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The process of getting a mortgage can not only be mentally tough, 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 (949) 340-3531.

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 amount of the money borrowed from a lender, paid over a period of time
I – Interest - The fee charged by the lender for borrowing money
T – Taxes - Property taxes paid to your county government
I – Insurance – Homeowners insurance on your property, to cover the lender and the owner against loss in the event of a disaster

Mortgages Choices

Fixed – Fixed mortgages have a fixed term (10, 15, 20 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. A fixed mortgage is fully amortized, so your loan will be paid off by the end of the term.

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 may go up or down based on these interest rate changes. There are some ARMs which are Fixed-Period or Hybrid ARMs, which have a fixed-rate feature. For example, a 5/1 ARM is an Adjustable Rate Mortgage that has a fixed interest rate for the first five years, and then adjusts every one year thereafter.

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 in most cases. Many lenders who we work with have loan programs that require 5 percent or less, including zero down for some qualified borrowers. Years ago, the only zero down loans were from the Veterans Administration but fortunately lender guidelines have adjusted to allow 100% financing - with some restrictions. If you think that you have to pay rent until you save up a 10 or 20 percent down payment, ask us for a Rent vs. Own analysis. You may be pleasantly surprised about what is available to you!

Pre-qualification
You will want to get pre-qualified during your mortgage search to be deemed as a serious buyer. Pre-qualification isn’t binding but rather it gives you an idea of what you can truly afford. The lender analyzes your income, debt and credit history to estimate your maximum loan amount. Your maximum allowable loan amount combined with your down payment will give you your maximum home price.

The next step is pre-approval which verifies your income, debt and credit. Pre-approval gives you the following benefits:

• Knowing exactly what you can borrow. You will receive an accurate commitment from Coast Mortgage Group 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 (and listing agents) love pre-approved buyers! They know your offer will not fall through and will treat you like a cash buyer. This will help you negotiate a better price and purchase terms.