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FAQ
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. What information do I need to gather for my loan officer? Answer
8. How does my credit score affect my loan? Answer
9. Can I do anything to improve my credit score? Answer
10. What might delay approval of my loan? Answer
11. What is a "debt to income ratio", how is it calculated, and what effect does it have on my mortgage application? Answer
12. What will happen at closing? 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. For an idea of what you can afford, see our mortage calculator. Then, give us a call, and we can help you determine exactly what kind of home loan you need.
 
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. Visit our Fixed Rate vs. Adjustable Rate mortage calculator for more information. 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. You can start by checking out some of our mortage calculators. When you're ready, Global Mortgage Link LLC 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.
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    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
  • Fees for Services: You may need to pay for services such as an appraisal or termite inspection. These costs can be recouped at closing.
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    Q : What information do I need to gather for my loan officer?
    A : You will want to get together the following information, where applicable:

    • Drivers License
    • Social Security Card
    • W2’s for last 2 years
    • Federal Tax Returns for Everyone last 2 years
    • Paystubs for 1 month
    • Bank Statements for last 2 months
    • Evidence of Assets – 401K, Money Market, CD’s, Stocks & Bonds etc
    • 1099’s last 2 years (if applicable)
    • Unemployment prior last 2 years (if applicable)
    • Child support (if applicable)
    • Proof of receiving child support (if applicable)
    • Court order and or Divorce Decree / Settlement (if applicable)
    • Bankruptcy (if applicable)
    • Social Security, Pension or Annuity Award Letters
    • Self Employment, Need Year to date – Profit and Loss (if applicable)
    • Discharge paper & All Schedules (VA Loans Only)
     
    Q : How does my credit score affect my loan?
    A : Borrowers with high credit scores tend to get lower interest rates on mortgages than borrowers with low credit scores. Different loan programs have different credit score requirements. Talk to your loan originator to find out what type of home loan is best for your situation.
     
    Q : Can I do anything to improve my credit score?
    A : The short answer is yes. However, some changes take more time to see results from than others. After your loan originator has pulled your credit report, he or she will work with you to make a plan to create the needed improvements. We are there to help and advise you every step of the way!

    In the meantime, the most important thing you can do is pay your bills on time.
     
    Q : What might delay approval of my loan?
    A : A job change, an increase or decrease in salary, a new debt, a change in your credit history or change in marital status could delay your loan approval. The best way to avoid that is to put your financial life in a holding pattern until you reach the closing table. This means don't open new debts (like a credit card) and make your regular payments on your existing accounts, don't change jobs, and don't make large, non-payroll deposits without a paper trail.
     
    Q : What is a "debt to income ratio", how is it calculated, and what effect does it have on my mortgage application?
    A : Your debt to income ratio is figured using your "minimum monthly debt" -- the total minimum you have to pay each month based on payments such as housing/rent, car payment, student loans, and credit card payments. Add up each of these minimum monthly payments to determine your monthly debt.

    Divide that monthly debt by your gross monthly income, and you have your debt to income ratio. The lower the number, the more money you have at your disposal every month.

    This ratio tells your lender what kind of mortgage payments you can afford, and how large a loan you can reasonably afford. There are things you can do to improve your debt to income ratio, and Global Mortgage will work with you to make a plan that gets you qualified for the home loan program that works best for you.
     
    Q : What will happen at closing?
    A : Basically, you'll sit at a table with your broker, the broker for the seller, probably the seller, and a closing agent. The closing agent will have a stack of papers for you and the seller to sign. While he or she will give you a basic explanation of each paper, you may want to take the time to read each one and/or consult with your agent to make sure you know exactly what you're signing. After all, this is a large amount of money you're committing to pay for a lot of years! Before you go to closing, we will provide you with material explaining the closing costs, a lending estimate, information on cash you'll have to supply at closing, and a list of documents you'll need at closing. These items will help you understand your rights in the process. Don't hesitate to ask questions!