How much cash will I need to purchase a home?


["The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:","Earnest Money: The deposit that is supplied when you make an offer on the house","Down Payment: A percentage of the cost of the home that is due at settlement","Closing Costs: Costs associated with processing paperwork to purchase or refinance."]

What does my mortgage payment include?


["For most homeowners, the monthly mortgage payments include three separate parts:","Principal: Repayment on the amount borrowed","Interest: Payment to the lender for the amount borrowed","Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like mortgage insurance, hazard insurance, and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company."]

How do I know what type of mortgage is best for me?


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 and how long you intend to keep your house. Cherry Creek Mortgage can help you evaluate your choices and help you make the most appropriate decision.

What is the difference between a fixed-rate loan and an adjustable-rate loan?


With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest rate can change after a specified period of time. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.

How is an index and margin used in an ARM?


An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).

How do I know how much house I can afford?


The amount that you can borrow will depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are able to make. You may also be able to take advantage of special loan programs for first time buyers. Give us a call, and we can help you determine exactly how much you can afford.

What is title insurance?


It is a policy provided by the title company guaranteeing the accuracy of the title work done on your home at the time of purchase. As a buyer, you are required to purchase a lender’s policy of title insurance as part of your standard closing costs, which only protects the mortgage company. You may also choose to purchase an owner’s policy, which would protect you against any loss in the event of any legal issues relating to the title of your home.

What is mortgage insurance?


["Mortgage insurance is generally required in one form or another when the down payment is less than 20%, and it protects the lender in the event of loan default. The lower the down payment, the higher the risk for the lender, and thus the higher the monthly mortgage insurance premium. Depending on your particular situation, there may be loan options available that either don\u2019t require monthly mortgage insurance payments or allow your monthly mortgage insurance payments to be dropped at some point in the future.","(Disclaimer: *BPMI = Borrower Paid Mortgage Insurance; LPMI = Lender Paid Mortgage Insurance. LPMI may not be cancelled by the borrower; it terminates only when the loan is refinanced or paid off, and it usually results in a loan with a higher interest rate than BPMI unless discount points are added to lower the rate. BPMI may be cancelled or terminated when the loan reaches 80% of the original value of the property.)"]

Why do I have to submit so much paperwork?


["We are often asked why there is so much paperwork mandated by the bank for a mortgage loan application when buying a home today. It seems that the bank needs to know everything about us and requires three separate sources to validate each-and-every entry on the application form.","Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago.","There are two very good reasons that the loan process is much more onerous on today\u2019s buyer than perhaps any time in history.","During the run-up in the housing market, many people \u2018qualified\u2019 for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can\u2019t happen again.","Over the last seven years, banks were forced to take on the responsibility of liquidating millions of foreclosures and also negotiating another million plus short sales. Just like the government, they don\u2019t want more foreclosures. For that reason, they need to double (maybe even triple) check everything on the application.","However, there is some good news in the situation.\nThe housing crash that mandated that banks be extremely strict on paperwork requirements also allows you to get a mortgage interest rate as low as 3.43%, the latest reported rate from Freddie Mac.","The friends and family who bought homes ten or twenty years ago experienced a simpler mortgage application process but also paid a higher interest rate (the average 30 year fixed rate mortgage was 8.12% in the 1990\u2019s and 6.29% in the 2000\u2019s). If you went to the bank and offered to pay 7% instead of less than 4%, they would probably bend over backwards to make the process much easier.","Bottom Line","Instead of concentrating on the additional paperwork required, let\u2019s be thankful that we are able to buy a home at historically low rates."]

Why does it take so long to get a loan?


["There are some common scenarios that can lead to a longer processing time. Here are some factors that might cause a mortgage lender to take a relatively long time with processing.","In 2014, a new set of mortgage rules took effect, and they\u2019ve had an impact on how lenders originate home loans. The Ability-to-Repay rule, for example, requires mortgage companies to thoroughly verify and document a borrower\u2019s financial ability to repay the loan. As a result of these and other government regulations, mortgage lenders might take a long time to process and approve loans (longer than in the past, anyway.)","When you apply for a home loan, your application and paperwork might pass through the hands of half-a-dozen different people (or even more, if you use one of the \u201cbig banks\u201d). Loan officers, processors and underwriters, oh my! And additional documents might be requested at each stage. Think of a snowball getting larger as it rolls downhill.","This is another reason why mortgage lenders can take a long time when processing loans. There are many steps in the process, many documents to review, and several different people involved.","Granted, some lenders have made big advancements with streamlining in recent years. This is especially true for those companies that put an emphasis on technology, web-based applications, and the like. But by and large, it\u2019s still a cumbersome process with lots of paperwork along the way.","Home loan applications go through several screening processes. Underwriting is the most intense review. This is when the mortgage lender\u2019s underwriter (or underwriting department) reviews all paperwork relating to the loan, the borrower, and the property being purchased.","Underwriters often request additional documents during this stage, including letters of explanation from the borrower. It\u2019s another reason why mortgage lenders take so long to approve loans.","In a standard residential real estate transaction, the buyer\u2019s mortgage lender will have the home appraised to determine its current market value. Additionally, a title company will usually step in to verify the seller\u2019s right to sell (and transfer ownership of) the property.","Sometimes these things go smoothly \u2014 other times they don\u2019t. For instance, the appraiser might decide the home is worth less than what the buyer has agreed to pay (in the purchase agreement). This can delay or even derail the mortgage process. The title company might have to find and fix problems relating to the title. All of this can make the process take longer.","Sometimes It All Goes Smoothly\nLet\u2019s end on a positive note. I don\u2019t want to give you the false impression that mortgage lending is always a slow process. Sometimes it moves quickly and smoothly, with no hang-ups or obstacles along the way.","Some lenders can process an application and approve a borrower in 7 \u2013 10 days. This is especially true when there are no underwriting issues or conditions to resolve.","But if the mortgage company has a backlog of applications, and\/or the borrower has a host of financial and paperwork issues, it can take a relatively longer time."]

Why can some borrowers qualify for lower rates than others?


["Not everybody qualifies for the same mortgage rates. If you think about the times you have applied for a loan, you\u2019ll remember that the interest rate the lender gave you was partly determined by your credit score, your debt to income ratio, and the amount of money you were planning to put down on the loan. These are some of the strongest factors that influence rates (though they\u2019re not the only ones).","While home buyer John might qualify for a mortgage rate of 5% based on his credit score and other risk factors, home buyer Jane may only qualify for a rate of 6.25%. The offers you receive will be based on various factors, in addition to your credit score.","Much of it has to do with risk. The big idea here is that risk impacts the rate. A borrower who is considered a higher risk due to late credit payments, high debt ratios, etc., will typically end up with a higher interest rate than a borrower with a higher credit score, more income and significant assets."]