THE LOAN PROCESS

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Getting a loan can be confusing. We have tried to simplify the loan process by outlining the steps involved. Click on each step for further information on that step.
 

STEP 1

 HOW MUCH CAN YOU BORROW?

The first step in obtaining a loan is to determine how much money you can borrow.  In case of buying a home, you should determine how much home you can afford even before you begin looking. By answering a few simple questions, we will calculate your buying power, based on standard lender guidelines.

It is important to get pre-approved for a loan, which requires verification of your income, credit, assets and liabilities.  As a matter of fact, most Real Estate Agents, Sellers and Banks, if you are buying a bank owned property (REO) or if the transaction is a “Short Sale” require a copy of your pre-approval letter when submitting an offer.  It is recommended that you get pre-approved before you start looking for your new house so that you can:

1.       Look for properties within your range.

2.       Be in a better position when negotiating with the seller (seller knows your loan is already approved) which will give you buying power.

3.       Close your loan quicker.

STEP 2

WHAT TYPE OF LOAN SHOULD I GET?

Home loans come in many shapes and sizes. Deciding which loan makes the most sense for your financial situation and goals means understanding the benefits of each.  Whether you are buying a home or refinancing, there are 3 basic types of home loans. Each has different reasons you'd choose them.

1) FIXED RATE MORTGAGE

Fixed rate mortgages usually have terms lasting 15, 20, 25, or 30 years. Throughout those years, the interest rate and monthly payments remain the same.  You would select this type of loan when you:

    * Plan to live in home more than 7 years
    * Like the stability of a fixed principal/interest payment
    * Don't want to run the risk of future monthly payment increases
    * Think your income and spending will stay the same

2) ADJUSTABLE RATE MORTGAGE

Adjustable Rate Mortgages (often called ARMs) typically last for 30 years, just like fixed rate mortgages. However, the interest rate is usually lower than a traditional fixed rate mortgage but is only fixed for 3, 5, 7, or 10 years. After the initial fixed period your loan becomes adjustable. Your loan may adjust monthy, every 6 months or annually. The interest rate on the loan may go up or down which means your monthly payments may increase or decrease.  You would select this type of loan when you:

    * Plan to stay in your home less than the initial fixed period
    * Don't mind having your monthly payment periodically change (up or down) when it begins to reset