The difference between fixed and adjustable rate mortgages...
With a Fixed Rate Mortgage, the interest rate and the amount you pay each month remain the same over the entire mortgage term, traditionally 15 or 30 years. Whereas, with the Adjustable Rate Mortgage (ARM), the interest rate will fluctuate according to the interest rate. The initial interest rate of an ARM is typically offered at a discounted interest rate, or "teaser rate", that is lower than the typical rate for a fixed rate mortgage. However, over time when the initial discounts have expired, the ARM rates will fluctuate as interest rates go up and down. Different ARMs are adjusted based upon different financial indexes - COFI, LIBOR, etc. For your protection to avoid constant and drastic changes, ARMs typically have a "rate cap" of how much and how often the interest rate and/or payments can change in a given year, and over the life of the loan. Some ARM products may include hybrids that change from a fixed to an adjustable rate after a period of years, or "option ARMs" that allow you to choose, on a monthly basis whether to pay a minimum payment, or an interest-only payment, or an ordinary principal plus interest payment, or an accelerated payment amount.

What if I can't afford 20% down.. what are my payment options?
If you can afford and qualify for your mortgage payments and if you have a high credit score, you should be able to find a low down loan of 5% to 15%, or even perhaps a no money down loan. However, you will have to pay a higher interest rate and loan fees than someone who is making a larger down payment. Note: If you put down less than 20%, you will either have to pay for private mortgage insurance (PMI), or take out two separate loans, a 1st and a 2nd, to avoid the PMI.

Can I borrow money from my 401(k) plan for the down payment?
Yes, usually you can, but conditions, limitations and possible penalties may apply. Check with your employer, or the 401(k) plans administrator to see if your plan will allow loans. Also check with your tax adviser before exercising this option.

How much down payment will I need?
The minimum down payment required depends on the mortgage program you select. Usually at least 5% is required, but there are exceptions. If you are concerned about having enough money to purchase a home you may want to consider our options for rolling your closing costs into either your interest rate, or your loan amount. You will still need to come up with money for your down payment, but this will help reduce the amount of additional money that you will need to bring to the closing.

Why is the Annual Percentage Rate (APR) different from the interest rate?
The annual percentage rate is intended to reflect the total cost of your mortgage loan. To calculate the APR, lenders consider the interest rate on your mortgage loan, the term of the loan, and other loan fees such as closing costs and points, etc. Your monthly payment is calculated based on the mortgage note rate, not the APR. The APR will always be higher than your interest rate.

Can I be approved for a loan if I have credit problems?
Most likely, but it will depend upon just how bad your credit really is, and other factors such as LTV (Loan To Value and DTI (Debt To Income Ratio), etc. We have many lenders that do offer mortgage loan programs for customers who may not have a perfect credit score.

How do creditors evaluate the information on my credit report?
Most creditors, including mortgage lenders, use a credit score generated from information on your credit report - FICO (Fair Isaac Credit Score). A credit score is a statistical measurement used to predict how likely you are to repay a loan based on experience with millions of consumers. As a result, it provides a fast and objective way to evaluate your credit history.

What are the factors that influence my credit score?
Any action you take regarding your credit use and/or management will influence your credit score. For example, if you make your payments on time each month, that will positively influence your score. However, if you tend to maintain maximum balances on your credit cards, and make only the minimum payments, that will negatively influence your score. At any given time, your credit score is calculated by weighing all positive and negative points.