The process of getting a mortgage is not only mentally taxing but can be very emotional as well. You want to cover all your bases but you’re committing to a property and a loan that you have to live with for some time. We are here to make your journey easier. You are welcome to learn at your convenience from all of our online reading materials but don’t forget that we are available to answer any question that you have about your mortgage search. You can reach us anytime at Contact Us.

We’ve put together this collection of online articles to help explain everything from the basics to some interesting and advanced topics.

The Anatomy of a Mortgage
A mortgage payment consists of PITI
P – Principal - The original amount of the money borrowed from a lender.
I – Interest - A fee charged for borrowing money.
T – Taxes - Property taxes paid to your local government.
I – Insurance – Home owners insurance on your property.

Mortgages Choices

Fixed – Fixed mortgages have a fixed term (like 15 or 30 years) and a fixed interest rate. The interest rate and term are fixed over the course of the mortgage and your monthly payment for the payment of principal and interest will not change during the term of the mortgage. Taxes and insurance can change so this may affect your total payment during the life of your loan.

Adjustable – An ARM (Adjustable Rate Mortgage) has an interest rate that will be adjusted up or down according to current interest rate levels. The monthly amount for your principal and interest payment will go up or down based on these interest rate changes.

Interest Ony-Interest Only mortgages can be offered along with our adjustable or fixed rate mortgages for terms up to 10 years. You only pay the interest portion of the loan which can save you 38 percent of your total payment. Principal is deferred until the term period expires.

Balloon mortages-usually termed as 40 due in 30. Sunset offers shorter terms too. the 40 due in 30 means that your loan is amortized over 40 years for its interest and principal but due in 30 years. At the end term which in this case would be 30 years, you pay back the remaining balance of the principal.  During the 30 year payment period, you would have paid down the principal and whatever balance remains on the outstanding principal, you payoff in a lump sum. A borrower that may be interested in this type of loan instrument is one that seeks the lower rate offered through this loan type. You may also attach an Interest Only feature as well.

MTA Loan-This loan type is commonly known as an option ARM . This loan instrument offers various payment options which you may chose from. The loan is recast after a designated time period. A borrower who choses this type of option ARM loan instrument is one that needs a reduced payment option. A strong caveat to remember; this type of loan instrument has a negative amortization. For simplistic purposes, you chose a payment option that is lower than the usual P * I affiliated with the rate and terms, since you choose a smaller payment option, your payment may not cover the interest on the loan and thus the balance of the interest that was not covered by the payment option chosen will be added on to the back of the loan principal.

The Down Payment
Many people believe that they need to put down 10 percent or even 20 percent for their down payment and that’s no longer true. There are many lenders that have loan programs that require 5 percent or less, including zero down. Way back when, the only zero down loans were from the Veterans Administration but fortunately those days are gone. If you think that you have to pay rent until you save up a 10 or 20 percent down payment, check with us. You’ll be pleasantly surprised.

Prequalification
You will want to get pre-qualified during your mortgage search. Prequalification isn’t binding but rather it gives you a ballpark idea of what you can afford. The lender analyzes your income, debt and credit history to estimate your maximum loan amount. Combine that with the money you have for a down payment and you have your maximum home price.

The next step is preapproval which verifies your income, debt and credit. Preapproval gives you the following benefits:

• Knowing exactly what you can borrow. You will have an accurate commitment from your lender for the amount you can borrow.
• Credit problem solving. You will know now, instead of while your offer is being evaluated by the buyer if you have any credit issues to be dealt with.
• Stronger negotiating position. Sellers love preapproved buyers. They know your offer will not fall through and will treat you like the proverbial bird in the hand. This can help you negotiate a better price.