Capital One

Capital One

Capital One is a relatively young financial services company, founded in 1988 in Richmond, Va. Though it may be best known for its credit card business, it also offers mortgage, auto and personal loans, along with general banking services such savings and checking accounts. One of the nation’s largest consumer lenders, its primary focus is on consumer financial services, although it also offers business accounts and commercial banking services as well.

A Fortune 500 company, it ranks among the 10 largest banks in the United States in terms of deposits. Its retail outlets are concentrated in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia, but it also does business nationwide through the mail and by its web site, .

In February 2012, Capital One acquired ING Direct USA, which offers its own line of banking and investment products, including home mortgages. ING Direct USA continues to maintain a separate identity, at least for the time being.

Mortgage Lending

Capital One’s mortgage lending business is somewhat limited in focus, originating loans only in the states of New York, Connecticut, New Jersey, Delaware, Maryland, Virginia, Washington, D.C., Louisiana and Texas.

Capital One offers mortgages of up to $2 million. Conforming mortgage loans of $417,000 or less typically have the lowest mortgage rates; high-balance loans of $417,000 to $625,500 are available in areas with higher property values. Jumbo loans are available for mortgages above $625,500 but have higher mortgage rates.

Fixed-rate mortgages are available with repayment terms of 10, 15, 20 and 30 years. Capital One also offers adjustable-rate mortgages (ARMs), typically with terms of three to five years; in any event, ARM amortization terms are set at 30 years.

Capital One is an authorized lender for both FHA and VA mortgages. Co-op loans are available in New York City only.

Interest-only mortgages may be available to certain borrowers. On these loans, the borrower pays only interest payments for a fixed period, usually the first 10 years of the loan. Rates are higher than on other loan types, but these mortgages may offer tax advantages for certain types of borrowers.

Refinance

Although Capital One only originates mortgages in certain states, current Capital One mortgage holders may refinance regardless of where they property is located. This may be useful to mortgage holders who obtained loans through Greenpoint Mortgage, which was acquired by Capital One in 2006 but closed in 2007 due to declining mortgage demand at that time.

Capital One offers the same products for mortgage refinancing as they do for mortgages to purchase a home. This is because when you refinance a mortgage, you are simply replacing the old mortgage with a new one that has more desirable terms. Borrowers often do this to obtain a lower mortgage rate, to shorten their loan term to pay it off faster, to extend their loan term to reduce their monthly payments, or to replace an ARM with a fixed-rate loan.

Interest rates are similar to those on mortgages used to purchase a home. Origination fees may be paid separately or added onto the mortgage balance; Capital One also offers a “no-fee” refinance where a slightly higher interest rate is charged in lieu of paying origination fees.

For borrowers with sufficient home equity, cash-out refinancing is available in all states where Capital One originates mortgages except for Texas. Cash-in refinancing, where the borrower brings money to the table to pay down the loan balance at closing, is an option for borrowers who presently lack enough equity to refinance or would like to obtain better mortgage terms by increasing their equity securing the loan. For homeowners who are underwater on their mortgage or have less than 20 percent equity, Capital One participates in the Home Affordable Refinance Program.

Home Equity

Capital One offers both home equity loans and home equity lines of credit (HELOCs). On home equity loans, the minimum loan amount is $10,000 and is repaid as a fixed-rate loan over a period of years. Interest rates are slightly higher than for a primary mortgage, but are very competitive.

A HELOC is a line of credit, secured by the equity in your home, that can be tapped as needed up to a pre-established limit. Interest rates are lower than for a regular home equity loan, and a quarter of a percentage point discount is available for borrowers who choose to have payments withdrawn directly from a Capital One bank account.

Home equity loans are typically useful for when you need money for a single large expenditure, such as for education or medical expenses; HELOCs for when you need to make a series of expenditures over time, such as for a home improvement project. Both are considered second mortgages on your home, so the interest may be tax-deductable in the same manner as on a primary mortgage.