Loans For First Time Buyers, Things You Should Know

Q: Is it better to work with a bank or loan broker?

A: In the past working with a bank may have been an advantage if the borrower had a deposit relationship. However, today virtually all loans available are purchased by the U.S. government through Fannie Mae and Freddie Mac. Since this is the case, all loans have essentially the same loan criteria. A good loan broker can provide more efficient service and pricing from many banks and other mortgage sources vs. just going with one bank direct 

Q: What is an APR?

A: APR stands for Annual Percentage Rate and is a complex computation used to express what you, the borrower, are truly paying for a loan over its life. If the loan is a fixed rate for the life it can be a good gauge of your true costs but for other loans it is not very useful.

Q: What is a point?

A: A point is a percentage of the loan amount. Paying points can bring down the rate you pay and can benefit you with additional tax deductions.
 
Q: What are closing costs?

A: Closing costs are fess associated with getting a loan. They can include loan underwriting, processing of your paper work, appraisal, credit report, escrow and title fees and recording of your loan documents with the County you live in.

Q: Are there other fees I should be aware of?

A: Buyers should be aware of other fees like administration or funding fees which can add up to hundreds of dollars. Some lenders and banks will quote you their fees and leave out the escrow and title costs which can easily exceed $1,000.

A: What is a conventional loan?

There are several types of loan categories. Conventional is the standard loan that all lenders can provide. Other types are FHA and VA, which are loans for specific groups

Q: How many types of loans are there?

A: Within these loan categories there are many types of different loans. The standard fixed rate which can never change over it life used to be just available for 30 years. Now a Broker can offer 30, 25, 20, 15, 10 and even a longer 40 year fixed rate. Another popular loan is the fixed/adjustable rate loan. This loan is fixed for the first 3, 5 7 or 10 years then becomes adjustable after that. The advantage of this type of loan is that borrower can get a much lower rate than a fixed, giving them a lower payment and possible qualifying for a larger home.

Q: How do I know how much my loan will cost?

A: A good faith estimate (GFE) will be provided shortly after a full application is submitted. This new, updated document know also has explanations of what these costs are.
 
Q: How long does it take to get a loan?

A: A good Loan Originator can get a loan approval within a couple of days of submitting a complete loan package.

Q: What are the steps for qualifying for a loan/what do I need to provide?

A: Your Loan Originator can provide you with a list of items to put together for the application. A service oriented Originator can complete the application for you based on the information he/she requests on the checklist.

Q: What are the 5 most important questions I should ask the person helping me with my loan?

A:  

1. How long have they been doing loans?
2. How do they generate their business? (If they get it through referrals then they are probably doing a great job for others)
3. Who do they use for their loans? (Is it just 1 company or do they have many choices to pick from)
4. Are they going to lock my loan in and for how long?
5. What do you do after my loan close’s to keep in touch with me?

Did you find this information useful? Are there other questions you want answered? Post your comments here.

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For more answers on your loan questions you can contact Michael McClare

Residential First Mortgage
(949) 852- 0400 x217
mjmcclare@rfmortgage.com

Michael’s BIO: I have been in the mortgage/banking industry for 25 years and a Partner and Owner of my own Mortgage Company in Irvine, California where I have been for over 15 years. Our firm believes in long term relationships with both our clients and the sources we use for our loans. Delivering a loan to a borrower on time and as promised is how our company has stayed in business through some tough times in our industry. My goal is to have my borrowers refer me because I stand out from the average. This is a big financial step in our client’s life and I am proud to be a very important part of it.

For answers to your home buying or selling questions contact Adrienne

(714) 396-2819 or adrienne@adriennemarkes.com