Frequently Asked question
YES. depending on the program you are applying for, the seller may pay up to 6% of the purchase price towards your closing costs.
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.
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. Shirley Adams Financial Services, Inc can help you evaluate your choices and help you make the most appropriate decision.
n 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).
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 house
Down Payment: A percentage of the cost of the home that is due at settlement
Closing Costs: Costs associated with processing paperwork to purchase or refinance a house
Closing costs can range from 3-6%. It is important not to confuse closing costs with down payments which can range from 3% upward, depending on the mortgage program you choose.
YES YOU CAN. We currently offer a program that does not require you to have a credit score. Contact us today for details.
The interest rate is the rate on the loan itself and does not take into account fees/costs or credits. The Annual Percentage Rate (APR) is the cost you pay each year to borrow the money including fees/loan costs. APR reflects not only the interest rate, but also the fees that you have to pay to get the loan. The higher the APR, the more you’ll pay over the life of the loan.
Probably, not because your interest changed but because your property taxes and insurance tend to fluctuate. If they rise, it will be necessary to increase your escrow account and if there was not sufficient funds in your escrow account to pay them when they increased, you will also have to do what is called an escrow payback.
Shirley Adams Financial typically closes purchase money loans in as little as 20 days and refinances in as little as 15 days.
Loan-to-value or LTV for short, is expressed as a percentage that shows the ratio between your home’s unpaid principal balance and the appraised value. For purchases, this is the difference between your deposit and how much your financing will be. The higher your down payment, the lower your loan amount will be and therefore the lower your loan-to-value ratio will be. The formula used is your loan amount ÷ appraised value or purchase price (whichever is less)
This depends on how much you want to stretch your budget. If you can afford the higher monthly payments, a 15 year mortgage usually comes with a better interest rate than a 30-year mortgage. Not only will you pay off the house quicker, but you can save a tremendous amount of interest. On the other hand, a 30-year mortgage will cost less per month, and you still have the option of making additional payments towards your principal balance which will payoff the mortgage sooner without stretching your budget each month.
discount points are monies that you pay up front in exchange for a lower interest rate. One “point” is equal to 1% of the loan amount. Discount points may be tax deductible, consult your accountant for more information on tax deductions.
For most homeowners, the monthly mortgage payments include three
separate parts:
Principal: Repayment on the amount borrowed
Interest: Payment to the lender for the amount borrowed
Taxes & 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.
Unlike a pre-qualification, a pre-approval is issued based on verified information. As part of the pre-approval process, we will check your credit, verify your income and employment as well as assets. A pre-approval shows a seller that you are serious about buying a home and you have already committed to the mortgage process.
A pre-qualification is a basic review of your finances to determine if you would qualify for a mortgage. Usually, a pre-qualification is based on unverified information you provide and does not include a credit check or any documentation review.
When you obtain a mortgage, you’ll probably be asked to put money into an escrow account to guarantee the lender that the ongoing payments for property taxes and insurances will be handled. You’ll pay a lump sum into the escrow account at closing (also known as your “prepaids”), and with each monthly payments, this account is added to.
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.
We have a program for credit scores as low as 500