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1. HOW DO I KNOW HOW MUCH HOUSE I CAN AFFORD
Answer
2. WHAT IS THE DIFFERENCE BETWEEN A " FIXED RATE LOAN " &  AN " ADJUSTABLE RATE LOAN?"
Answer
3. HOW IS AN INDEX AND MARGIN USED IN A ARM? Answer
4. HOW DO I KNOW WHICH TYPE OF MORTGAGE IS BEST FOR ME?
Answer
5. WHAT DOES MY MORTGAGE PAYMENT INCLUDE? Answer
6. HOW MUCH CASH WILL I NEED TO PURCHASE A HOME?
Answer
7. HOW DOES THE APR RELATE TO YOUR MORTGAGE LOAN? Answer

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 " &  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.
 
Q : HOW IS AN INDEX AND MARGIN USED IN A 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. AMERICA''S HOME LENDER 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.
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    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
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    Q : HOW DOES THE APR RELATE TO YOUR MORTGAGE LOAN?
    A : Because a mortgage is often the largest and most complicated loan you will receive, it is important that you, the borrower, understand all of the costs and mortgage terms involved so an informed decision can be made.  The term APR ( Annual Percentage Rate ) was specifically developed to help consumer understand the relative costs of a transaction. As such, it is a particularly useful factor to consider when comparing similar loans.

    HERE IS SOME VERY HELPFUL INFORMATION REGARDING " APR "

    HOW WAS THE APR DEVELOPED?

    To help borrower understand loan transactions and to help you compare loans offered by different lenders, a federal law-- The Truth In Lending Act-- requires creditors to provide information to consumers about the conditions, terms, and costs of a loan.  This law is administered under a Federal REserve Board of regulation known as Regulation Z.  The APR is one of the required disclosures.

    WHY IS  AN APR AN IMPORTANT DISCLOSURE?

    APR is a measure of the total cost of  your mortgage express as a yearly interest rate.  It is designed to help you determine the relative cost of a loan you are considering.  The annual percentage rate is based on a rather complex mathematical formula as outlined in Regulation Z.  In essence, it reflects the amount  being financed, the interest rate, the timing of the payments, and any other costs ( prepaid charges ) required as a condition of the mortgage loan that make up the finance charge.  The finance charge, another required disclosure under the Truth In Lending Act, reflects as a dollar amount the cost associated with the loan, including interest and other payments required of the borrower such as points, loan fees, origination fees, application fees and insurance.  With fees and costs added to the mortgage loan you desire, the effective APR is often slightly higher than the actual rate of interest charged for the loan. A example is listed below:
    Type of loan                          Fixed Rate
    Initial Interest Rate              8.50%
    Loan Term                            30 Years
    Amount of Loan                    $80,000
    Total Prepaid Charges         $3,126.89
    APR                                       8.9383%

    WHAT IS THE DIFFERENCE BETWEEN THE INTEREST RATE AND THE APR?

    The APR is an artificial measurement of the relative cost of your loan transaction....it doesn't have a bearing on the actual rate of interest you pay on a particular loan, but your loan rate of interest is a part of the calculation.

    Comparing the APR of different mortgage loans you are considering is an important tool to help you measure the relative cost of each loan.  It is not the only factor you should consider, however, before make a decision.  You need to take into account other factors such as the interest rate and any fees or charges required by the lender.  A lower APR on one loan doesn't necessarily ensure that it is the best mortgage loan for you.

    Your best course of action is consult you loan officer.  We can calculate the APR of various loan programs, and help you understand all of the costs associated with obtaining your mortgage loan.  Please ask as many questions as you want.... the final decision is yours.  Our goal is to help you find the right mortgage for you purchase or refinance of your home.