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How do I know how much house I can afford? |
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Generally speaking, the amount that you can borrow will depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Some programs will allow borrowers with exceptional credit scores to qualify for loans that do not require verification of income or assets.
Please contact me so I can help you determine exactly how much you can afford. |
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What is the difference between a fixed-rate loan and an adjustable-rate loan? |
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With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest rate will remain fixed for a specified time period, followed by periodic adjustments that will typically relate directly to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change after the fixed rate period ends and the adjustment period begins. Common ARM loans include 3 year, 5 year and 7 year fixed rate periods, followed by adjustment periods.
There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to me about your individual situation and I will be delighted to offer options that will enable you to select a suitable loan program for your situation. |
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Is Mortgage Insurance required with my loan? |
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If you wish to purchase a home with a down payment of less than 20% of the purchase price, or would like to refinance a home with less than 20% equity, your loan will require mortgage insurance. However, we offer a unique product that enables you to avoid paying a monthly mortgage insurance premium by taking a loan that carries a slightly higher interest rate. The end result is a mortgage with a much lower monthly payment! Call us now to find out more about this exciting product! |
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How do I know which type of mortgage is best for me? |
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There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. I am here to help you evaluate your choices and assist you in making the most appropriate decision. |
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What does my mortgage payment include? |
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For most homeowners, the monthly mortgage payments include three separate parts: Principal: Repayment on the amount borrowedInterest: Payment to the lender for the amount borrowedTaxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company. |
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How much cash will I need to purchase a home? |
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The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
Earnest Money: The deposit that is supplied when you make an offer on the house
Down Payment: A percentage of the cost of the home that is due at settlement
Closing Costs: Costs associated with processing paperwork to purchase or refinance a house
Cash Reserves: Some loan programs require you to have at least 2 months of monthly mortgage payment reserves available in your bank account. |
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How is an index and margin used in an ARM? |
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An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR). |
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