| 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 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. 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. |
| |
| 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. Vista Mortgage Inc. can help you evaluate your choices
and help you make the most appropriate decision. |
| |
| Q
: |
What does my
mortgage payment include? |
| A
: |
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.
|
| |
| Q
: |
How much cash
will I need to purchase a home? |
| A
: |
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
|
