Choosing the Right Kind of Loan

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Today there are so many types of loans on the market that it is beyond the scope of this page to list or explain them all. Your Loan Advisor is the best person to help you select a loan program to suit your needs. Below is a summary of the three most popular loan types we see in practice; for more detailed information call us for a free loan consultation.

Fixed loan: The fixed rate loan assures your monthly payments will stay the same over the life of the loan, which is typically between 15 and 30 years. Fixed rate loans may be best if you intend to hold the property for a long period of time, say over 7 years.

ARMs (adjustable rate mortgages): ARM’s may be suitable if you plan to sell or refinance your home within the next few years. The starting interest rate is typically lower than a fixed rate loan, saving you money initially. These loans can offer fixed interest rates for the first 3, 5, 7 or 10 years after which the interest rate adjusts with the market every 6 months or year thereafter. However, it is important to understand the index, the readjustment interval, the capitalization rate and downside risks of an ARM before making a final decision to use this type of loan.

Interest Only Loan: An interest-only loan is a loan in which the borrower pays only the interest for some or all of the term, with the principal balance unchanged during the interest-only period. At the end of the interest-only term the borrower must renegotiate another interest-only mortgage, pay the principal, or, if previously agreed, convert the loan to a principal-and-interest payment (amortized) loan at the borrower’s option. The advantage of an interest only loan is that the monthly payments on an interest-only mortgage are initially lower than those of a conventional loan. That allows borrowers to afford a more expensive home. 

Mortgage Options

California Financial offers many competitive loan programs and options, including:

  • Fixed and Adjustable Rates
  • FHA, VA, and USDA Loans
  • Jumbo and Conforming Loans
  • Conventional Financing
  • Renovation Loans
  • Non QM loans such as Bank Statement, Stated Income and Cross Collateralization Loans
  • Hard Money Loans
  • Commercial Loans

This will depend on how long you plan to live in your home. Think about a fixed-rate mortgage if you plan to live in your home for more than a few years. This will provide you with stable payments and protection against increasing mortgage interest rates. While an adjustable-rate mortgage would be more suitable for you if you foresee living in your home for only a few years. With an adjustable-rate mortgage, you open yourself up to the possibility of having your monthly payments increase or decrease each time your interest rate changes.

Your lifestyle and financial situation are the best guides for deciding on the best loan program for you. Consider these questions:

  • How long do you plan to live in this home? Several years, or just a few?
  • Do you anticipate your income or finances to significantly change over the next few years?
  • Do you prefer your monthly mortgage payment to be consistent or possibly adjust over time?
  • Do you plan to be out of mortgage debt by a certain milestone, such as when your children start college or when you retire?

Based on your answers, your California Financial loan officer can discuss different home loan programs that will suit you financially and help you reach life’s milestones.

A VA loan is guaranteed by Department of Veterans Affairs. This loan is a great benefit to military personnel during and after their service, and offers no down payment, higher loan value and no PMI. FHA loans are guaranteed by the Federal Housing Administration. FHA is a government agency that works with approved lenders such as California Financial. These loans are ideal for people with limited income or money for a down payment; typically, first-time homebuyers, seniors or others with limits on what they can afford.

Pre-qualification

A pre-qualification letter evaluates your credit worthiness to determine the estimated amount you can afford to borrow. Pre-qualification is a quick and easy process of examining your income and expenses to help you set realistic goals while you’re house hunting and can provide you with the same negotiating ability as a cash buyer. It also enables you to move quickly once you find the perfect home.

Definitely. If your credit score and finances are already in order prior to your house hunt, the process will go very smoothly. The pre-qualification process is simple:

  1. Meet with your California Financial loan officer to find out what documents will help you become pre-qualified.
  2. Your California Financial loan officer will pull your credit report and evaluate your financial documents. With this information, you and your loan officer will be able to discuss the best home financing options to help you achieve your financial and homeownership goals.
  3. Once you are pre-qualified, you will receive a pre-qualification letter to inform your real estate professional and the seller of the property that you’re a preferred and serious potential buyer. This will give more weight to any offer you extend on a property as well as allow you to relax and enjoy the process of looking for your new home.

No, it’s absolutely free. We invite you to use our website for information, to compare interest rates and terms for various loans, for pre-qualification at no charge. And if you need additional assistance, please contact us.

Mortgage DETAILS

The typical documents you’ll need are those that verify your income, employment and assets. Talk to your loan officer to find out exactly what you’ll need.

According to the Consumer Financial Protection Bureau (CFPB): “The interest rate is the cost of borrowing money expressed as a percentage rate. It does not reflect fees or any other charges you may have to pay for the loan. An Annual Percentage Rate (APR) is a broader measure of cost to you of borrowing money. The APR reflects not only the interest rate but also the points, broker fees, and certain other charges that you have to pay to get the loan, including certain of your closing costs. For that reason, your APR is usually higher than your interest rate.”

Interest rates change daily. Your California Financial loan officer will advise you of the rates available for your specific loan product. When you are ready, you can lock in your interest rate for up to 180 days (additional restrictions and fees may apply for lock terms in excess of 90 days). This guarantees your rate for the entire lock period.

The Loan Estimate (LE) will be provided to you within three business days of receiving your application. It tells you important details about the loan you have requested including the estimated interest rate, monthly payment and total closing costs for the loan.

You may obtain a copy of your credit report through the credit bureaus. You will receive a copy of your appraisal a minimum of three days prior to your closing.

Your loan-to-value ratio is called LTV. You can calculate this amount by dividing your current loan amount by the total value of your home. For example, if your home is worth $220,000 and you owe $160,000, your LTV is 73%.

Yes. California Financial offers many home loan solutions for borrowers with credit problems. You’re not alone; everyone finds themselves in tough financial situations at one point or another. Don’t let previous problems discourage you from getting a fresh start.

PAYMENTS

Origination fees are the fees required to originate the loan. They can include processing fees, underwriting fees, administrative fees, and several others. Your loan officer can give you a complete breakdown of these fees as they vary from state to state.

Depending on your financial situation and loan eligibility, we have several down payment options. Your California Financial loan officer will be able to help you find a loan program that best fits your financial goals and needs.

Refer to your “First Payment Letter” in your closing documents to determine where to send your first mortgage payment.

When you waive escrows, you take the responsibility of paying your taxes and insurance rather than having them included in your monthly payment. Waiving escrows may add a fee to your closing costs. You can only waive escrows if your loan program allows for this.

The second lien is often from a different lender than the first lien (or loan). Borrowers with a second lien, therefore, will make two separate payments each month – one on the first lien and one on the second lien.