FAQs on Loans & Credit
If you have questions not answered here, call or email anytime.
What if there is an error on my credit report?
If you see an error on your report, report it to the credit bureau. The three major bureaus in the U.S., Equifax (1-800-685-1111), Trans Union (1-800-916-8800) and Experian (1-888-397-3742) all have procedures for correcting information promptly. Alternatively, your mortgage company may
help you correct this problem as well.
How can I increase my score?
While it is difficult to increase your score over the short run, here are some
tips to increase your score over a period of time.
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Pay your bills on time. Late payments and collections can have a serious impact on your score.
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Do not apply for credit frequently. Having a large number of inquiries on your credit report can worsen your score.
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Reduce your credit-card balances. If you are "maxed" out on your credit cards, this will affect your credit score negatively.
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If you have limited credit, obtain additional credit. Not having sufficient credit can negatively impact your score.
How do I know how much house I can afford?
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. Give us a call, and we can help you
determine exactly how much you can afford.
How do I know which type of mortgage is best for me?
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. We can help you evaluate your choices and help you make the most appropriate decision.
How much cash will I need to purchase a home?
The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
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Earnest Money: The deposit that is supplied when you make an offer on the house.
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Down Payment: A percentage of the cost of the home that is due at settlement.
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Closing Costs: Costs associated with processing paperwork to purchase or refinance a house.
What does my mortgage payment include?
For most homeowners, the monthly mortgage payments include three separate parts:
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Principal: Repayment on the amount borrowed
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Interest: Payment to the lender for the amount borrowed
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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.
What is the difference between an adjustable-rate loan and a fixed-rate loan?
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.
There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.
How is an index and margin used in an ARM?
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).
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