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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 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. Advisor Funding 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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Q
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How do I pay for closing costs? |
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You always have the option of paying for your closing costs out of your pocket if you choose, but you do not have to.
On a purchase tranaction, most loan programs allow the seller to pay most or all of the buyers closing costs regardless of whether you are putting any money down or no, so many times buyers can buy the home with zero out of pocket.
With a refinance, most people roll their closing cost into the final loan, therefore there are no out of pocket expenses. |
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What are closing costs and how much are they? |
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Closing costs are the costs associated with closing a home loan. In addition to closing costs, most loans have "Pre-Paid" items, which include interest as well as reserves for setting up an escrow account. All of these charges are referred to as "Settlement Charges" and are outlined on the "Settlement Statement", a 2 page uniform sheet that details all of the various charges and expenses involved in a loan transaction. The Settlement Statement is a government form that all lenders and title companies must use. Settlement charges vary for each loan and depend on the size of the loan, the interest rate, the specific closing date, as well as various other factors. In general, these costs range from 1%-2% of the loan amount, although the actual charges can be higher or lower. The best way to calculate your charges is to call us and we can give you a more specific estimate based on your individual situation. |
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How long does the loan process take? |
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While the timeframe varies depending on the individual loan, we can typically close your loan 2 - 3 weeks from the day we receive your application. The two main factors are how fast we receive all needed documentation from you, and how long the appraisal takes. Typically, an appraisal takes about a week from the time it is ordered. If we do not need an appraisal, or one already exists, we can usually get you closed in less than 2 weeks. |
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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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