FAQ

How do I know how much house I can afford?

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.

What is a jumbo loan?

A mortgage larger than the maximum eligible for conforming purchase by the two Federal
agencies, Fannie Mae and Freddie Mac.

What is the difference between a fixed-rate loan and an adjustable-rate loan?

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.

What does my mortgage payment include?

For most homeowners, the monthly mortgage payments include three separate parts:

  • Principal: Repayment on the amount borrowed

  • Interest: Payment to the lender for the amount borrowed

  • Taxes & 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.

When does it make sense to refinance?

Usually people refinance to save money, either by obtaining a lower interest rate or by reducing the term of the loan. Refinancing is also a way to convert an adjustable loan to a fixed loan or to
consolidate debts. The decision to refinance can be difficult, since there are several reasons to refinance. However, if you are looking to save money, try this calculation: Calculate the total cost of the refinance
Calculate the monthly savings
Divide the total cost of the refinance (#1) by the monthly savings (#2).  If you own the house longer than this, you will save money by refinancing.

 

Since refinancing is a complex topic, feel free to contact one of our loan officers for a free no
obligation consultation.

What's the difference between prequalified and preapproved?

The pre-approval process is much more complete than pre-qualification. For pre-qualification,
the loan officer asks you a few questions and provides you with a pre-qualification letter.

Pre-approval includes all the steps of a full approval, except for the appraisal and title search. Pre-
approval can put you in a better negotiating position, much like a cash buyer.

Will I save money going directly with a mortgage lender?

Not necessarily. In fact, if you are a reasonably astute shopper, you will probably do better
dealing with a mortgage broker. Mortgage brokers do not add any net cost to the lending
process, because they perform functions that would otherwise have to be done by employees
of the lender. Furthermore, because mortgage brokers deal with multiple lenders -- in a typical case, 25 to 30, sometimes more -- they can shop for the best terms available on any given day.

 

In addition, they can find the lenders who specialize in various market niches that many other
lenders avoid, such as loans to applicants with poor credit ratings, loans to borrowers who do not intend to occupy the property, loans with minimal or no down payment, and so on.

What's the difference between lender and mortgage broker?

A mortgage broker counsels you on the loans available from different wholesalers, takes your
application, and usually processes the loan which involves putting together the complete file of
information about your transaction including the credit report, appraisal, verification of your
employment and assets, and so on. When the file is complete, but sometimes sooner, the lender
"underwrites" the loan, which means deciding whether or not you are an acceptable risk.

Are there options for zero money down loans?

Don't be afraid to buy a home because you assume you'll need 10 or 20% down. There are numerous programs that will work with 5%, 3.5%, and even 0% down. We can also help you apply for programs to assist with down payment and closing cost expenses.

What is a conforming loan?

A loan eligible for purchase by the two major Federal agencies that buy mortgages, Fannie Mae
and Freddie Mac.

What is a rate lock?

A rate lock is a contractual agreement between the lender and buyer. There are four
components to a rate lock: loan program, interest rate, points, and the length of the lock.

Have other questions?

Let's talk. 

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