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How do I know how much house I can afford? Answer |
| 2. |
How much cash will I need to purchase a home? Answer |
| 3. |
What is the difference between Closing Costs and Prepaid Items? Answer |
| 4. |
What is the best way to select a mortgage provider? Answer |
| 5. |
What does my mortgage payment include? Answer |
| 6. |
What is Credit Scoring? Answer |
| 7. |
What is a "Zero Point" Mortgage Loan? Answer |
| 8. |
What is Automated Underwriting? Answer |
| 9. |
What is a "Point"? Answer |
| 10. |
How do I know which type of mortgage is best for me? Answer |
| 11. |
What is the difference between a fixed-rate loan and an adjustable-rate loan? Answer |
| 12. |
How is an index and margin used in an ARM? Answer |
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How do I know how much house I can afford? |
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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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How much cash will I need to purchase a home? |
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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 houseDown Payment: A percentage of the cost of the home that is due at settlementClosing Costs: Costs associated with processing paperwork to purchase or refinance a house There are many programs availalbe that will allow you to purchase with little to no money down, so don't hesitate to call if your down payment isn't what you think it should be! |
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What is the difference between Closing Costs and Prepaid Items? |
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Closing costs are the one time costs associated with purchasing a home. These would include but not be limited to Title/Escrow fees, Points, Appraisal and Credit Report fees as well as Processing, Underwriting and Document Preparation fees. Prepaid Items are paid more than once and would include such things as Prepaid Interest, Insurance, and Taxes. |
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What is the best way to select a mortgage provider? |
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The first place to begin is from a referral from a real estate agent, family or friends. Every borrower should inquire with the company as to not only the costs of the mortgage but with how much experience the individual that you will be working with has and how well they can explain the process to you in an easy to understand method. It is also a wise suggestion to find out if the company belongs to any professional trade organizations such as the Oregon Association of Mortgage Brokers which provides ongoing training for their members. |
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What does my mortgage payment include? |
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For most homeowners, the monthly mortgage payments include three separate parts: Principal: Repayment on the amount borrowedInterest: Payment to the lender for the amount borrowedTaxes & Insurance: If you have less than 20% equity, you may also be required to have Mortgage 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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What is Credit Scoring? |
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A credit score is a summary of your credit report and a numerical measurement that reflects the management of your credit . Your credit score is based on the records compiled by credit bureaus and includes the information reported each month by your creditors, such as the amount of existing credit you have and your payment history. |
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What is a "Zero Point" Mortgage Loan? |
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The first thing to understand is that no mortgage company works for free. Somehow, they must be compensated for the services and product that they offer. The question is, who is going to pay the fee or fees at closing? Mortgage companies who offer 0 origination or 0 closing cost loans are doing this by delivering to the investor a higher interest rate loan that will give the investor a higher yield than what was required. At the time of closing the investor will apply a percentage of the loan amount to the transaction to cover any fees agreed upon by the borrower. |
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What is Automated Underwriting? |
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Automated Underwriting is a computer-based method that enables mortgage lenders and brokers to process loan applications in a quicker, more efficient, objective,and less costly manner. Your application is entered and then electronically communicated to an automated underwriting system and a credit report is obtained. The automated system evaluates different pieces of information and gives the lender a recommendation whether the loan meets criteria for approval. Using an Automated underwriting system streamlines and speeds up the review and approval process. |
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What is a "Point"? |
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A point is another term for a percentage. 1pt=1%. This is important to understand because since the point is a percent the dollar amount can change if your loan size changes. For example 1 pt. on a $100,000 Loan = $1,000 and 1 pt. on a $150,000 loan = $1,500 |
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How do I know which type of mortgage is best for me? |
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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. Homestead Mortgage Company can help you evaluate your choices and help you make the most appropriate decision. |
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What is the difference between a fixed-rate loan and an adjustable-rate loan? |
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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. |
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How is an index and margin used in an ARM? |
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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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