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Frequently Asked Questions
Buying a Home?
General Mortgage Questions
Mortgage Refinance Loans
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Buying a Home
- How much house should I buy? How much can I
afford?
-
The answer to this has a lot to do with your income
and the amount of your debt load. As a rough rule of thumb, most
home buyers purchase houses that cost between 1 1/2 and 2 1/2
times their annual income. For example, a home buyer earning
$40,000 per year would buy houses costing between $60,000 and
$100,000. There is, however, a degree of variation due to the
individual market prices of the area in which you are
interested. In some areas, there may not be houses available
within that range, so you may need to spend a bit more. In
general, however, your monthly mortgage payment cannot exceed
approximately 28%-29% of your gross monthly income. Your total
debt payments (car payments, credit card payments, etc. plus the
monthly mortgage amount) cannot exceed approximately 36%-50% of
your gross monthly income. These ratios will depend on the type
of mortgage for which you are applying
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- Do I really need to use an Agent to buy a
house?
- No. Should you use an Agent to buy a house? Probably, for
two reasons. First, in virtually all situations, the buyer does
not pay a commission, so the services of an Agent working for
you are paid for by the seller. Second, without an Agent, you
may be missing valuable representation of your interests.
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- How do I know if I am getting a good deal on a
mortgage?
- In a word: Compare. There is a good deal of variation in the
mortgage market, not only from week to week, but from lender to
lender. Many newspapers list current mortgage rates for your
local area in their Real Estate sections, often on Saturday or
Sunday. Check them.
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- What First Time Buyer Programs are available?
- There are literally hundreds of different programs
available, depending on your location (city, state, or province)
and the mortgage source that you use. The requirements and
benefits vary greatly from program to program. Consult your
Agent or your local housing authority for more information.
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- How much will my closing costs be?
- The amount of closing costs will depend on what items are
customary for buyers and sellers to pay for in your area.
Traditions vary greatly from one area of the country to another.
In some areas, for example, the buyer pays for title insurance.
In other areas, it is the responsibility of the seller. In still
other areas, the cost is split between buyer and seller. Your
Agent can give you specific information on the items that are
customarily paid for by buyers in your area. In addition, the
amount of closing costs will depend on the amount of points you
will be paying with your mortgage loan, since these are
generally paid for up-front. (A point is 1% of your mortgage
loan amount)
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- How much should I offer for a house?
- There is no simple answer to that question, since each
property stands on its own. A particular house may be overpriced
(you should make an offer BELOW the listing price),
"on-the-money" (you should make an offer at or just below the
listing price) or underpriced (you should grab it before someone
else does
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- What about foreclosures? Can you save a huge
amount of money here?
- Save money, usually. A huge amount of money, occasionally.
In many cases, though, these will be homes that need work.
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- Should I spend the money to have a home
inspection?
- Absolutely. The $200 to $500 that a professional home
inspection costs could be the best money you ever spend on your
house. Not only does the home inspection seek out any defects
(and gives you some peace of mind), the home inspector will
often give you tips on maintaining and repairing your house.
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General Mortgage Questions
- What is an appraisal? Will I need one?
- An appraisal is an opinion of value of the home you want to
purchase. Viritually every lender will require some sort of
appraisal before the loan is approved.
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- When is my payment considered late?
- The due date of your monthly payment is reflected in your
loan documents and on your payment coupons. Your payment should
be mailed in time to be received by lender on or before your due
date. Any payment received more than fifteen days after the due
date will be assessed a late charge.
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- What is escrow?
- In addition to the principal and interest portion of your
monthly payment, the terms of your loan agreement allow us to
collect funds from you for the payment of your real estate
taxes, insurance bills, and sometimes other items. These
additional funds are referred to as the escrow portion of your
payment.
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- What is mortgage insurance?
- Mortgage insurance protects the lender and investor, or
owner of the loan, against loss if the borrower defaults in
their repayment of the loan. This type of insurance is typically
required on loans where the borrower makes a down payment of
less than 20 percent. Without the added protection of mortgage
insurance, most lenders would not be willing to make loans to
borrowers with small down payments. Any premiums collected for
the payment of mortgage insurance on your loan are remitted to
the company or agency providing the insurance coverage. On FHA
loans, mortgage insurance is provided by the Federal Housing
Administration, an agency within the U.S. Department of Housing
and Urban Development.
The mortgage insurance on conventional
loans is typically referred to as PMI, or Private Mortgage
Insurance. This type of mortgage insurance coverage is provided
by private companies. As stated above, both PMI and FHA Mortgage
Insurance protect the investor who owns the loan in the event of
a default on the loan. These types of mortgage insurance do not
pay off the loan on your behalf if something should happen to
you.
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- What is an ARM loan?
- ARM stands for Adjustable Rate Mortgage. With an ARM loan,
the interest rate and the monthly principal and interest payment
change (adjust) periodically. The timing, frequency, and
methodology of the adjustments are outlined in the loan
documents.
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- How is my interest rate calculated?
- The initial interest rate on your loan was determined by the
competitive market of rates in the mortgage lending industry for
your particular ARM product at the time your loan was
originated.
Beginning with your first adjustment, the new
interest rate on your loan is calculated according to the
formula in your loan agreement. This rate is typically
determined by taking the index specified in your loan documents
(such as the One-Year Treasury Index), and adding it to a fixed
percentage, called the margin. This figure may then be rounded,
and is often subject to rate caps, which limit how much your
interest rate may change at any given adjustment, or over the
life of the loan.
Please refer to your loan documents for specific information
on the index, margin, and rate caps which apply to your loan.
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Mortgage Refinance Loans FAQ's
- Will a Mortgage Refinance allow me to borrow
funds against my existing property?
- There are several solutions to borrow funds against your
existing property value.
- Refinance Loan Line of Credit
If you want a reserve of funds you can draw on in the
future, choose a Refinance Loan Line of Credit. You'll have the
credit you need when the need arises - and you make no
monthly payments until you draw on it. Be ready for expenses
like medical bills, emergency home repairs, tuition, and
more.
- Refinance Loan Loan
If you want to borrow up to 100% of your home's value at a
fixed rate of interest, choose a Refinance Loan Loan. Use those
funds for a purchase opportunity, home maintenance, debt
consolidation, or major expenses.
- High Loan-To-Value
If you want a large sum of cash, choose a high Loan-To-Value
product like the 125% loan. With low equity - even no equity
– We can still loan you the funds you need to make home
improvements, consolidate debt, buy a car, or make an
investment.
We offer fixed-rate Refinance Loan loans and variable-rate Refinance Loan Lines of Credit (HELOCs) to suit your needs. With these
products, you can borrow up to 125 percent of the value of your
property:
- Refinance Loan Line of Credit
- A Refinance Loan Line of Credit is a line of credit that
can be used as you need it. You can use any portion of it at
any time and pay it back at any time. The interest rate is
usually variable and is usually tied to the prime rate.
The most common reasons for an Equity Loan are:
- Closed-End Refinance Loan Loan
- A closed-end Refinance Loan loan, or term loan, is provided
to you as a one-time lump sum that is paid off over a set
period of time, with a fixed interest rate and equal
payments each month. Once you get the money, you cannot
borrow further from the loan.
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