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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. |
Why should I use First Class Financial Services? Answer |
| 8. |
Should I refinance? Answer |
| 9. |
I have problems with my credit, will I still be able to get a mortgage? 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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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 your broker. |
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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. First Class Financial Services 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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Why should I use First Class Financial Services? |
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A: We pride ourselves in providing Honesty, Integrity, Service and Trust in all of our transactions. We are a referral based business. This means our business comes from the recommendation of our satisfied clients. We cannot maintain a successful referral based business without providing the utmost in quality service and timeliness. We will provide you with all the necessary information upfront, work diligently to close your transaction efficiently and accurately, with the anticipation you will be comfortable referring your friends and family. |
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Should I refinance? |
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Refinancing your home is only beneficial if you are able to see either monetary or security based gain. First you need to know the following information:
*Current principal mortgage balance, rate and payment.
*Exact amount of proposed closing costs - not to include any prepaid interest, taxes, insurance or mortgage insurance. These are recurring costs.
Next... use this formula as a good rule of thumb:
- Your current principal balance is $150,000. Your current interest rate is 8.5%.
$150,000 x8.5% = $12,750 annual interest.
- Your new rate is 7% with $2500 in closing costs.
$150,000 x 7% = $10,500 annual interest.
$12,750 (current) - $10,500 (new) = $2250 savings. $2250 divided by 12 months = $187.50 / mth savings.
Now... take the $2500 in proposed closings costs and divide it by the new monthly savings i.e. $2500/$187.50 = 14.46.
This implies it would take you 14 months to break even. Ask yourself, Do you plan to be in your home at least 14 more months? If so, it would benefit you to refinance.
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I have problems with my credit, will I still be able to get a mortgage? |
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YES! We are excited to have relationships with lenders that provide loan products to handle virtually ANY credit situation. You have nothing to loose and owe it to yourself to apply online today!
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