|
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. |
|
|
|
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. |
|
|
|
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. Viking Capital Inc.
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
|
