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How do I know how much house I can afford? Answer |
| 2. |
What is the difference between a fixed-rate loan and an adjustable-rate loan? Answer |
| 3. |
How is an index and margin used in an ARM? Answer |
| 4. |
How do I know which type of mortgage is best for me? Answer |
| 5. |
What does my mortgage payment include? Answer |
| 6. |
How much cash will I need to purchase a home? Answer |
| 7. |
Is a Pay Option ARM for everyone? Answer |
| 8. |
What is the difference between a Rate, Start Rate and Qualifying Rate? Answer |
| 9. |
What is considered an Increase in Cash Revenue? Answer |
| 10. |
If I have notes and accounts receivable do I have to transfer all servicing rights to the future payments? Answer |
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Q
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How do I know how much house I can afford? |
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A
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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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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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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. Your Personalized Loan 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 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. |
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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 |
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Is a Pay Option ARM for everyone? |
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No, a pay option ARM is not for every borrower. Part of the Foreclosure Rate we are experiencing in the United States is due to the fact Loan Officers and Lenders allowed non qualified individuals to utilize the Pay Option ARM for main purpose of getting them in more house than they could afford. |
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What is the difference between a Rate, Start Rate and Qualifying Rate? |
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A Rate is generally used in a Fixed Rate loan which means the same Interest Rate is being utilized for the calculation of your Principle and Interest Payment.
Start Rate and Qualifying Rate is generally utilized in a Pay Option ARM type loan. The Start Rate is a lower rate to calculate the payment so that the borrower has a lower required payment based upon the Start Rate interest calculation.
Qualifying Rate is the generally the full indexed rate on the loan. The proper utilization of the Pay Option ARM is to qualify the borrower as being able afford the financial obligation based upon the full Interest Rate.
One of the primary problems in the past with Loan Officers and Lenders utilizing the pay option ARM was that they qualified the borrower with the Start Rate and Qualifying Rate as one and the same, which did not allow for adjustment later in the payment. Thus the borrower never had a chance when the rates started increasing. |
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What is considered an Increase in Cash Revenue? |
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Cash revenue is NOT a loan but an avenue to bring Positive Cash Revenue either by payments or in a lump sum payment. Revenue is available from many different avenues as shown under the Capital Receivables Product Page.
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If I have notes and accounts receivable do I have to transfer all servicing rights to the future payments? |
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NO, you do not have to transfer you future payments. You determine how much cash or payments you need and can transfer a portion, a number of payments or transfer the entire servicing rights. This determination is based on your current cash flow need? |
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