Q. How do I know if I can afford this house?
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. Give us a call, and we can help you determine exactly how much you can afford.
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, mortgage payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select the most fitting loan product is through professional consultation.
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 in your mortgage payments 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. Phoenix Mortgage Specialists, Inc. can help you evaluate your choices and help you make the most appropriate decision.
Q. What will my mortgage payments 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.
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
Phoenix Mortgage Specialists, Inc. is proud to serve all our clients across Georgia with premier mortgage products specially tailored to their respective preferences and needs. It is our greatest pleasure to be a consistent source of professional guidance and expertise for every prospective homeowner and every individual preparing to walk through this milestone in his or her life. With any further questions or concerns beyond what is covered on this page, contact us today! This is what we are here to do, and we would love to be of service to you in any way possible.
Thank you for choosing Phoenix Mortgage!