| Q: |
How do I know how much house I can afford? |
| A: |
Generally it is the monthly mortgage payment that determines the amount you can afford. The monthly obligation will vary based upon the type of program you select. Usually no more than 1/3 of your gross monthly income can go toward a house payment. 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. Different mortgage programs will carry different interest rates and payments, therefore your qualifications change with each individual mortgage program. Give us a call, and we can calculate exactly how much you can qualify for. |
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| Q: |
What is the difference between a fixed-rate loan and an adjustable-rate loan? |
| A: |
With a fixed-rate mortgage, the interest rate and monthly payment stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest and payment changes periodically, in relation to a specific index. While the monthly payments that you make with a fixed-rate mortgage are stable, payments on an ARM loan will likely change according to the prescribed adjustment schedule. There are advantages and disadvantages to each type of mortgage, and the best choice will depend on your personal circumstances. A free loan consultation with a Westwood representative is a good way to select a loan program suitable for your needs. |
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| Q: |
What about Custom Construction loans? |
| A: |
With the ever changing market/regulations, please contact us with any questions related to construction loans. |
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| 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, your intended use of the property and how long you intend to keep your house. Westwood Mortgage can help you objectively evaluate your choices and help you make the most appropriate decision. Westwood Mortgage will take a comprehensive look at your available assets, income, and credit history to give you straightforward answers about which choices look right for you. |
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| Q: |
What about investment property financing? |
| A: |
Rental properties ranging from a single family house, up to a four unit multiplex are eligible for conventional financing. An investment loan carries a higher interest rate to compensate the bank for increased risk. Standard guidelines call for larger down-payments, but exceptions are available. The rental income from the property itself contributes toward the necessary income to qualify. The most significant factor is the monthly cash-flow; the net difference between the income generated and the monthly mortgage payment. In most cases rental experience is examined during the underwriting process. |
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| Q: |
What is a Jumbo loan? |
| A: |
The term Jumbo loan refers to the dollar amount of the mortgage. Jumbo loans are conventional loans that exceed the limits set by FNMA & FHLMC (Fannie Mae & Freddie Mac, respectively). Currently the conforming loan limit for FNMA & FHLMC is $647,200. Any loan amount above that is considered a Jumbo loan. Jumbo loans carry a higher interest rate. In 2008 Congress enacted an economic stimulus package allowing for increased loan amounts offered through FNMA & FHLMC. The higher loan amounts, called Conforming Jumbo, permit loan amounts up to $891,250 in the greater Seattle area. Loans in this special category carry rates higher than conforming, but lower than ordinary Jumbo loans. |
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| Q: |
What is a Fixed/ARM loan? |
| A: |
The Fixed/ARM program describes a mortgage where the interest rate and payment are set (fixed) for a predetermined number of years. At the end of the fixed period the interest rate and payment adjust periodically thereafter. One such program is called the 5/1 ARM which refers to the fact that the rate is fixed for 5 years and adjusts each year thereafter. This program is available with 3, 5, 7 or 10 years before the first rate change. |
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| Q: |
What is a “conforming” loan? |
| A: |
Any conventional residential mortgage loan program that meets FNMA or FHLMC (Fannie Mae or Freddie Mac) underwriting guidelines is called a conforming loan. Those guidelines change periodically to meet market demands or to promote housing policies. Fannie Mae or Freddie Mac study risks involved with lending and determine the credit qualifications they find acceptable in a mortgage application. Lenders, such as Westwood Mortgage originate loans according to those guidelines. |
