Welcome - FAQ's |
Tools
& Resources
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Resources
At any
point, feel free to e-mail or call us
regarding any questions you may have.
We are here to personally help you.
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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.
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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
your broker.
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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).
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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. Front Street Capital Group can
help you evaluate your choices and help
you make the most appropriate decision.
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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.
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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.
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Q:
What documentation will I need to provide
at application?
A: When applying for a loan, please
provide copies of the following:
- Two year's W-2 and paystubs for the
last 30 days OR if you are self-employed
provide two years tax returns and a YTD
profit and loss statement.
- Leases and two years tax returns if
you own rental property
- Three months bank statements for each
bank, stock and mutual fund account.
- Provide recent copies of any stock brokerage
or IRA/401K accounts that you may have.
- Purchase and Sale Contract if buying
a home.
If you are requesting a cash out refinance
please provide a letter explaining what
you plan to do with the proceeds.
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