| 1. |
How do I know how much house I can afford? Answer |
| 2. |
How do I shop for a loan? Answer |
| 3. |
How do I know which type of mortgage is best for me? Answer |
| 4. |
What does my mortgage payment include? Answer |
| 5. |
How long does the loan process take? Answer |
| 6. |
What are Impounds? Answer |
| 7. |
What are closing costs? Answer |
| 8. |
I see advertisments stating that the lender will pay $2000 in closing costs or they will pay all closing costs, do they really? Answer |
| 9. |
I see advertised home loans for only $395 closing costs, is this a good deal? Answer |
| 10. |
I was told that I should ask for a PAR rate, what is that? Answer |
| 11. |
How much cash will I need to purchase a home? Answer |
| 12. |
What is an interest only loan? Answer |
| 13. |
What is the difference between a fixed-rate loan and an adjustable-rate loan? Answer |
| 14. |
How is an index and margin used in an ARM? Answer |
| 15. |
Why should I use a mortgage broker rather than a bank? Answer |
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How do I know how much house I can afford? |
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Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also 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. Give us a call, and we can help you determine exactly how much you can afford. |
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How do I shop for a loan? |
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Here is a GREAT from provided by Americans for Fainess in Lending. It give you questions which you should ask.
Mortgage Shopping Guide |
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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. 1st Choice Mortgage Company, LLC can help you evaluate your choices and help you make 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 long does the loan process take? |
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To get pre-qualified it simply takes completion of a loan application and review of credit with a loan officer. about 1 hour.
After that, the process usually takes 10 business days, depending upon collection of suppporting documentation and formal underwriting.
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What are Impounds? |
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Imponds or escrow accounts are your funds you pay at closing, and monthly with your mortgage payment, which are held in reserve to pay items such as home owner's insurance, state and local taxes. |
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What are closing costs? |
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These are fees that represent the expense of getting your loan. These are charged by various 3rd party agencies such as title company, your local county, appraisers, and lenders. |
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I see advertisments stating that the lender will pay $2000 in closing costs or they will pay all closing costs, do they really? |
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There is NO FREE LUNCH. A lender can't do a loan for free, there are a lot of expenses. What the lender will do is increase the interest rate on a loan in order to make back points, and then use the back points to pay the fees. You as a borrower will then pay a higher interest rate for the life of the loan, thus costing you more. Always ask for a PAR rate! Remember it is all about the RATE! |
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I see advertised home loans for only $395 closing costs, is this a good deal? |
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The cost of doing business is realtive the same for any company. How companies do low closing costs or no closing cost is by increasing the interest rate which you will pay for the life of your loan. So by not paying closing cost and having a higher interest rate, you may pay more over the life of your loan in interest. Remember it is all about the RATE! |
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I was told that I should ask for a PAR rate, what is that? |
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Every lender has a PAR rate. Rates vairy from lender to lender, you should ask for PAR rates and compare. PAR rate is the rate which the lenders does not charge discount points (fees). Remember it is all about the RATE! |
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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 closing UNLESS the loan program does not require any.
Closing Costs: Costs associated with processing paperwork to purchase or refinance a house, UNLESS realtor has negotiated the seller to pay some or all closing costs. |
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What is an interest only loan? |
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This is a loan where your monthly payment only covers the interest of the loan, you do not pay any of the principal or another way of saying this you are just renting the house from the bank, and at the end of the loan, you still owe what you bought the house for. In markets where house are appreciating, this is a loan you can research. In markets where houses are not appreciating fast enough or are depreciating a borrower can end up upside down on a house. |
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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 changes periodically, typically in relation 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. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us. |
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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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Why should I use a mortgage broker rather than a bank? |
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A bank has just their programs and just their rates. While a mortgage broker is registered with many different banks and other lenders. A good mortgage broker will "shop" your loan to many different lenders in order to get you the best possible loan for your situation. Rates and programs GREATLY differ between different banks and lenders. |
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