This section contains answers to our most frequently asked questions about mortgages in general, choosing a mortgage, refinancing solutions, financing home construction and home equity lending.
If you have any further questions, please contact your Merrill Lynch Financial Advisor or a Merrill Lynch Loan Consultant at 1-866-ASK-MLCC (275-6522) Monday through Friday, 8 a.m. – 8 p.m. (EST). Click here for Merrill Lynch Credit Corporation Licensing Information.
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General Mortgage Information
Financing Home Construction
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Choosing a Mortgage
Refinancing Solutions
Home Equity Lending
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General Mortgage Information
Q. When should I refinance my mortgage?
A. When the cost of establishing a new mortgage is recovered during the time you plan on remaining in your home. Consider restructuring to maximize tax deductibility and weigh refinancing costs (origination fees, attorney's fees, appraisal fees, title fees, and other applicable fees). For more information, visit our Refinancing Considerations page.
Please consult your tax advisor regarding the deductibility of mortgage interest.
Q. When should I pay points on a mortgage?
A. Paying points will lower your rate and monthly payments, but it also means that you pay more at closing. With a “no points” option, you will ultimately pay more interest over the long term. It makes sense to pay additional points if you intend to hold the mortgage long enough to break even on the extra money paid at closing.
Q. Am I required to pay mortgage insurance?
A. If you make less than the standard 20% down payment or do not have enough equity in your home upon refinancing, mortgage insurance is required and the monthly premium is added to your mortgage payment. Merrill Lynch has several solutions to help you avoid paying mortgage insurance:
• Mortgage 100® -- finance up to 100% of your home by pledging eligible securities in lieu of a cash down payment.
• Flexible FirstSM -- finance up to 90% of your home without mortgage insurance by combining a first mortgage with a home equity credit line.
• Parent Power® eliminates the need for a cash down payment by offering 100% financing with a pledge of eligible securities by a parent or sponsor for a child or family member to guarantee a portion of the loan.
For more information, visit our 100% financing solutions page.
Merrill Lynch’s Mortgage 100® and Parent Power® programs require the pledge of eligible securities owned by an individual and maintained in a Merrill Lynch, Pierce, Fenner & Smith, Incorporated brokerage account. Member, Securities Investor Protection Corporation (SIPC). Mortgage 100®/Parent Power® may not be suitable for everyone and a default on your mortgage could result in both the loss of your home and your securities. Should the value of the securities pledged as collateral decrease below a certain level (as specified within the loan documents), the deposit of additional assets and/or liquidation of assets may be required. Merrill Lynch may liquidate some or all of the securities in the account without contacting you. You are not entitled to an extension of time to meet a collateral call or choose which securities in your account are sold to meet the collateral call. Liquidation may result in adverse tax consequences. Mortgage interest may not be deductible if tax-exempt obligations are pledged as additional collateral. Trading within the brokerage account for the 100% financing programs is subject to restrictions.
Q. How can I apply for home financing through Merrill Lynch?
A: Our simple and easy application can be completed in a 20-30 minute phone interview by calling a Merrill Lynch Loan Consultant at 1-800-854-7154. Our friendly and knowledgeable Loan Consultants will give you the personal attention you need.
If you are an existing Merrill Lynch client you can contact your Financial Advisor for additional information.
Find a Merrill Lynch Financial Advisor in your neighborhood.
Q. Does Merrill Lynch offer loans outside of the United States?
A. Loans are offered on properties in all 50 states, the District of Columbia and the U.S Virgin Islands and Puerto Rico.
Q. Should I get preapproved for a mortgage?
A. Having a preapproved mortgage makes home shopping easier. It’s a powerful negotiating tool in a "seller's market," where homes move quickly and sellers/realtors sometimes only accept offers from pre-qualified buyers over those who have not yet secured financing. Merrill Lynch's Qualified BuyerSM program gives you home financing recommendations that match your objectives, a complimentary preapproval letter and an approved loan amount within your actual price range. Learn more about the Qualified BuyerSM program.
Q. How can I access my loan after closing?
A. After you have closed on your loan, you can access information online regarding your existing Merrill Lynch-originated mortgage loan via our Message Center. Register at www.mlcc.com. Click on “Access Your Account.” Click on the link provided to www.mortgagequestions.com and follow the registration directions.
Q. Can I view my loan application status online?
A. Yes. All sites are secure, user-friendly and accessible 24 hours a day, 7 days a week. Click here to view your Loan Application Status.
Q. Can I receive my monthly mortgage statements by e-mail?
A. Yes. The online Message Center (see above) allows you to receive your monthly statements and notifications of when payments are made by e-mail. In addition you can:
• Review current payment information.
• View transaction history.
• View escrow account balances and payments.
• View year-end interest and tax statements from last year.
• View information on PMI removal.
• Arrange to have your mortgage payments taken directly from your bank account(s).
• Make fast, easy online payments.
Q. What are my mortgage payment options?
A. Merrill Lynch offers you several convenient payment options, including mail, telephone, online payments and direct debit (ACH). Click here for detailed information.
Choosing a Mortgage
Q. How does my mortgage affect my portfolio?
A. Your mortgage can affect your cash flow, tax picture and long-term investment strategy. At Merrill Lynch, we look at your mortgage as an integral part of your overall financial life. With more financing choices available than ever before, savvy borrowing can make a difference in helping you preserve and enhance your net worth. Whether you're buying or refinancing your home, purchasing a vacation property or helping your children buy a home, we'll help you evaluate different financing alternatives to fit your individual needs.
For more information, visit our Home Financing overview page.
Q. How can my mortgage help me maximize tax opportunities?
A. To maximize potential tax deductibility, as well as increase cash flow flexibility, Merrill Lynch offers various mortgage solutions including:
Interest-only payments
Home Equity Lines of Credit
Combination first mortgage with a home equity line of credit
Please consult your tax advisor regarding the deductibility of mortgage interest.
“Interest-only” mortgages allow you to pay only the interest on the money you borrow for a certain number of years. If you only pay the amount of interest that’s due, once the interest-only period ends, you will still owe the original amount you borrowed and your monthly payment will increase – even if interest rates stay the same – because you must pay back the principal as well as interest. You should ask what the payments on your loan will be after the end of the interest-only period. If you are considering an adjustable-rate mortgage, ask what your payments can be if interest rates increase.
Q. How can I make a cash down payment without liquidating assets?
A. If you are planning on liquidating assets to make a cash down payment, consider the advantages of 100% home financing. 100% home financing benefits include reducing up-front mortgage expenses, preserving your investment portfolio by keeping assets invested, deferring potential capital gains tax, and increasing potential tax deductibility.
Merrill Lynch’s 100% home financing programs include:
Mortgage 100® allows you to finance up to 100% of your home by pledging eligible securities in lieu of a cash down payment.
Parent Power® eliminates the need for a cash down payment by offering 100% financing with a pledge of eligible securities by a parent or sponsor for a child or family member to guarantee a portion of the loan.
Merrill Lynch’s Mortgage 100® and Parent Power® programs require the pledge of eligible securities owned by an individual and maintained in a Merrill Lynch, Pierce, Fenner & Smith, Incorporated brokerage account. Member, Securities Investor Protection Corporation (SIPC). Mortgage 100®/Parent Power® may not be suitable for everyone and a default on your mortgage could result in both the loss of your home and your securities. Should the value of the securities pledged as collateral decrease below a certain level (as specified within the loan documents), the deposit of additional assets and/or liquidation of assets may be required. Merrill Lynch may liquidate some or all of the securities in the account without contacting you. You are not entitled to an extension of time to meet a collateral call or choose which securities in your account are sold to meet the collateral call. Liquidation may result in adverse tax consequences. Mortgage interest may not be deductible if tax-exempt obligations are pledged as additional collateral. Trading within the brokerage account for the 100% financing programs is subject to restrictions.
Q. If I don't meet the eligibility guidelines for Mortgage 100®, is there an alternative?
There are several alternatives:
Flexible FirstSM, an innovative Merrill Lynch program, can also help you put down less than 20 percent on your home and avoid mortgage insurance.
Q. How can I help a family member purchase a home without liquidating my assets or disrupting my investment strategy?
A. The Parent Power® program enables a relative to sponsor eligible securities to pledge for the mortgage applicant without having to be a co-signer of the loan. Parent Power® offers the same benefits as the Mortgage 100® program, such as no private mortgage insurance on the mortgage, and the sponsor is still able to avoid potential capital gains and trade the pledge account.
Merrill Lynch’s Mortgage 100® and Parent Power® programs require the pledge of eligible securities owned by an individual and maintained in a Merrill Lynch, Pierce, Fenner & Smith, Incorporated brokerage account. Member, Securities Investor Protection Corporation (SIPC). Mortgage 100®/Parent Power® may not be suitable for everyone and a default on your mortgage could result in both the loss of your home and your securities. Should the value of the securities pledged as collateral decrease below a certain level (as specified within the loan documents), the deposit of additional assets and/or liquidation of assets may be required. Merrill Lynch may liquidate some or all of the securities in the account without contacting you. You are not entitled to an extension of time to meet a collateral call or choose which securities in your account are sold to meet the collateral call. Liquidation may result in adverse tax consequences. Mortgage interest may not be deductible if tax-exempt obligations are pledged as additional collateral. Trading within the brokerage account for the 100% financing programs is subject to restrictions.
Q. Is an interest-only financing solution right for me?
A. By paying only the interest on your mortgage, you can reduce your monthly mortgage payment and redirect money that would have gone toward paying principal to other needs. For more information, visit our Interest-only financing overview page.
“Interest-only” mortgages allow you to pay only the interest on the money you borrow for a certain number of years. If you only pay the amount of interest that’s due, once the interest-only period ends, you will still owe the original amount you borrowed and your monthly payment will increase – even if interest rates stay the same – because you must pay back the principal as well as interest. You should ask what the payments on your loan will be after the end of the interest-only period. If you are considering an adjustable-rate mortgage, ask what your payments can be if interest rates increase.
Q. Is a fixed or adjustable-rate mortgage better for me?
A. Your home mortgage is one of the largest financial transactions you will ever make. Choosing between a fixed and adjustable-rate mortgage can be difficult, so look closely at:
• Interest-rate spreads between current fixed and adjustable rates.
• Interest-rate projections during the time you plan to live in your home.
• Your tolerance for payment changes arising from interest-rate fluctuations.
• Your potential investment return compared to the interest expense.
Note concerning adjustable rate mortgages:
If interest rates increase, your monthly mortgage payments may also increase. When deciding whether an adjustable-rate mortgage is right for your situation, you should consider the potential risk of rising rates and such factors as how long you plan to own your home.
For more information, visit our Home Financing overview page.
Q. How can a home equity line of credit help me?
A. A revolving home equity line of credit offers you flexible borrowing power by setting up a line of credit against the equity in your home. You can draw and replace funds without incurring unnecessary interest expense. Funds may also be tax deductible.
Merrill Lynch Equity Access® credit line benefits:
• Access cash quickly for unexpected expenses
• Avoid liquidating assets for purchases
• Consolidate higher interest-rate debt
• Meet the rising costs of education
• Make home improvements
• Purchase a vacation home, new car or boat
• Provide a ready source of potentially tax deductible funds for seasonal expenses like holiday shopping or tax time
With Flexible FirstSM you can finance up to 90% of your home without mortgage insurance by combining a first mortgage with a home equity credit line.
Please consult your tax advisor regarding the deductibility of mortgage interest.
Equity Access® funds may not be used to purchase, carry, or trade securities or repay debt incurred to purchase, carry, or trade securities.
“Interest-only” mortgages allow you to pay only the interest on the money you borrow for a certain number of years. If you only pay the amount of interest that’s due, once the interest-only period ends, you will still owe the original amount you borrowed and your monthly payment will increase – even if interest rates stay the same – because you must pay back the principal as well as interest. You should ask what the payments on your loan will be after the end of the interest-only period. If you are considering an adjustable-rate mortgage, ask what your payments can be if interest rates increase.
Q. Can I consolidate my nondeductible debt as part of my home financing?
A. There are a few ways to do so. With cash-out refinancing, you refinance your existing loan balance and receive additional funds at closing to finance things like paying off consumer debt or making home improvements.
Consider a first mortgage combined with a home equity line of credit. The equity credit line may be available at a special rate and with reduced closing costs when closed in conjunction with a first mortgage. Or if you have equity in your home, consider a home equity loan or line of credit. Interest expense on funds utilized is potentially tax deductible.
Please consult your tax advisor regarding the deductibility of mortgage interest.
Equity Access® funds may not be used to purchase, carry, or trade securities or repay debt incurred to purchase, carry, or trade securities.
“Interest-only” mortgages allow you to pay only the interest on the money you borrow for a certain number of years. If you only pay the amount of interest that’s due, once the interest-only period ends, you will still owe the original amount you borrowed and your monthly payment will increase – even if interest rates stay the same – because you must pay back the principal as well as interest. You should ask what the payments on your loan will be after the end of the interest-only period. If you are considering an adjustable-rate mortgage, ask what your payments can be if interest rates increase.
Q. Can I obtain a mortgage and home equity credit line at the same time?
A. Yes. Combination financing, or Flexible FirstSM, simultaneously establishes a first mortgage with a home equity line of credit that typically offers a lower rate than most credit cards. Reduce your down payment by borrowing more than the customary 80% of the purchase price without having to pay costly mortgage insurance premiums. For more information, visit our Flexible FirstSM page.
Equity Access® funds may not be used to purchase, carry, or trade securities or repay debt incurred to purchase, carry, or trade securities.
“Interest-only” mortgages allow you to pay only the interest on the money you borrow for a certain number of years. If you only pay the amount of interest that’s due, once the interest-only period ends, you will still owe the original amount you borrowed and your monthly payment will increase – even if interest rates stay the same – because you must pay back the principal as well as interest. You should ask what the payments on your loan will be after the end of the interest-only period. If you are considering an adjustable-rate mortgage, ask what your payments can be if interest rates increase.
Q. What are the benefits of a home equity credit line or home equity loan?
A. Lines of Credit and Home Equity Loans are smart choices to help you meet your personal financing needs. By leveraging the equity in your home, you’ll benefit from competitive rates, high credit lines, the borrowing power to finance what matters to you most and a source of funds that may be potentially tax-deductible (consult your tax advisor). For more information, visit our Home Equity Overview page.
Equity Access® funds may not be used to purchase, carry, or trade securities or repay debt incurred to purchase, carry, or trade securities.
“Interest-only” mortgages allow you to pay only the interest on the money you borrow for a certain number of years. If you only pay the amount of interest that’s due, once the interest-only period ends, you will still owe the original amount you borrowed and your monthly payment will increase – even if interest rates stay the same – because you must pay back the principal as well as interest. You should ask what the payments on your loan will be after the end of the interest-only period. If you are considering an adjustable-rate mortgage, ask what your payments can be if interest rates increase.
Refinancing Solutions
Q. When should I refinance my mortgage?
A. If you are looking for ways to maximize your tax deductions, add flexibility to your monthly cash flow or build equity, you may want to consider refinancing your mortgage. To help determine if refinancing makes sense financially, you should:
• Project your annual mortgage payment savings and compare it against an estimate of the cost of refinancing. The costs should include items such as origination fees, attorney's fees, appraisal fees, title fees, and other applicable fees.
• If you know the length of time you plan to hold the mortgage, this can help you determine whether you will recoup the upfront refinance costs.
• Weigh the estimated cost of refinancing against the potential tax benefits, increased flexibility and liquidity.
Please consult your tax advisor regarding the deductibility of mortgage interest.
To learn more, visit our Refinancing Considerations page.
Q. What are my options if I choose to refinance?
A. Different personal needs require varying refinancing options:
• Rate and term refinancing--obtain a better rate or loan term.
• Cash-out refinancing--receive additional funds at closing for things like paying off consumer debt or making home improvements.
• Combine a home equity line of credit with your refinanced mortgage for extra monies.
• Refinance costly consumer credit into a home equity line of credit.
Equity Access® funds may not be used to purchase, carry, or trade securities or repay debt incurred to purchase, carry, or trade securities.
“Interest-only” mortgages allow you to pay only the interest on the money you borrow for a certain number of years. If you only pay the amount of interest that’s due, once the interest-only period ends, you will still owe the original amount you borrowed and your monthly payment will increase – even if interest rates stay the same – because you must pay back the principal as well as interest. You should ask what the payments on your loan will be after the end of the interest-only period. If you are considering an adjustable-rate mortgage, ask what your payments can be if interest rates increase.
Financing Home Construction
Q. What’s the best way to finance building or renovating a home?
A: Explore programs specially geared to this need. Our Construction-to-Permanent home financing program can save you time and money. With one application and one closing, you establish a construction loan that easily converts to permanent home financing. Typically, custom-built home construction takes from 12 to 18 months. During this time, you will receive disbursements of funds to pay your builder for labor and material costs. Each month you will be required to pay only the accrued interest on the outstanding balance. Once the home is complete, the loan will convert to the permanent mortgage you selected during the application process.
The construction period requires interest-only payments based on the prime rate as quoted in The Wall Street Journal, minus .50%. Six-month extension permitted with interest rate margin increase and lender approval.
“Interest-only” mortgages allow you to pay only the interest on the money you borrow for a certain number of years. If you only pay the amount of interest that’s due, once the interest-only period ends, you will still owe the original amount you borrowed and your monthly payment will increase – even if interest rates stay the same – because you must pay back the principal as well as interest. You should ask what the payments on your loan will be after the end of the interest-only period. If you are considering an adjustable-rate mortgage, ask what your payments can be if interest rates increase.
Q. How is my down payment determined and when is it due?
A. Your down payment or "cost balance" is the difference between the total construction/land costs and your mortgage amount. You pay the full cost balance at closing. Your equity in the property and any qualified prepaid expenses will be credited against your cost balance.
Q. What happens if the total cost exceeds the value of the proposed project (as determined by the Merrill Lynch appraiser)?
A. The difference is added to your cost balance requirement. This can happen when improvements exceed comparable properties in the area or when the general contractor's fees and charges are more than expected.
Q. Can I utilize a construction-to-permanent mortgage to finance the renovation or demolition with reconstruction of my existing home?
A. Yes, our Construction-to-Permanent loan can be customized this way but Merrill Lynch must hold the first mortgage on the property. Your new loan amount plus your cash investment must be sufficient to retire the existing first mortgage and pay for the improvements. Learn more about the Construction-to-Permanent loan program.
Q. What happens if I start construction prior to the closing of the construction loan?
A. Normally, borrowers are discouraged from doing this. If unavoidable, the loan closing will be conditioned upon your providing the title insurer with all documentation necessary to insure Merrill Lynch against intervening claims or liens.
Q. Can I act as my own builder or project manager?
We require that you have a written contract with a builder who has a proven track record in the construction of single-family residential homes.
Home Equity Lending
Q. How does adding a home equity credit line to my mortgage benefit me?
You may also benefit from our Equity Access® account:
• Access cash quickly for unexpected expenses
• Consolidate higher interest-rate debt
• Meet the rising costs of education
• Make home improvements
• Purchase a vacation home, new car or boat
• Provide a ready source of potentially tax deductible funds for seasonal expenses like holiday shopping or tax time
Merrill Lynch does not provide specific recommendations on tax issues. Consult your tax advisor regarding the deductibility of interest expense. Interest expense may not be deductible for all taxpayers.
Equity Access® funds may not be used to purchase, carry, or trade securities or repay debt incurred to purchase, carry, or trade securities.
“Interest-only” mortgages allow you to pay only the interest on the money you borrow for a certain number of years. If you only pay the amount of interest that’s due, once the interest-only period ends, you will still owe the original amount you borrowed and your monthly payment will increase – even if interest rates stay the same – because you must pay back the principal as well as interest. You should ask what the payments on your loan will be after the end of the interest-only period. If you are considering an adjustable-rate mortgage, ask what your payments can be if interest rates increase.