FAQ

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 four 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 us.

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. First Equity 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.

Private Mortgage Insurance (PMI) payments will be added to conventional loans with LTV higher than 80%, Upfront MIP payments will be added to FHA and RD loans.

Homeowners Associations Dues (HOA) are not included in your mortgage payment, however, they are used in calculating the qualifying house expense.

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

Q: What options are there for coming up with money for the down payment?

A: Many buyers save up for the down payment before purchasing a home. With today's low down payment options, this is easier than ever. Additional sources of down payment funds can include gifts from family members, tax returns, or loans from retirement accounts or insurance policies. All deposits have to have a papertrail to be used, so plan accordingly. There are also down payment assistance options. To find out the best path to homeownership for you, give us a call.
 

Q: Does my credit have to be perfect to purchase a home?

A: No. Your credit history is important in qualifying for a loan but it does not need to be perfect. Different programs have different requirements. Call today and let us review your options. In many cases, we can make suggestions for quick improvements to your credit and your credit scores.
 

Q: Can unmarried couples buy a home together?

A: Yes. Almost all loan programs allow individuals to purchase a home jointly regardless of marital status or relationship, except VA. Only veterans and spouses are allowed on VA loans, however, there are a few exceptions.  All parties have to qualify for the loan, and all parties are equally liable. Please call us to discuss your situation if in question.