| There are many mortgage products available for San | | | | |
| Fernando Valley home buyers. If you are a first time | | | | Interest rates are either fixed or variable. Fixed rates |
| home buyer, the various types of loans may be | | | | are the preferred type of loan. The term is fixed for a |
| confusing to you. You should try and educate yourself | | | | period of 40, 30 or 15 years. 30 years is the most |
| first by comparing different loans and interest rates. | | | | popular fixed rate loan. A variable loan rate changes |
| Much of the information can be obtained on the | | | | depending upon the base interest rate. If rates go up, |
| Internet. | | | | your monthly payment goes up. If the rates go down, |
| | | | | then your monthly payment goes down. Variable rates |
| It is important to work with a mortgage broker or | | | | are for 5/1 ARM and 5/1 jumbo ARM’s or |
| lender that you trust. Your San Fernando Valley | | | | combinations. |
| Realtor can recommend a good mortgage broker to | | | | |
| help you with your financing needs. | | | | |
| | | | | |
| To get started, here are some crucial things you | | | | Mortgage Broker or Lender? |
| should know about home mortgages: | | | | |
| | | | | Mortgage brokers do not loan money. They assist |
| Conventional Loans (conforming or non-conforming | | | | borrowers to find the best loan products. Typically, |
| jumbo loans) | | | | mortgage brokers work with many different lenders to |
| | | | | match the borrower’s needs and financial |
| Conventional loans are made by banks and traditional | | | | situation. |
| lending institutions. Guidelines for conventional loans are | | | | |
| based upon Fanne Mae and Freddie Mac guidelines. | | | | A mortgage broker will take your loan application, lock |
| Fannie and Freddie only insure loans; they do not | | | | in your rate with a lender and gather all the required |
| make them. | | | | information that is necessary to process your loan. |
| | | | | The mortgage broker will disclose federal and state |
| Government Loans | | | | disclosure laws to you. Mortgage brokers are paid a |
| | | | | commission for putting you and the lender together. |
| Government programs include FHA and VA loans. | | | | The borrower generally pays the mortgage broker's |
| Each loan program is governed by their own | | | | ocmmission in the form of closing costs or what is |
| requirements and guidelines. | | | | typically referred to as points. Some borrower’s |
| | | | | prefer to work with mortgage brokers because they |
| - FHA has a low minimum down payment of 3.5%. | | | | have access to more loan products. If you have |
| Borrowers must use the property as their primary | | | | credit problems, you probably will have better luck |
| residence and can only purchase 1-4 units including a | | | | finding a loan by working with a mortgage broker. |
| single family home, condo or townhome. Home | | | | Other borrowers like to work with their local bank. It is |
| improvement loans are also available through FHA. | | | | a personal decision. |
| FHA insures loans made by FHA approved lenders. | | | | |
| FHA loan limits vary by the specific county where the | | | | When choosing a mortgage product, look for the best |
| property you are purchasing is located. | | | | terms and rates and avoid things like pre-payment |
| | | | | penalties and junk fees. Stay within your budget. A |
| - VA loans are made by lending institutions and are | | | | good conservative rule of thumb is to keep your |
| guaranteed by the U.S. Dept of Veterans Affairs. This | | | | mortgage payment to 25% of your gross income. This |
| program is for veterans and service personnel so that | | | | way you won’t feel stressed that you are living |
| they can afford to purchase a home. There is no | | | | beyond your means. Take your time shopping around |
| down payment required. VA loan limit amounts also | | | | until you are satisfied with the product you have |
| depend upon the specific county where the property | | | | chosen. Have the lender or mortgage broker give |
| you are purchasing is located. The general loan limit is | | | | you a pre-qualified letter at the time you are making |
| $417,000. The VA determines the borrower’s | | | | your offer. Better yet if you have already gone |
| eligibility, and then issues a certificate of eligibility for the | | | | through the loan approval process, and can give the |
| borrower to use to apply for their VA loan. | | | | seller a pre-approval letter. This has much more weight |
| | | | | because it signifies that you already have your loan |
| Interest Rates | | | | lined up. |