Frequently Asked Questions

Most frequent questions and answers

How do I know how much house I can afford?

Generally speaking, you can purchase a home with a value of two or three times your annual household income.  You can get pre-approved with us today for FREE and begin shopping for your new home immediately.

What is the difference between a fixed-rate loan and an adjustable-rate loan?

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.  Interest rates are currently low, we will rarely if ever recommend an adjustable rate mortgage.

How is an index and margin used in an ARM?

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).

How do I know which type of mortgage is best for me?

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. Joe Dan can help you evaluate your choices and help you make the most appropriate decision.

What does my mortgage payment include?

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.

How do I know how much house I can afford?

The amount of cash that is necessary depends the type of Home Mortgage you receive.  Just tell your Loan Officer what your goals and capabilities are, and he will provide you with the best product to meet your goals.