|
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 us. |
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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). |
| |
|
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. Alston Mortgage
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 |
