We are only licensed to lend in the State of California.  However, if you require our services for a property in any other state, we have a network of like-minded professionals that will take great care of all of your real estate needs.  Please give us a call for a referral.

1. How do I know how much house I can afford? Answer
2. What is a short sale?  And should I buy one? Answer
3. What is the difference between a fixed-rate loan and an adjustable-rate loan? Answer
4. How is an index and margin used in an ARM? Answer
5. How do I know which type of mortgage is best for me? Answer
6. What does my mortgage payment include? Answer
7. How much cash will I need to purchase a home? Answer
8. What is a HELOC? Answer

Q : How do I know how much house I can afford?
A : 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.
 
Q : What is a short sale?  And should I buy one?
A : A short sale is when the current liens on the property are more that what the current market value in the area is.  For example, a homeowner owes $325,000 to their lender, but the market value is at $300,000.  A short sale is the best way to get a great deal on a home that would normally be out of reach.  All terms of the sale are subject to lender approval.  Most short sales can take a few months for a Seller to receive the short sale approval from their current Lender(s) after your offer is submitted for review.  All short sales require Lender approval.  For more information about short sales, feel free to call our office.  We'll be more than happy to answer any questions you may have.
 
Q : What is the difference between a fixed-rate loan and an adjustable-rate loan?
A : 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. Most ARM products have a short period of time that the loan is fixed.  For example, the first 3 or 5 years of the 30 year loan.  While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change after the fixed rate period expires. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.
 
Q : How is an index and margin used in an ARM?
A : 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).
 
Q : How do I know which type of mortgage is best for me?
A : 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. Whatever your current and future plans are, we can help you make the most appropriate decision.
 
Q : What does my mortgage payment include?
A : If you choose or are required to have an impound account, your monthly mortgage payment will include the following if you obtain a Fixed Rate or ARM loan:

  • P&I (Principal & Interest): The payment due to the Lender for the loan amount borrowed.
  • Taxes: The annual property taxes will be divided up into 12 monthly equal payments.
  • Insurance: The annual homeowners insurance premium will be divided up into 12  equal monthly payments.

If your Fixed Rate or ARM loan has a period of time where you are only required to make the "Interest Only" payment, then your mortgage payment will include the following:

  • Interest Only Minimum Payment: The payment due to the Lender for the loan amount borrowed by paying only the monthly interest due.  The loan amount will not increase or decrease during the Interest Only period.  It can decrease if additonal payments are made.
  • Taxes: The annual property taxes will be divided up into 12 monthly equal payments.
  • Insurance: The annual homeowners insurance premium will be divided up into 12  equal monthly payments.

If your loan requires Private Mortgage Insurance (MI), it will also be included in the monthly payment paid to the Lender.

If you owe monthly homeowner's association dues (HOA), they are not included in your mortgage payment.  You will be responsible to pay the HOA company seperately.

For Condo's, you will be required to have HO-6 insurance ("Walls-In" policy) to cover the inside of your unit.  The HOA insurance will most likely only cover the exterior building.  This payment is not included in your mortgage payment, you will need to pay the annual premium to the insurance company direcly.

If you choose to not have your taxes & insurance impounded, then your monthly mortgage payment will only be the principal & interest payment (or Interest Only payment) that you owe the bank.  You will be responsible to pay your annual insurance premium to your insurance company on your own along with the property taxes due to the County Tax Assessor twice a year.

 
Q : How much cash will I need to purchase a home?
A : The minimum down payment for a FHA loan is 3.5% down.  A down payment on a VA loan is optional and not required.  For Conventional loans, the minimum down payment to avoid requiring mortgage insurance is 20% down.

In addition to your down payment, you'll also need to pay for your closing costs.

After your offer is accepted & escrow is open, you will be required to submit your earnest money deposit to the escrow company.  The amount is generally 1% of your purchase price, but is negotiable.

 
Q : What is a HELOC?
A : A HELOC is a Home Equity Line of Credit.  The easiest way to explain it is a large credit card that's attached to your house.  The payments are interest only and anything above your normally monthly payment will go towards paying your balance down.  If you pay down your balance, the amount you've paid down now become available again to use in the future.  At this time, we do not have this product available.