All your Purchase and Refinance needs at one stop!

Each customer has specific and individual needs.  Our goal is to meet those specific needs with quality service and individual attention.

I start with the “end in mind”.

What is your goal:

a) Purchase a Home

b)  Refinance your mortgage:  Owner Occupied, 2nd home, Investor

c)  Add a 2nd mortgage

d)  Home Improvement loan

e)  “Break Your ARM” and finance with Fixed term rate

f)  Cash out/Debt Consolidation

Or many other goals…

Your options are determined at the initial stage in order to start your mortgage process so we all understand your goal and stay on track to achieve them.  Your credit and income documentation determine the options available to you keeping your goal in mind.  Together, it is decided how to meet your goals regardless if this is an immediate action or a longer term action with additional steps involved to reach your goals.  Your immediate and long term goals are both factors in your financing decision for today and your future.  All options will be presented and you decide when and how we do business.

Educating you on your mortgage options for both immediate and long term financing are always a priority.  We want you to understand the mortgage you are currently financing as well as know how to properly prepare yourself for the future transactions that may take place whether it may be a future refinance or planning the finance for your ultimate dream home.
You will have access to over 300 Lenders with thousands of loan programs for your individual loan need.  You will also have a huge variety of loan programs from full documentation to No employment, no asset verification necessary for Owner Occupied, 2nd home to Investment properties.

 

 

When calculating a normal principle and interest payment for a mortgage payment, use the 1st calculator.

When calculating Interest Only payment, you will need to use a separate calculator and formula:

 

Example:

Loan Amount:  500,000

Interest Rate:  6.75%

500,000 X 0.675 (remember to move the decimal on the rate) /12 months= $2812.50 monthly interest only payment on 500,000 mortgage

**When considering the mortgage payment against your income you earn, you want to be sure you have enough income to cover the mortgage payment, your other revolving debt obligations, other financial obligation as well as other expenses for the home, car, food, etc.  It is important you consider all your financial obligations when determining what monthly mortgage payment you are comfortable committing to your monthly obligation.  Many times, when I ask a client what he/she is comfortable committing to, it comes out lower than their qualifications.  However, there are some situations where the comfort level may be higher than their qualifications.  In general, you want to be sure your mortgage obligations does not exceed more than 33% of your total gross income.  However, when considering all your financial obligations, you want to be sure these total financial obligations do not exceed 44% of your total gross income.  Of course, exceptions are made on a regular basis with some strong compensating factors.  Compensating factors are other factors that will compensate for a higher risk area of the loan.  For example, if you have a excellent credit, you may be able to qualify for a larger mortgage due to your track record of meeting your credit obligations and paying bills on time.

 

There are the factors that will determine your ability to qualify for a mortgage:

(these are also referred to Layers of Risk in which no more than 2 are acdeptable)

1.  Credit – we will look at past credit history, debts, payment history, credit limits, etc.

*poor or shakey credit (below 620 credit is considered shakey)

2.  Reserves (savings, 401K, mutual fundsother liquid reserves)

*Unable to verify liquid assets

*unsufficient reserves

3. Payment Shock

*dramatic payment increase with new mortgage or adjusting interest rate

*symptom or shortened term

4. Debt to income ratios

*High Ratios (the difference between what is earned with income and the financial obligations you owe)

5. Property

*Low appraisal value

*Appraisal under estimated value, stretched appraisal

*Appraisal is higher than the lender willing to risk

6.  LTV Ratio:  Loan to Value (new mortgage loan mortgage calculated against the value of the property)

*at 90% or higher

7.  Term

*the length of the loan (30, 20, 15 year term)

Adjustable rate mortgage (ARM)
An adjustable rate mortgage (ARM) is calculated on a 30-year basis. The rates adjust at scheduled intervals. An ARM starts with a fixed payment rate and adjusts thereafter. Example: fixed for 3 years, then adjusts every year.

Amortization
Amortization is the gradual paying off of your mortgage. Each month, you pay a certain amount of the interest and of the principal.

Amortization schedule
For a 30-year fixed loan of $200,000 at 7% interest, the amortization schedule would show the detail of each of the 360 monthly payments of $1,330.61.

Annual Percentage Rate (APR)
In order to allow buyers to compare loans in a fair way, federal law requires lenders to disclose the APR along with their rates. APR is the interest rate plus points and fees added together and amortized over the entire term of the loan. Points and fees usually increase the nominal rate by about .25 point.

Application fee
The application fee covers the lender’s cost of processing the loan. Depending on the loan, this fee may be reduced or waived.

Appraisal
Lenders are interested in the value of a home, especially from one point of view — how much it would sell for in case of forelcosure. For this reason, a lender selects an appraiser who uses current sales prices as comparables for a “real” price estimate, conservative by nature rather than optimistic of future appreciation. The appraisal fee, normally $300 for a moderately-sized, single-family home, is paid by the buyer.
Balloon payment
A balloon payment is the balance due at the end of the loan term if the loan is not fully paid off. If the loan term is very short (e.g., five years) and monthly payments are calculated as though the loan would last 30 years, a ballon payment will be due at the end of the term. The buyer must pay the total amount remaining or risk foreclosure.
Capital Gains
A increase in the value of an asset, calculated as the asset’s sale price minus its basis.  Capital gains are taxed at different rates depending on how long the asset is held.  A long-term capital gain occurs if you hold the stock or bond for at least one year.  A short-term captial gain occurs if you hold the security for less than a year.  Long-term capital gains are taxed at a lower rate than the short-term capital gains, which are taxed as ordinary income.
Caps
Caps apply to adjustable rate mortgages (ARMs). To minimize the risk of extreme fluctuations in interest rates, caps are imposed on your rate. Caps protect you by limiting the percentage by which your rate can increase.

Cash Out Refinancing
“Cash out” refinancing enables you to replace your current loan with a new one and get some extra cash at the same time. If your loan-to-value ratio (LTV) is low enough (at least 80%), you may be able to cash out. In other words, you need to have accumulated equity in your home and/or the market value of your home must have increased.

Cash Reserves
Once you’ve settled the purchase and paid the down payment and all other expenses, you still have to keep a minimum amount of money in your bank account to ensure that you can pay your mortgage, property taxes, mortgage insurance, and so on. Cash reserves usually amount to two times your first mortgage payment. Liquid assets such as a savings account, 401k, or other retirement account may be counted as cash reserves. You may need to show you have cash reserves in your bank account at the time of settlement.

CD Rates Index
An ARM is tied to an index. The CD Index is the average of the secondary market interest rates on 6-month negotiable Certificates of Deposit (CDs). Most major indexes are published in the Wall Street Journal.

Closing
The final transfer of ownership of the home, is called “close of escrow” or “settlement.”

Closing Costs
Closing (or settlement) costs are the expenses needed to settle the purchase or the refinancing. They add approximately 2 to 5% to the cost of your loan.

COFI (11th District Cost of Funds Index)
An ARM is tied to an index. The 11th District Cost of Funds Index (COFI) is the average of interest costs on deposits at savings and loan institutions in the 11th district of the Federal Home Loan Bank. Most major indexes are published in the Wall Street Journal.

Condominiums
A condominium is a unit within a condominium project. The project can be a group of houses or apartments in a building.

Conforming loan
A conforming loan is one that conforms to the standards of the main institutions that purchase mortgages on the secondary mortgage market, such as Fannie Mae, Freddie Mac, or Ginnie Mae.

Conventional Mortgage
The “conventional mortgage” is usually a 30-year fixed loan, with a 20% down payment. Its maximum amount is fixed every year by the major secondary lenders. As of November 1999, the amount was $252,700. Conventional mortgages are sometimes called “conforming” loans.

Co-ops
A co-op is a unit within a cooperative project. The project can be a group of houses or apartments in a building. The cooperative association owns the entire project.

County, State
County and state are important factors to consider when buying a home. Tax assessments as well as some of the closing costs vary with each county’s or state’s requirements.

Credit report
Lenders check with three credit reporting agencies for your credit history, and also check county records for judgments and tax liens. Your credit report should cost about $55.

Debt-to-income ratio
The debt-to-income ratio is the percentage of your income used to repay debts. Lenders have established standards of how much of your income generally should be used to pay debts.

Deductible expenses
Mortgage interest and property taxes may be tax deductible. Please consult your tax advisor for more detail, especially if you are purchasing rental property.

Deferred payments
One-month and three-month adjustable rate mortgages allow for deferred payments and a 7.5% yearly payment cap.

Desired home price
The desired home price is one for which you think you could reasonably qualify. This price minus the down payment is your loan amount.

Desired home type
The different types of homes you can purchase are:

• single family home
• condominium or co-op
• PUD(planned unit development)
• townhouse
• vacation homes

Discount
Loancity.com has negotiated discounted rates with the lenders. The rates that you will be downloading already include this discount of approximately .25 point. On a $200,000 loan, a .25 point discount equals $500.

Down Payment
The down payment is the percentage of the home price that you pay in cash at the time of purchase. Down payments come in 5% increments: 5%, 10%, 15%, and so on.

Equity
As you pay your mortgage every month, you may build equity. Equity is the portion of your home that actually belongs to you.

Escrow
An escrow is an agreement between buyer and seller to give a third party the responsibility of holding documents and money until the property transfer is finalized.
Fannie Mae
A lending institution will more often than not re-sell your loan to an investor in the “secondary” mortgage market rather than keep it in its portfolio. The Federal National Mortgage Association (FNMA or Fannie Mae) is a large financial institution that purchases mortgages from local “primary” lenders. Fannie Mae buys only loans that conform to its established standards. Many lenders will therefore match their qualifying standards to Fannie Mae guidelines. For example, to be “conforming” to Fannie Mae guidelines, a loan should not exceed $417,000, and buyers should not devote more than 28% of their gross income to their mortgage payments.

FHA (Federal Housing Administration)
The Federal Housing Administration does not lend money to buyers, but guarantees repayment of the loans to lenders. It enables buyers to purchase a home with little money down and easier qualification requirements, but the maximum allowable loan amounts are low.

Fixed rate mortgage
The interest rate of a fixed rate mortgage never changes. You pay the same amount every month until the loan is paid off. The most common category of mortgages is the 30-year fixed, in which the loan is totally repaid in 360 monthly payments of the same dollar amount.

Fixed rate period (in an ARM)
All adjustable rate mortgages (ARMs) have an initial period during which the rate is fixed before its first adjustment. This period can last 1, 3, or 6 months, or 1, 3, 5, 7, or 10 years. Usually, the shorter the fixed period, the lower the rate. For example, the rate on a 5-year ARM should be lower than the rate on a 7-year ARM.

Foreclosure
If a buyer fails to make mortgage payments for a certain period, the lender may have the right to take possession of the home and sell it. Lenders have to take certain steps before foreclosure can occur. Foreclosure laws may vary in different states.

Freddie Mac
Lending institutions often re-sell their loans to investors in the “secondary” mortgage market rather than keep them in their portfolios. The Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) is a large financial institution that invests in purchasing mortgages from local “primary” lenders. Freddie Mac buys only loans that conform to its established standards. Many lenders will therefore match their qualifying standards to Freddie Mac guidelines. For example, to be “conforming” to Freddie Mac guidelines, a loan should not exceed $417,000, and mortgage payments should not exceed 28% of their gross income to their mortgage payments.
Fully indexed rate
The rate of an adjustable rate mortgage is calculated by adding the nominal interest rate to the margin. Rate + Margin = Fully Indexed Rate. See also Adjustable Rate Mortgage.
Ginnie Mae
Like Fannie Mae and Freddie Mac, Ginnie Mae is a secondary lender. Ginnie Mae is a governmental agency that assembles and guarantees pools of mortgages that can be purchased by investors. Ginnie Mae accepts only FHA and VA (Veterans Administration) loans.

Gross annual income
Gross annual income includes income from all borrowers (e.g., husband and wife) before taxes, Social Security, workers’ compensation, and so on. Bonuses can be added to this amount only if they can be documented over the last 24 months.

Hazard insurance
Lenders usually require that you buy hazard insurance in case your home is damaged by fire, storms, vandalism, and so on. The cost can vary according to the county where the home is located. The actual amount will be calculated when you choose your insurance carrier and policy.

Home Owner’s Association Dues
Owning a home that is part of a PUD, condominium project, or co-op project involves making monthly payments to the owner’s association. These payments cover expenses for the maintenance and repairs of common areas such as lawns, pool, and garage.

Indexes
In an adjustable rate mortgage, the rate adjusts at scheduled intervals. The rate adjusts according to an index. Each adjustable rate loan is tied to an index.

Interest and Principal
The interest is the sum you are charged for having borrowed the principal. It is recalculated every month on your new principal. See amortization for calculation of interest. The principal is the amount that you borrowed or your remaining debt. Your principal diminishes every month as you pay it off (except in the case of negative amortization).

Interest cap
Caps apply to adjustable rate mortgages (ARMs). To minimize the risk of extreme fluctuations in interest rates, caps are imposed on your rate. Caps protect you by limiting the percentage by which your rate can increase. An interest cap places an annual limit on the percentage by which a payment can increase at each adjustment period. For example, if your initial rate is 6% and your interest cap is 1 percentage point, your interest rate can rise to no more than 7% within the next year. See also caps.
Jumbo loan
Any loan that exceeds the so-called “conforming” loan limit is a jumbo loan. Because jumbo loans are more difficult to sell on the secondary market, lenders tend to charge higher interest rates for them.

Lender’s fee
Points are the major part of the lender’s fee. One point equals 1% of the loan amount.

LIBOR index
An ARM rate adjusts at scheduled intervals according to an index. Each ARM is tied to an index. The LIBOR (London Inter-Bank Offering Rate) Index is the average of inter-bank offered rates for 6-month U.S. dollar–denominated deposits in the London market. Most major indexes are published in the Wall Street Journal.

Life of loan cap
Caps apply to adjustable rate mortgages (ARMs). To minimize the risk of extreme fluctuations in interest rate, caps are imposed on your rate. Caps protect you by limiting the percentage by which your rate can increase. A life-of-the-loan cap limits the rate which an ARM can be adjusted over the life of the loan. For example, if your loan has a 6% interest rate and the life-of-the-loan cap is 5 percentage points, your interest rate can rise to 11% but never higher.

Loan amount
The loan amount (the amount you borrow) depends on your down payment, your gross annual income and debt, and the interest rate that you can obtain.

Loan term (in years)
The loan term is the length of time allowed for complete repayment of principal and interest. Typical loans are designed for repayment in 30 years or 15 years. Some loans are amortized over 30 years but require a balloon payment at the end of a 5— or 7— year term.

Loan-to-value ratio (LTV)
The loan-to-value ratio is the relationship of the loan amount to the value of the home.

Locking in
“Locking in” a rate means that the lender guarantees you will get the rate being advertised if your loan is approved within the lock-in period. Rates may be locked in at the time of application, at the time of loan approval, or at the time of settlement.

Main categories of mortgage loans

• 30-year fixed
• 15-year fixed
• 10-year adjustable
• 7-year adjustable
• 5-year adjustable
• 3-year adjustable
• 1-year adjustable
• 6-month adjustable
• 3-month adjustable
• 1-month adjustable
• 30-year due in 7 years (balloon)
• 30-year due in 5 years (balloon)

Margin
Margins apply only to adjustable rate mortgages. The margin is the percentage added by the lender to your index interest rate. The total of the two (the rate and the margin) is the actual rate that you pay, the fully indexed rate. Margins enable lenders to cover their costs and make a profit. See also Adjustable Rate Mortgage and Indexes.
Negative amortization
Some loans allow you to make monthly payments that are too small to repay interest and principal. In other words, you are not paying a large enough amount to cover the fully amortized principal and interest. Loans that allow negative amortization to increase your principle balance on a monthly basis.
Owner occupied
Some loans are granted on the condition that you live in the home yourself. Lenders assume that a tenant might neglect the maintenance of the home, thereby lowering its value and making it harder to recover their funds in case of foreclosure.
Payment cap
Caps apply toadjustable rate mortgages (ARMs). To minimize the risk of extreme fluctuations in interest rates, caps are imposed on your rate. Caps protect you by limiting the percentage by which your rate can increase.

PITI (Principal, Interest, Taxes & Insurance)
PITI stands for principal, interest, property taxes, and property insurance. Lenders determine that to qualify you for a loan, your PITI should not exceed a certain percentage of your gross monthly income. Depending on the type of loan, this percentage usually varies between 28% and 41%. See alsoDebt-to-Income Ratio, and Qualifying.
PMI (Private Mortgage Insurance)
Private mortgage insurance is an agreement that a private insurer will partially repay the lender if the borrower defaults.

Points
One point is equal to 1% of the loan amount. Points have two purposes:

1. They are the lender’s profit.
2. They can be a trade-off for a lower interest rate.

For example, you could be offered a 30-year fixed loan at 7.5% with no points or the same loan at 7% interest with two points. These two points are a trade-off for getting an interest rate of .5% less.

Principal and Interest
The principal is the amount that you borrowed, or your remaining debt. Your principal diminishes every month as you pay it off (except in the case of negative amortization). The interest is the sum you are charged for having borrowed the principal. The interest is recalculated every month, based on your new principal. See also Amortization for calculation of interest.

Property tax
This figure may vary according to the county where the home is located. Actual property taxes are calculated at closing. It is best to consult a tax or real estate professional in the area you wish to purchase a home for specific rates.

PUD (Private Unit Development)
A PUD is a unit within a project, usually a group of houses. The owner of each PUD owns the unit personally and pays taxes and utilities separately. Each owner must pay fees to the owner’s association for the maintenance of all common areas.
Qualifying
The process of being approved to receive a loan is called qualifying. To determine if you can qualify for a loan lenders will examine your credit, income, debt, past paying habits, bankruptcy history, and criminal record. In other words, lenders will try to assess their risk in lending money. Lenders will also require that your monthly mortgage payments do not exceed a certain percentage of your gross monthly income. See also Debt-to-income ratio.

Refinancing
Refinancing is replacing your current loan on a home with a new loan. It enables you to take advantage of lowering interest rates. If you have a 30-year fixed mortgage of $200,000 at 8% interest: Your monthly payment is $1,468. At 7%, monthly payment would drop to $1,331. See also Cash Out Refinancing.

Reserves
Once you’ve settled the purchase by paying the down payment and all other expenses, you are still required to keep a certain amount of money in your bank account to ensure that you can pay your mortgage, property taxes, and mortgage insurance. This money is called “cash reserves” and usually amounts to double your first mortgage payment. Liquid assets such as a savings account, 401k, or other retirement accounts can qualify as cash reserves. You must show you have cash reserves in your bank account at the time of settlement.
Self Amortization
Self amortization occurs when your monthly loan payments repay both interest and principal resulting in your debt being completely paid off at the end of the term. Conversely, some loans allow you to pay interest only. After several years you still owe the whole principal amount and must repay it in one big “balloon” payment. See also Amortization, Amortization Schedule, Negative Amortization, and Balloon Payment

Settlement
Settlement is the final transfer of ownership of the home, otherwise called “close of escrow” or closing.

Settlement costs
Settlement (or closing) costs are the expenses incurred in finalizing the purchase or the refinancing. They add approximately 2 to 5% to the cost of your loan.

T-bill index
An ARM rate adjusts at scheduled intervals according to an index. Each adjustable rate loan is tied to an index. The T-Bill (Treasury Bill) Indexes are the current interest rates the U.S. government pays to borrow money. These rates are determined at weekly auctions. There are both 6-month and 1-year T-Bill indexes. Most major indexes are published in the Wall Street Journal.

Tax Deductible
A tax deductible expense or contribution reduces your taxable income.  To calculate the worth of a tax decuction, multiply the deduction by your income tax rate.  Fro example, if youdeduct $10, 000 in mortgage interest expenses and are int eh 25% income tax bracket, the tax deduction is worth $2,500.  If you deduct $1,000 in contributions to a charity, the deduction is worth $250.
Title
The documented legal ownership of a home is known as title.

Title insurance
Title insurance covers possible undisclosed challenges against the property, such as an unknown heir claiming ownership of the home, unpaid repairs owed to contractors, and unpaid taxes. Many lending institutions may require that you buy title insurance for up to the value of the mortgage.

Total cash required at closing
The estimated amount of cash required at closing time (or settlement) includes:

• down payment
• points
• closing costs
• cash reserves

Treasury constant index
An ARM rate adjusts at scheduled intervals according to an index. Each adjustable rate loan is tied to an index. The Treasury Constant Index is the 12-month average of monthly yields on actively traded U.S. Treasury securities adjusted to a constant maturity of one year. Most major indexes are published in the Wall Street Journal.
VA (Veterans Administration)
The Department of Veterans Affairs (DVA, formerly called VA) does not make loans but guarantees a portion of their repayment. VA loans are available only to people with military experience. Consult a local VA office for more details.