You need more than just talk about rates.  You need solid answers and professional counsel.  That’s exactly what you’ll get.

We’ll show you that your mortgage is more than a way to get the home of your dreams.  You’ll see that it’s also an invaluable financial tool for reaching your long-term financial goals.  That’s what we’ve been doing for our clients for nearly two decades and that’s what we can do for you today.  You talk.  We listen.  Then we advise.  That’s the personal approach that has kept clients coming back to us year after year.

Our aim is to provide every client with a loan commitment.  A commitment places you in a better negotiating position since you essentially become a cash buyer. 

As a broker we act as the wholesale division for the lenders we represent.  A mortgage broker is paid by the lender for originating, processing, and delivering the loan.  When a consumer pays points, some or all of those fees may be returned to the broker for originating the loan.

Gifts funds may be used as your source of down payment.  The donor must be related to you or your co-borrower. Always provide the name, address, and phone number of the donor, as well as their relationship to you.  A Gift Letter will be requested from the donor for verification.

If a gift is needed and your loan request is for more than 80% of the purchase price, you must verify that at least 5% of your down payment (the property's value) is derived from your own funds.

Prior to closing, the transfer of the gift funds will be verified with a bank receipt or deposit slip as proof that you have deposited the funds to your account.

You may borrow funds for your down payment.  However, these loans must be secured by an asset that you own. You may borrow against assets such as a stock portfolio, a car, or another home.  If you plan to use loan proceeds for your down payment, the lender will ask you for a copy of the Note and a paper trail to verify receipt of the loan proceeds.

Locking guarantees an interest rate for a specified period of time.  The lock is good only for a specific property and a specific borrower.  There are four components to a rate lock:

• Loan program
• Interest rate
• Points
• Length of the lock – usually between 30 to 60 days

In most cases the answer is no. 

Most lenders will not lower their rate unless interest rates have dropped substantially (3/8% or more). There is an expense to the lender when they lock a rate. There are actually three parties to most real estate loans, the borrower, the lender and the investor that provides money to the lender.

We don’t post our interest rates on line because rates change daily, sometimes more often than that. Each day we review interest rates and fees from over 100 different lenders.

The Federal Truth in Lending law requires mortgage companies to disclose the APR when they advertise rates. The APR was meant to allow consumers to easily compare loan programs.  An APR factors the cost of borrowing in with the note rate.  Unfortunately, lenders can legally calculate APRs differently. A loan with a lower APR may not be the most competitive.

• Document preparation (lender)
• Loan processing
• Pre-paid interest – Interest paid from the date the loan closes through the end of the month
• Points
• Private mortgage insurance
• Underwriting

Third party fees for the title insurance, escrow, attorney, notary, credit report, recording and appraisal are generally NOT included in the APR calculation.  The APR does NOT affect your monthly payment. Your monthly payment is based upon your note rate and the amortization period.

This discrepancy is often noticed on the federally mandated Estimated Settlement Statement. The Loan Amount is the amount you are borrowing, while the Amount Financed is the Loan Amount less the borrowing costs that are used to calculate the APR (annual percentage rate.)

We encourage you to consult a CPA before making any decisions regarding the tax consequences of your financing.  For a purchase you may deduct both Points and Pre-paid Interest charged in connections with the closing of your loan.  For a refinance Pre-paid interest is tax deductible in the current year, but Points must be amortized over the life of the loan.

A No Cost Loan is a loan where the borrower pays a slightly higher rate, usually ½% depending upon your loan amount, in return for having all of the Non-Recurring closing costs paid by the lender.  The Non-Recurring costs include the lender fees as well as the one-time fees for title, escrow, appraisal, credit and recording.

You will be required to pay the Recurring closing costs.  The recurring costs include those items, which, as a homeowner, you would pay even if you were not refinancing your home.  These costs include property taxes, hazard insurance, and mortgage interest.

Please note that for refinances, most lenders require that your homeowner’s insurance is paid 6 months in advance at the time of closing.

Your commitment is good as long as your financial situation remains unchanged.  After a period of time your documents become outdated.  Recent bank statements, pay stubs and tax returns may be required to bring an application up to date.

Adjustable rate loans have an initial fixed period.  That period may last anywhere from one month to 10 years.  At the end of the fixed period, most ARMs will adjust their rate every 6-12 months.  Aside from this Adjustment Period there are three factors that determine how the loan will adjust.  They are the Index, the Margin and the Caps placed on the rate changes. 

The Index is a usually based upon a market rate that fluctuates with changes in the bond market.  Commonly used indexes include the 1 Year Treasury Security, and LIBOR, the London Inter-Bank Offer Rate.  The Prime Rate, a non-market rate is often used in connection with home Equity Lines of Credit.  Adjustable loan rates rise and fall with variations in the index. 

To determine the interest rate on an ARM, lenders add a Margin of approximately 2 to 4 percent to the value of the index.  The Index can be thought of as the lender’s cost to borrow money.  The Margin then, is the lender’s overhead and profit.

In California, lenders may not require borrowers to pay their property taxes and insurance with each monthly payment (impounds) unless the 1st mortgage exceeds 80% of the appraised value.

Credit scoring was developed by the Fair Isaac Corporation.  Credit scores are calculated using models that assign points for different pieces of information that have historically been predictors of future credit performance. These models were developed by studying the payment history of millions of borrowers.  The model used for home mortgages was developed to predict the likelihood that a borrower will have a 90 day late payment in the next 24 months.

• Late payments
• The amount of time credit has been established
• The amount of credit used versus the amount of credit available
• Negative credit information such as bankruptcies, charge-offs, collections, etc.

Three different credit scores are computed, one for each of the three credit bureaus (Experian, Trans Union and Equifax). In most cases the middle score is used for making home loan decisions.

How can you improve your score?

• Pay your bills on time. Late payments and collections have a negative impact on your score.
• Do not apply for credit frequently. Having a large number of inquiries on your credit report can decrease your score.
• Reduce your credit card balances. If the outstanding balance on a credit card is greater than 50% of your credit limit, your score will be negatively affected.
• Not having sufficient credit can negatively impact your score. Lenders prefer borrowers to have 4-5 established sources of credit. If you are applying for a home loan, please call us before obtaining any new credit. e.g. car loan, credit cards, finance company 

If there is an error on you credit report.
Report errors to company that provided the credit.

The three major Credit Bureaus in the U.S. are:

• Equifax (1-800-685-1111)
• Trans Union (1-800-916-8800)
• Experian (1-888-397-3742)

In California, the property tax year starts on July 1st and ends June 30th.  Taxes for the 1st half of the tax year are due November 1st and delinquent December 10th.  The second installment of taxes is due February 1st and delinquent April 10th.

If your loan closes on or after the tax Due Date, the lender will require that you pay your property taxes at closing. 

When purchasing property you must reimburse the Seller for the property taxes they have paid.  You are responsible for property taxes from the date you close through the remainder of the tax year.  The amount due at closing will be calculated at the seller’s tax rate.

Form 4506 gives a lender 60 days to confirm that the income documentation submitted with your application matches the information on file with the IRS.  This document is used for quality control and is required by most although not all lenders.