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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. |
When should I start shopping for a mortgage and how do I know what I can afford? Answer |
| 8. |
Do I need to sell my existing home before I apply for a new mortgage loan? Answer |
| 9. |
Why is the Annual Percentage Rate (APR) different from the interest rate?
Answer |
| 10. |
Can I be approved for a loan if I have credit problems?
Answer |
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Q
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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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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. Financial 2000, Inc. 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 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 houseDown Payment: A percentage of the cost of the home that is due at settlementClosing Costs: Costs associated with processing paperwork to purchase or refinance a house |
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When should I start shopping for a mortgage and how do I know what I can afford? |
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The best time to look for a mortgage is before you look for a house. This way you'll know exactly the amount of money you can borrow. Getting approved for a mortgage before shopping for a home will maximize your negotiating power. It is free and will take only a matter of minutes to get a decision, and there's no obligation until you want to reserve your funds.
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Do I need to sell my existing home before I apply for a new mortgage loan? |
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Absolutely not! You can apply for a new mortgage loan before you sell your current home. However, depending on your income and debt levels, you may need to sell your current home before you can close on your new home. |
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Why is the Annual Percentage Rate (APR) different from the interest rate?
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The annual percentage rate is intended to reflect the total cost of your mortage loan. To calculate the APR, lenders consider the interest rate on your mortgage loan, the term of the loan, and other loan fees such as closing costs, points, etc. Your monthly payment is calculated based on the mortgage note rate, not the APR. The APR will be higher than your interest rate,especially if you are paying any points.
To be used as a valid evaluation tool the APR must be loan specific. The actual APR will show on the Truth-In-Lending statement that you will see once you have submitted your information and reserved your funds. When comparing laon programs based on APR make sure you ask each lender their criteria for determining the APR. |
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Can I be approved for a loan if I have credit problems?
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We offer mortgage loan options to customers who may not have perfect credit. If you are concerned about your credit contact one of our loan officers for their expert guidance. |
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