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What factors do lenders consider when making a decision on my loan. |
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There are three primary factors. <1>Credit Score. The higher the "middle tri-merge" score, the lower the loan underwriting requirements. <2>Loan To Value Ratio, LTV. Based almost exclusively on middle credit score, the higher the score, the greater the LTV, up to 100% loans. <3>Debt Ratio, DTI. Debt to Income ration can never exceed 55%. DTI is computed by adding all monthly debt payments + home loan principal and interest + monthly taxes and insurance then dividing the sum total by your monthly gross income. |
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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. Figure your monthly gross income. divide your monthly gross by (2). From this 50% of gross income, subtract all monthly debt payments appearing on your credit report. The resulting number is the maximum you can spend on the house payment icluding the taxes and insurance. OR, Give us a call, and we can help you determine exactly how much you can afford. |
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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 rate is fixed for 3 or 5 or 7 years, then the interest changes annually, 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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Is an ARM loan right for me? |
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Generally speaking, if you are planning on remaining in the house for five years or less, a 5/1 ARM would offer a LOWER fixed interest rate for the first five years. The lower rate, lower than 10-15-20 or 30 year fixed rates, will either save you money on the principal and interest payments or allow you to afford slightly more home. |
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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). A common margin may be 1.75% over annual prime rate. |
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How do I know which type of mortgage is best for me? |
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As a Mortgage Broker, our duty is to match you with a suitable program. 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. Adventure Mortgage can help you evaluate your choices and help you make the most appropriate decision. There are literally hundreds of Lenders that offer a very broad range of Fannie Mae and Freddie Mac loan programs, (conforming), some that offer conforming programs with their own twist, normally more lenient than straight conforming guidlines, and still others that write their own lending criteria based on the mortgage investors risk tolerance. |
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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: <1>Principal: Repayment on the amount borrowed. <2>Interest: Payment to the lender for the amount borrowed. <3>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. <4>Private Mortgage Ins., PMI, only on conforming loans above 80% LTV, (loan amount as a percentage of Appraised value. |
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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:<1>Earnest Money: The deposit that is supplied when you make an offer on the house, normally credited against purchase price at closing. <2>Down Payment: A percentage of the cost of the home that is due at settlement. The higher your credit score, the less you may need. Scores above 660 will normally put you into "no down payment" territory. <3>Closing Costs: Costs associated with processing paperwork to purchase or refinance a house. Most lenders allow for sellers to pay purchasers closing costs upto 6% of the loan amount, even on 100% loans!. Some Lenders have a requirement that you pay in at least 3% towards the cost of a loan in either down payment or closing expense. <4>Appraisal Fee. Generally paid in advance at time of loan acceptance. |
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How can I be assured that I am getting the best loan for Me !? |
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Complete your online application or simply CALL Adventure Mortgage at the numbers in the left margin. Toll Free 877-805-8062 or select from the loan officers listed. |
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