MORTGAGE PLAN FINANCIAL SERVICES INC

Home

Loan Center

Products

About Us

FAQ

Resources

1.	How do I know how much house I can afford? Answer
2.	What is the difference between a fixed-rate loan and an adjustable-rate loan? Answer
3.	How is an index and margin used in an 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.	When the Fedreal Reserve lowers or raises interest rates do rates change immediatly? 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 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 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. MORTGAGE PLAN FINANCIAL SERVICES 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

Q :	When the Fedreal Reserve lowers or raises interest rates do rates change immediatly?
A :	This is a complicated question to answer with a blanket statement but in general before the Federal Reserve meets to raise or lower rates the bond market speculates if rates will go up or down based on several factors: Previous Fed Chairman statement about the economy and thier posture. Several Economic Indicators such as energy prices, inflation, Strength of the dollar, Unemployment rates,etc. Demand for mortgage back securities and a host of other factors Typically before the "Fed" meets the market has already tried to analyze the trend in rates. With this speculation the bond market "prices in" any rate reduction or any rate hike. For example if the market anticipates that the Fed will lower rates by a quarter of a percent then several days before the Fed announcement, rates will adjust accordingly. It’s this trend between anticipated rate movement and actual rate movement that affects rates. Your Mortgage Plan Financial Services Loan Officer can help you understand what forces are impacting todays market. Be sure to check out our Rate Watch section to see what economic reports are coming out that may impact Interest Rates.