| 1. |
How do I know how much house I can afford? Answer |
| 2. |
How is an index and margin used in an ARM? 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 much cash will I need to purchase a home? Answer |
| 6. |
What is the difference between pre-approval and pre-qualification? Answer |
| 7. |
What is PMI? Can I get rid of the PMI on my loan? Answer |
| 8. |
What if I don't want to send information over the internet? Answer |
| 9. |
What is the difference between a fixed-rate loan and an adjustable-rate loan? Answer |
| 10. |
What is a Rate Lock? 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 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. Network Funding L.P. 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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What is the difference between pre-approval and pre-qualification? |
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The pre-approval process is much more complete than pre-qualification. For pre-qualification, we would ask you a few questions, look at your credit history and provide you with a pre-qualification letter stating how much you pre-qualify for. Pre-approval includes all the steps of a full approval, except for the appraisal and title search. (Having a specific property picked out is not necessary in either case.) |
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What is PMI? Can I get rid of the PMI on my loan? |
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PMI, or Private Mortgage Insurance, is normally required when you buy a house with less than 20% down. PMI is a type of guarantee that helps protect lenders against the costs of foreclosure. From a borrowers' standpoint, PMI enables the lender to approve loans with lower down payments then they normally would accept.
PMI premiums (your monthly costs) decrease as your down payment increases. For example, the PMI premiums on a loan with 10% down payment would be less than a loan with only 5% down.
PMI automatically drops off on conventional loans when you are at 78% of the original value/sales price of your loan. On FHA loans PMI drops off when you are at 78% as well but you also have to have paid PMI on your loan for at least 5 years. You also may be able to get your PMI taken off when you reach 80% of the value of the property but you must contact your mortgage company and request this. The mortgage comapny will have the property appraised to see if your balance is no more than 80% of the value. If it is not more than 80% of the value and you have not been past due on your loan then generally the mortgage company will remove the PMI.
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What if I don't want to send information over the internet? |
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We will still be glad to help! Just call us toll-free at 1-866-247-3005. Our Mortgage Professionals will be glad to assist you with any mortgage needs you may have |
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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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What is a Rate Lock? |
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A rate lock is a contractual agreement between the lender and borrower. When you lock a rate the lender secures the money you are borrowing at a set rate. If the market rate changes after the lock your interest rate will not change. For example: You lock a rate at 6.75% for 30 days on Monday and the rate changes to 7.25% on Tuesday, your rate will remain 6.75% as long as you close within the time frame of the lock. Example (30 days or 45 days). |
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