| 1. |
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. |
What about my credit? Answer |
| 5. |
Hard Money: when do i want this type of loan? Answer |
| 6. |
Hard Money, why are the rates as high as they are? Answer |
| 7. |
How do I know which type of mortgage is best for me? Answer |
| 8. |
How long will it take to get the loan? Answer |
| 9. |
What does my mortgage payment include? Answer |
| 10. |
How much cash will I need to purchase a home? Answer |
| 11. |
Hard money - what sort of terms can i expect? Answer |
| 12. |
What does the loan broker do that my local bank not do? Answer |
| 13. |
How does the broker get paid and how much? Answer |
| 14. |
What else does the broker do for me? Answer |
| 15. |
What if i do not understand something, who can I ask? Answer |
| 16. |
During the process when can I expect the broker to update me? Answer |
| 17. |
How are interest rates determined? Answer |
| 18. |
Can the loan rate be locked? Answer |
| 19. |
Who should order the appraisal and when? Answer |
| 20. |
Who does the appraisal, who pays for it and how long does it take? Answer |
| 21. |
What if i want to start buying income properties? Answer |
| 22. |
PITI WHAT IS PITI? Answer |
| 23. |
Appraised value versus purchase price and ARV?
Appraised value and purchase price, why can't the appraised value be used in determining Loan to value? 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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Q
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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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What about my credit? |
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Your credit will determine how much you can borrow and at what rate. The first thing you should do is get your credit score. You can get it for free on the internet and for a small fee from us.
If you are shopping for a loan remember each time you run your credit it reduces your score and multiple requests will have to be explained to an underwriter. The best thing is to get your free report which will not affect your credit and instruct anyone who wants your credit to use that report only.
If you have poor credit you can still get loans, just the terms are poorer. |
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Hard Money: when do i want this type of loan? |
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A
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Hard money loans are appropriate when you need to refinance asap, when you have challenged credit or income issues. |
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Hard Money, why are the rates as high as they are? |
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The rates reflect the risk, just like all loans. The cost for this type of loan are fair, as most loans will not be in place long, the credit/income of the borrower is not taken into account. |
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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. MCA can help you evaluate your choices and help you make the most appropriate decision. |
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How long will it take to get the loan? |
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With a purchase it should take less than 30 days. All information requested like title report, appraisal, credit report, various applications and addtional requests will each take a certain amount of time and should be persued as rapidly as possible. Purchase loans are processed faster than refinance loans.
With refinancing expect a loan to normally take 30 to 45 days. Again information like a title report, appraisal, payoff information all come from different sources and take time to get.
You can expect a loan quote for rates and costs within several hours.
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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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Q
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Hard money - what sort of terms can i expect? |
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Rates will vary, but a good estimate will be 12 percent, interest only and 4 points plus title, escrow and recording. |
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What does the loan broker do that my local bank not do? |
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Firstly the broker will have many lenders and programs to choose from, where as the bank has only its own products. The bank will also be very rigid in its requirements and often the experience of the banker is limited. The banker has no flexibilty with fees.
The loan broker is best suited to get you the best terms from a variety of products.
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How does the broker get paid and how much? |
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The broker can get paid in a variety of ways. The first used is an origination fee (often called points), then there are fees often called processing.
Secondly the lender may pay a rebate to the broker.
All of these items are disclosed on your good faith estimate. |
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What else does the broker do for me? |
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The broker acts as a processor for your loan. He collects and forwards your application, may open escrow, order preliminary title reports, interface between the loan underwriters, follows up on the entire process. this typically includes 100's of calls and emails per loan. |
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What if i do not understand something, who can I ask? |
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The title company is impartial and may be able to answer any questions you may have. The loan broker and any realtor involved may also answer anything you do not understand. |
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During the process when can I expect the broker to update me? |
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You can expect either a phone call or email each day with updates. Your account on this web site will be updated daily. |
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How are interest rates determined? |
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Geneally your fixed rate loans are closly linked to the ten year treasury bill.
ARMs are linked to various indexes and look like the prime rate. |
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Can the loan rate be locked? |
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Yes once you and the broker decide on which loan type you want the loan will typically carry a 15 or 30 lock period in which the loan must close. At this point in the process you should have already gotten the appraisal, the preliminary title report, submitted the application. |
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Who should order the appraisal and when? |
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For a purchase the appraisal should be ordered as soon as you have made an offer. The appraiser needs to be advised that it is a purchase and to be completed as soon as possible. The buyer or broker should order the appraisal, not the realtor.
For a refinance let the broker order the appraisal so he and the appraiser will be on the same page with value, use, timing, payment et cetera.
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Who does the appraisal, who pays for it and how long does it take? |
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Appraisals are performed by licensed appraisers, cost about $ 300 to $450 for a single family home, are typically paid for at the time of appraisal and are completed in a couple of weeks.
Commercial appraisals are much more expensive and take longer to schedule and prepare.
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What if i want to start buying income properties? |
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We can help you there, as we are experienced in locating this type of property and can assist you with prequalification on a loan, making your offer and offering sugestions.
We also will usually have one or two properties in our own inventory for sale. |
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PITI WHAT IS PITI? |
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PITI IS SHORT FOR PRINCIPAL, INTEREST, TAXES AND INSURANCE. THEY ARE THE MAJOR EXPENSES TO A LOAN AND THE PROPERTY WHICH SECURES IT.
OFTEN LENDERS WANT YOU TO HAVE SUFFICIENT CASH RESERVES IN EVIDENCE BEFORE THEY FUND THE LOAN. THE BETTER THE TERMS OF YOUR LOAN THE MORE LIKELY THIS WILL COME UP. OBVIOUSLY IT INDICATES THAT YOU HAVE GOOD FINANCIAL HABITS.
TRY OUR PITI LOAN, WHILE EXPENSIVE IT CAN GET YOU BETTER TERMS AND SAVE YOU MONEY IN THE LONG RUN. TERMS SIMILAR TO CREDIT CARDS. |
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Q
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Appraised value versus purchase price and ARV?
Appraised value and purchase price, why can't the appraised value be used in determining Loan to value? |
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A
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ARV means after repaired value. this method almost can never be used to value a property because it depends on events out of the lenders hands. An aquistion and construction loan will be the answer or cross collateralization.
Lenders use the lower of appraised value or purchase price to determine loan to value ratio's. Ofetn the appraisal may be higher in a foreclosure or quick sale. These sales have bagage and deffered maintenance issues.
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