t hesitate to reach out to me for assistance.
Banks typically display the Annual Percentage Rate (APR) alongside interest rates. The APR reflects the cost of loan-related fees expressed as a percentage of the loan amount, in addition to the interest rate. The difference between the APR and the interest rate is often around 0.06% of the loan amount, though this can vary depending on the loan terms and associated fees.
You can ignore the APR because what truly matters is the interest rate.
Obtaining a loan is generally a straightforward process. You simply need to verify your income and show that your bank account has sufficient funds. The remaining documents are relatively easy to handle, with no complicated calculations or analyses involved.
Home Mortgage Loan for purchasing a home
Refinance to reduce current mortgage interest rates
Cash Out Refinance for lowering interest rates while freeing up some additional funds
HELOAN to secure funds using your home as collateral
Commercial Loan solely for business purposes
We offer all these loans.
If you’re ready to buy a house and have the financial means, but can’t prove your income through your tax returns, there are still options available to you.
This situation is often addressed with Non-Qualified Mortgages (Non-QM) or No Documentation (No Doc) loans.
Non-QM loans are specifically designed for borrowers who don’t meet the standard criteria for traditional mortgages. These loans provide more flexible income verification methods, making them a suitable option for self-employed individuals, freelancers, or those with non-traditional income sources.
Alternative income documentation for Non-QM loans:
P&L letter addressed by a CPA
12 or 24 months of bank statements
Verification of Employment signed by the employer or HR.
DSCR, expected rental income from the home you are purchasing
More Than Just Switching Loans

“Refinance” generally means switching to a new loan, but there’s more to it than just that. Simply put, there are two main types of refinancing:
Refinancing only the remaining loan balance.
Refinancing the remaining loan balance while also borrowing additional funds (cash-out).

Let’s illustrate with an example:
Imagine you bought a $100 home with an $80 loan. Over time, the home’s value increased to $120, and you’ve consistently paid down your loan, so now only $50 remains. Based on an appraisal, the home’s current value is $120, and your outstanding loan is $50. This means your equity in the home is $70.

In this scenario, if interest rates drop, refinancing the remaining $50 at a lower interest rate is one type of refinance.
Cash-Out Refinance: Tapping into Your Home Equity
You can also borrow additional funds beyond the remaining loan balance—this is called a cash-out refinance. Lenders typically allow you to borrow up to 75-80% of your home’s appraised value. In our example, if they allow 80%, you could get a loan up to $96. Since your current outstanding loan is $50, you could receive an additional $46 in cash.

However, opting for a cash-out refinance increases your DTI (Debt-to-Income) ratio, which is the percentage of your monthly income that goes towards debt payments. A higher DTI often requires a higher income to qualify. If you don’t meet the income requirements, you might end up with a slightly higher interest rate. Furthermore, cash-out refinances inherently come with a higher interest rate compared to a rate-and-term refinance (where you only refinance the existing balance to get a better rate or term).

While refinancing to lower your interest rate is generally beneficial, a cash-out refinance is not usually recommended unless you have a specific and pressing need for the money, due to the associated increase in DTI and higher interest rates.

Young Kim

T.718-844-8608

NEXCAP HOME LOANS NEW JERSEY
333 SYLVAN AVE, #216
ENGLEWOOD CLIFFS, NJ07632

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