FAQs About Home Mortgage Loans
How do I determine how much I can afford to spend on a house?
The general rule of thumb is that you can afford a home with a value of two to three times your annual household income. However, there are other factors that affect how much you can borrow, such as your current income, employment history, credit history, savings, and the amount you plan to use as a down payment.
How is my mortgage payment calculated?
Lenders use the acronym PITIA for the five components of a monthly mortgage payment besides the size and term of the loan. It stands for:
1. Principal - Repayment of the amount you borrow
2. Interest - Payment to the lender for the amount you borrow
3. Taxes - Payment to the County Tax Assessor
4. Insurance - Payment to an insurance company to cover losses and damages to your home and its contents in case of an accident or theft
5. Association dues - If you purchase a home in a community or subdivision, you’ll probably need to pay this fee, which is used to maintain and improve the common areas and community property.
How much cash do I need for a down payment?
That will depend on the price of the house and the type of mortgage you get. The larger your down payment, the less you’ll need to borrow, and therefore the lower your monthly mortgage payments. Typical down payments range from 5% to 20%, but every situation is different.
What are mortgage points?
Also called discount points, mortgage points work are a one-time fee you can pay to get a lower interest rate. One mortgage point equals 1% of your total loan amount and may drop your interest rate 1/8th to 1/4 percent lower.
What is private mortgage insurance and why do I need it?
Private mortgage insurance (PMI) protects the lender—not you—if you stop making payments on your loan. Lenders require it when you have a conventional loan and make a down payment of less than 20% of the home's purchase price. PMI typically costs between 0.5% to 1% of the entire loan amount on an annual basis.
Can I get a loan if my credit is less than perfect?
Your credit history will affect what loan options are available to you, but we can usually find a workable solution. And we don’t judge. Promise.
Should I get pre-qualified?
Yes. We recommend getting pre-qualified. Pre-qualification lets you know how much you can borrow and it also can be used to demonstrate to sellers that you have the borrowing power to back up your offer on purchasing their home.
What’s the difference between being pre-qualified and pre-approved?
When you’re prequalified, you’ve provided your mortgage lender or broker with all the basic information they need to determine what loan program and what amount you likely can borrow. When you’re preapproved, your mortgage lender or broker will have collected the necessary documents and verified your information to move the loan forward to underwriting and approval.
Should I get a loan from the bank where I do all of my banking?
A bank or direct mortgage lender can fund your loan. However, they can only offer you the home loan programs they have available.
What other options exist for obtaining a loan?
Another option is working with a mortgage broker. Mortgage brokers have access to hundreds of different lenders and types of loan programs. They can shop interest rates for you, help you compare different terms, and advise you on what loans best suit your financial situation.
FAQs About Santa Fe Mortgage
Is Santa Fe Mortgage a direct lender or a mortgage broker?
Santa Fe Mortgage is a mortgage broker, which means we have access to hundreds of different lenders and loan programs.
Do all mortgage brokers use the same lenders?
Santa Fe Mortgage was established in 1995. And our founder and president, Fred Bittle, has been in the industry for over __ years. With all that history, we’ve built a vast network of lenders who know us, trust us, and like working with us. That gives us more options in what we can offer home buyers and also affords us some leverage when we need a lender to make a decision on a borderline case.
Why should I choose to work with Santa Fe Mortgage?
Where we shine, isn’t only in the wide range of loan products we can access, it’s also in our knowledge and expertise. Our mortgage brokers are industry experts, second to none. They’re well-qualified to advise customers, whether you’re a first-time homebuyer or experienced homeowner.
Getting a home loan can be a complicated process, with lots of steps and often lots of challenges. You want someone who will go to the mat for you, explore every option, anticipate every problem, and be available to you 24/7 to answer your questions and resolve any issues as they arise. We’re 100% committed to doing whatever it takes to secure the best loan for your needs.
Lastly, if you’re buying a home in Santa Barbara County, it’s nice to work with someone local, someone who grew up here, knows the area communities, and quite possibly even handled the loans for your neighbors. We’ve been in Lompoc since our founding in 1995. We’re ready to meet with you in person (not just over the phone), get to know you, and help you obtain the best possible deal on your home mortgage.
Do you offer pre-qualifications?
Yes, we can pre-qualify you for a loan often within 24 hours. We’ll then produce a letter on our stationery that states how much you’re pre-qualified to borrow. Use that letter as leverage when you place an offer on a home. It lets sellers know you’re serious and you have the borrowing power necessary to complete the transaction.
To get pre-qualified for a mortgage, what do I need to provide?
You’ll need to provide the following items, which can be done electronically if that’s easier:
Tax returns and W-2 forms from the past 2 years
Bank/asset statements from the past 2 months
Paystubs from the last 30 days
Valid photo ID
If I get pre-qualified by Santa Fe Mortgage, am I obligated to obtain my loan through you?
No, we offer pre-qualification as a free, no-obligation service. Our hope, however, is that you come to value our expertise and personalized customer service and will choose to continue working with us to obtain your loan.
I already have a home. Does Santa Fe Mortgage offer refinancing?
Yes, we offer all the same services for refinancing as we do for home purchases.
What areas do you service?
We work with home buyers throughout the state of California. However, most of our clients are right here in Santa Barbara County, with the highest concentration in Lompoc.
How long will it take for my mortgage to be approved?
Every situation is different but the typical timeframe is ___ weeks. Here at Santa Fe Mortgage, we’ll stay on top of the details and quickly resolve any issues so you can close on your home within your desired timeframe.
What types of mortgages do you offer?
Our most common loan products are fixed-rate, VA, FHA, ARM, high-balance and jumbo loans. You can learn more about each of these loans on our Products page.
How do I know which loan is right for me?
We can help you to understand all the pros and cons of each type of mortgage so you can make an informed decision.
If I want to proceed, what’s the next step?
Contact us today to schedule an appointment. We can meet either by phone or in person. At that first no-obligation meeting, we’ll be able to discuss your borrowing needs, explain the process to you, and answer your questions.
We look forward to assisting you in the purchase or refinancing of your home. Contact us today!