Mortgage Information

A mortgage is a long term loan that you arrange through a bank or financial institution, or even the seller of the property.  The house and/or property serve as collateral for the loan.

How long does it take to pay a mortgage?
A home mortgage is most likely the largest debt you will assume. You typically pay off that debt in monthly payments over a long period of time, most often 15 to 30 years.

What are the different types of mortgages?

30-Year Fixed Rate
This mortgage is an industry standard, as total payments are spread over so many years that your monthly payments are lower than they would be on a shorter term loan. The interest rate, which is set, or locked in, at the time of obtaining the mortgage, remains the same throughout the life of the loan. On a 30-year loan, you end up paying thousands of dollars more in interest compared with a shorter-term obligation, but this interest is 100-percent tax deductible, which reduces your after-tax cost.

15-Year Fixed Rate
This mortgage also is becoming a common loan because borrowers pay a lower interest rate in exchange for larger monthly payments. Note, however, that a smaller portion of your monthly payment goes for interest and therefore the tax deduction is smaller. With a 15-year mortgage you could get an interest rate that is typically one-quarter to one-half percent lower than a 30-year mortgage. The shorter the term, generally the lower the interest. Yet, the main advantage is the fortune in interest you will be saving during the life of the loan.

Adjustable-Rate Mortgages
This mortgage differs from fixed-rate mortgages in that the interest rate moves up or down. ARMs are tied to a number of indexes, which usually are published interest rates. The margin is the amount a lender adds to the index , usually two percentage points or four percentage points, to set the actual interest rate of the ARM.

The most common index for ARM adjustments is the one-year U.S. Treasury bill. The one-year bill has a yield very near that offered by the 30-year Treasury bond, which is used to set rates on 30-year fixed mortgages. The initial ARM rate is generally lower than the fixed mortgage rate, though in the current economy the one-year ARM rate has been only slightly lower, about one-quarter to one-third of a percentage point.

The best way to find out more about mortgages and rates is to call a lender.  Lu can give you multiple lenders to call in order for you to shop around for the best rate.  It is important to use a lender you can trust and rely on, their ability to bring in the loan on time affects the close of escrow date.  Some recommendations include:

Allen Sun, First Capital Mortgage
626-356-8181
asun@firstcapitalmtg.com
http://www.firstcapitalmtg.com/index.shtml

Rob Levy, Home Street Mortgage
(818) 422-1850
rdlevy@earthlink.net

Linda Wilcox, Sierra Capital Mortgage
626-449-8545
linda.wilcox@earthlink.net
http://www.sierracapital.biz/index.rad