What
is a mortgage broker and why should I use one?
A mortgage broker is a person who
represents you to a wholesale lender. Our loan officers
will do the work for you. We will find you the right mortgage
product that fits your specific needs, from the many Varity
of lenders with whom we have relationships. Back
to top
What types of mortgages are there?
There are 2 basic types
• Fixed interest rate with fixed monthly payments
These include 30-year and 15-year terms. The 30-year mortgage
usually offers the lowest monthly payments, with a fixed
monthly payment schedule.
The 15-year allows you to own your home in half the time
and for less than half the total interest costs of a 30-year
loan. These loans also often require higher monthly payments.
• Adjustable (ARM) with variable rates and changing
monthly payments.
These are mortgages with changing interest rates and/or
changing monthly payments. The adjustable rate mortgage
(ARM) is probably the most common, and there are many
types of ARM loans available. An ARM usually offers interest
rates and monthly payments that are initially lower than
fixed rate mortgages. But these rates and payments can
fluctuate annually according to changes in a pre-determined
“index” commonly linked to the rate of return
on U.S. Government Treasury bills. Back
to top
What is a first mortgage?
A first mortgage is the first loan
on a certain piece of property. No Other lien has been
taken out on this home. When you first buy a house, the
loan you typically receive is a first mortgage.
Back to top
What is a second mortgage?
A second mortgage is the second
loan against a specific piece of property. Consider this
example: Let’s say you have a first mortgage on
your home. The value is $100,000 and you have a $60,000
balance left to pay on your loan. The $40,000 difference
is considered equity, or the part of the home that you
own outright. If you wish to further borrow against that
$40,000 you would be taking out a second mortgage on the
home in order to do so. Why borrow against the equity?
In many cases, the interest rate you pay on your mortgage
is lower than many other types of loans. Interest is also
frequently tax deductible for a first or second mortgage,
but not necessarily for a car loan or a credit card. (Consult
your tax advisor for more information on tax deductibility
and home loans.) Back to top
What is the difference between a
Home Equity Loan and a Home Equity Line of Credit?
Generally, a Home Equity Line is
for a fixed dollar amount, for a fixed period of time,
with fixed monthly payments, and the borrowed amount is
received as a single lump sum. With a Home Equity Line
of Credit, you can take out the amount of money you need,
when you need it. Payments are required only when there
is and outstanding balance, and you pay interest only
on the outstanding balance. If you have an outstanding
balance, you can make you r monthly payment on the interest
alone (and not against the principle) if you like. Because
the line of credit is revolving, you can borrow, repay
and borrow again. Back to top
Is the interest on my Home Equity Line or Line
of Credit tax deductible?
In many cases, the interest on a
Home Equity Line of Credit or Home Equity Loan may be
tax deductible. Consult your tax advisor concerning the
deductibility of interest. Back
to top
Is there a minimum income level to qualify for
a mortgage?
There is no set minimum income requirement
for mortgage qualification. However, just as average home
costs differ by Geographic area, so does the average income
level needed to support monthly mortgage payments. Fortunately,
it’s not hard to take the guesswork out of knowing
whether you can qualify. Before you even start looking
for a house, try out our Mortgage Calculator, and then
talk to your mortgage specialist. He or she can help you
determine how much mortgage you may qualify for.
Back to top
Will one late credit card payment or loan default disqualify
me from getting a mortgage?
If you have less than perfect credit,
Pacific Standard Mortgage Company has programs to meet
your needs. Late payments (especially those under 30 days)
should by no means disqualify you from getting a mortgage
loan. Almost everyone at one time or another has forgotten
to pay a bill on time, or has had trouble making a payment
– mortgage lenders know this. Many people find themselves
in difficult financial situations, often because of illness,
divorce, or temporary unemployment.
If you can demonstrate that the problem is in the past,
and you have been able to
re-establish a good track record for a sufficient amount
of time, you may be in a good position to get a mortgage
loan. There may be a reasonable explanation, so speak
to your broker openly and honestly about the situation.
It is important to remember that lender’s don’t
just look at your past history, but also at your ability
and willingness to pay in the future. Sometimes, though,
you may not be in a position to buy a house today. To
do so would only compound your problems. But if you don’t
qualify for the loan you want today, work with your broker
to address the things that may have kept your loan from
being approved. That way in 3 months, or 6 months, you
may be ready to buy your home. Back
to top |
