Questions to Expect From Mortgage LendersData Provided By Know what to expect before you apply.

Your mortgage lender will want to know a lot about you before approving your loan application, and justifiably so; they and their underwriters want to be assured that you meet their minimum level of creditworthiness before lending you money.
Areas of questioning.

Here are the general areas of questioning you can expect from a lender: 
1. Employment and income 
2. Outstanding debts 
3. Cash reserves and assets 
4. Down payment 
5. Loan purpose 
6. Property use 
7. Property type
 
Employment and income
Where do you work?
How much do you make?
How long have you been at your job?
How is your income derived — steady salary or irregular income? If it’s the latter, you may need to provide more details to obtain a favorable interest rate.
Outstanding debts
What recurring debts do you have?
How much do you pay a month for auto loans?
Credit cards? How much of your monthly pretax income do these debts consume?
Cash reserves and assets
How much money do you have in the bank?
How much will be left after you pay your down payment and closing costs?
Down payment
How much money are you putting down?
Is this your own money?
If not, is it a gift from your parents?
A nonprofit agency grant?
Loan purpose
Is this San Diego ca mortgage for a home buy or refinance?
If it’s a refinance, do you want to take cash out at closing to pay off other debts? If so, how much?
Property use
Do you plan to live in the house?
Is it investment property?
Property type
A condominium?
A duplex?
The following responses tend to work in your favor:
Steady employment (two or more years) with the same employer or in same line of work.
Low debt: no recent major buys (such as automobiles) and a debt-to-income ratio of 36 percent or less.
Loan is for straight home purchase (or rate-and-term refinance).
Property is detached single-family home to be used as primary residence.
Down payment of at least 5 percent of sales price with your own money.
You’ll have at least two months’ worth of mortgage payments in the bank after closing.
These responses tend to work against you:
Self-employed or contract worker.
High debt: credit cards maxed out, total debt-to-income ratio more than 36 percent.
Property is a duplex or condominium, to be used as a vacation home or rental.
No cash left after home buy and closing costs.
Down payment is 3 percent or less of buy price and money is borrowed.
Source: Move.com

2009 VA County Loan Limits for High-Cost Counties
The Department of Veterans Affairs’ Loan Guaranty program does not impose a maximum amount that an eligible veteran may borrow using a VA-guaranteed loan. However, the following county “limits” must be used to calculate VA’s maximum guaranty amount for a particular county. These limits apply to all loans closed January 1, 2009 through December 31, 2009. 2010 county loan limits will be made available as soon as possible.
The maximum guaranty amount (available for loans over $144,000) is 25 percent of the 2009 VA Limit shown below. Therefore, a San Diego CA veteran with full entitlement available may borrow up to the 2009 VA Limit shown below and VA will guarantee 25 percent of the loan amount. If a veteran has previously used entitlement that has not been restored, the maximum guaranty amount available to that veteran must be reduced accordingly. Lenders should check their own investor requirements regarding guaranty amounts and down payments. Questions about VA loans in a particular county may be directed to the VA Regional Loan Center (RLC) listed for that county.
NOTE: For all counties other than those listed below, the 2009 Limit is $417,000.
STATE COUNTY 2009 VA LIMIT RLC

CA
ALAMEDA
$1,094,625.00

CA
CONTRA COSTA
$1,094,625.00

CA
EL DORADO
$ 516,250.00

CA
LOS ANGELES
$ 737,500.00

CA
MARIN
$1,094,625.00

CA
MONO
$ 575,000.00

CA
MONTEREY
$ 525,000.00

CA
NAPA
$ 643,750.00

CA
ORANGE
$ 737,500.00

CA
PLACER
$ 516,250.00

CA
SACRAMENTO
$ 516,250.00

CA
SAN BENITO
$ 937,500.00

CA
SAN DIEGO
$ 593,750.00

CA
SAN FRANCISCO
$1,094,625.00

CA
SAN LUIS OBISPO
$ 610,000.00

CA
SAN MATEO
$1,094,625.00

CA
SANTA BARBARA
$ 656,250.00

CA
SANTA CLARA
$ 937,500.00

CA
SANTA CRUZ $ 805,000.00

CA
SOLANO $ 435,000.00

CA
SONOMA$ 566,250.00

CA
VENTURA$ 650,000.00

Source: VA . Gov

Military Service Requirements for VA Loan Eligibility:

Note:  Applications involving other than honorable discharges will usually require further development by VA.  This is necessary to determine if the service was under other than dishonorable conditions.

Wartime – Service During:

WWII: 9/16/1940 to 7/25/1947
Korean: 6/27/1950 to 1/31/1955
Vietnam: 8/5/1964 to 5/7/1975
You must have at least 90 days on active duty and been discharged under other than dishonorable conditions.  If you served less than 90 days, you may be eligible if discharged for a service connected disability.

Peacetime – Service during periods:

7/26/1947 to 6/26/1950
2/1/1955 to 8/4/1964
5/8/1975 to 9/7/1980 (Enlisted)
5/8/1975 to 10/16/1981 (Officer)
You must have served at least 181 days of continuous active duty and been discharged under other than dishonorable conditions.  If you served less than 181 days, you may be eligible for a Veterans Guaranteed mortgage loan if discharged for a service connected disability.

Service after 9/7/1980 (enlisted) or 10/16/1981 (officer)

If you were separated from service which began after these dates, you must have:

Completed 24 months of continuous active duty or the full period (at least 181 days) for which you were ordered or called to active duty and been discharged under conditions other than dishonorable, or
Completed at least 181 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1171 (Early Out), or have been determined to have a compensable service-connected disability;
Been discharged with less than 181 days of service for a service-connected disability.  Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances for the convenience of the Government.
Gulf War – Service during period 8/2/1990 to date yet to be determined

If you served on active duty during the Gulf War, you must have:

Completed 24 months of continuous active duty or the full period (at least 90 days) for which you were called or ordered to active duty, and been discharged under conditions other than dishonorable, or
Completed at least 90 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1173 (Early Out), or have been determined to have a compensable service-connected disability, or
Been discharged with less than 90 days of service for a service-connected disability.  Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances, for the convenience of the Government.

If you are a veteran living in the San Diego area and are considering a San Diego Ca Mortgage loan that is backed by the Veterans Administration you can obtain further information at the VA website.
Active Duty Service Personnel

If you are now on regular duty (not active duty for training), you are eligible after having served 181 days (90 days during the Gulf War) unless discharged or separated from a previous qualifying period of active duty service.

Selected Reserves or National Guard

If you are not otherwise eligible and you have completed a total of 6 years in the Selected Reserves or National Guard (member of an active unit, attended required weekend drills and 2-week active duty for training) and

Were discharged with an honorable discharge, or
Were placed on the retired list, or
Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable service, or
Continue to serve in the Selected Reserves
Individuals who completed less than 6 years may be eligible if discharged for a service-connected disability.

You May also be determined eligible if you:

Are an unremarried spouse of a veteran who died while in service or from a service connected disability, or
Are a spouse of a serviceperson missing in action or a prisoner of war
Note:  Also, a surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, may be eligible for the home loan benefit.  However, a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must apply no later than December 15, 2004, to establish home loan eligibility.  VA must deny applications from surviving spouses who remarried before December 6, 2003 that are received after December 15, 2004.

Eligibility may also be established for:

Certain United States citizens who served in the armed forces of a government allied with the United States in WW II.
Individuals with service as members in certain organizations, such as Public Health Service officers, cadets at the United States Military, Air Force, or Coast Guard Academy, midshipmen at the United States Naval Academy, officers of National Oceanic & Atmospheric Administration, merchant seaman with WW II service, and others.

This artcle should help you to understand what VA can and cannot do for the San Diego, Ca mortgage borrowers making a home purchase. However, it is not a legal document and should not be interpreted as one. Nothing should be taken as a change of law or regulations. The article does not attempt to go into detail or into unusual problems. Information about VA loans is given in a narrative format followed by questions and answers in those areas of the greatest concern.

It is suggested that the pamphlet be read in its entirety. Please pay particular attention to the information about:

your responsibility to determine the condition of the property you purchase, and  assumption of your VA loan and obtaining a release of liability.

Any questions you have which are not answered here should be referred to the Loan Guaranty Division at the nearest VA regional office, or to your lender who will take them up with VA if necessary. A list of VA offices may be found in the Help section.

If you are a Veteran the VA loan program will offer several advantages over a traditional/conventional loan.  See additional posts that follow.
 
Source: MortgageX .com

 FHA 203(b) 1-4 Family Mortgage Insurance Program

  FHA 234(c) Condominium Unit Mortgage Insurance Program

 Program Types

 FHA 30 and 15 Year Fixed

Max Loan Amount

 $271,050 to $729,750 based on County in which the property is located:

Mortgage maximums 
 

This is a listing of the FHA single family mortgage limits.

Selection criteria

  Minimum Fico Score  FMC Program 07 require a minimum 580 fico score:

 Program 72 require minimum 620 (regardless of UW method)

Maximum DTI 31/43%

UW Method Manual Underwrite Available, DU with Approve/Eligible, LP with Accept or Plus

FHA Loans Exceeding $417,000 – Additional Credit Parameters

Any San Diego, Ca LTV => 95% must comply with these additional requirements:

• A 2nd appraisal (1004) from an FHA fee panel appraiser must be obtained and underwritten to support the value.

• If there is a variance between the two San Diego property appraisals that is greater than 5% the lower of the two values must be used.

All other guidelines with the exception of the above follow standard FHA eligibility requirements.

Easier Qualifying With FHA insuring the San Diego Ca mortgage, lenders are more willing to give terms making it easier to qualify. Since FHA will pay a claim to the lender in the event of a San Diego, Ca homeownership default

Smaller Down Payment

3.5% down payment which can come from a family member, employer, charitable organization as a gift.

Less than perfect credit

Even if the California borrower(s) had credit problems in the past such as a BK, it’s easier to qualify for an FHA than a conventional loan

Get to closing faster:

Why? It’s easier to qualify:

_ No minimum credit score is required

_ Non-traditional credit is acceptable

_ Low down payment

_ Non-occupant co-borrower is permitted

_ Can use up to 100% of income for qualifying

_ Expanded qualifying ratios

_ FMC can manually UW up to 46% with strong comp factors

_ Financed closing costs

_ Many closing costs can be financed with an FHA loan

Protections & Advantages to a San Diego mortgage financed through a FHA loan.

 No Prepayment Penalties

o Fully Assumable

o Default Assistance

o Competitive interest rates and Lower Premiums

Who would benefit from a FHA San Diego Ca Mortgage Home Loan?

Borrowers who fit one or more of the following criteria’s:

_ First Time Home Buyers who may not be eligible for traditional financing

_ Borrower’s who don’t have a lot of money to put down on a house – they may have limited cash for down payment or closing costs.

_ Borrowers who need flexibility in their housing income and payment ratios

_ Borrowers who have low to moderate incomes

_ Borrowers who are worried about qualifying for a loan and may not qualify for a conventional loan

_ Borrowers who don’t have perfect credit – have credit blemishes

_ Borrower’s who live in a disadvantage San Diego, Ca neighborhood or who are interested in  purchasing a property that needs repairs

Basic Eligibility

Basic Eligibility Requirements

1. Social Security # Borrower must have a valid Social Security Number:

2. Residency Status Borrower must be a lawful resident in the United States

• U.S. Citizen

• Permanent Resident Alien

– Must have evidence of permanent residency status

• Non Permanent Resident Alien

– Must be eligible to work in the US

• Non-Occupant Co-Borrowers (Co-Signers)

3. Legal Age Borrower(s) must be 18 years old, or age which state permits a person to

sign on a San Diego Ca Mortgage/Deed of Trust

• Purchases

• Rate & Term Refinances

• Cash Out Refinances

Loan Purpose Must be Primary Owner Occupied

• Must occupy property within 60 days of closing Occupancy

Basic Loan Requirements

Lien Position Must be a 1st Trust Deed.

Who is Federal Housing Administration?

– The Federal Housing Administration generally known as “FHA” was established in 1934 as adivision of the U.S. Department of Housing and Urban Development. They provide mortgage insurance on loans made by FHA-approved lenders throughout the US and its territories. It is the largest insurer of mortgages in the world insuring over 34 million properties since its inception .

– FHA’s mission is to expand homeownership opportunities, increase minority homeownership, make the home buying process inexpensive and less complicated, and keep existing homeowners from losing their homes – basically to help borrower’s realize the dream of homeownership.

• Eligible FHA Programs

– Section 203(b) – Standard FHA Program: MI for One to Four Family Homes Program

• Section 234(c) – Subsection of 203(b): Condominium Housing Program

• Section 251 – Subsection of 203(b): Adjustable Rate Mortgage Program (ARM)

– Section 203(k) – Rehabilitation Mortgage Insurance Program

• What is FHA Mortgage Insurance?

– FHA MI protects lenders against loss if homeowner defaults on loan. The lender bears less risk because FHA will pay the lender should a homeowner defaults on their loan. The cost of the insurance is passed along to the borrower and is typically included in the monthly payment.

• How is FHA funded?

– FHA operates from self-generated income and costs the taxpayers nothing. The proceeds from the MI paid by the homeowners is used to operate the program entirely.  San Diego Ca Mortgage borrowers who can not qualify for a traditional conventional mortgage because they may lack the down payment requirements would benefit from this government loan program.

at is FHA Mortgage Insurance?
– FHA MI protects lenders against loss if homeowner defaults on loan. The lender bears less risk
because FHA will pay the lender should a homeowner defaults on their loan. The cost of the
insurance is passed along to the borrower and is typically included in the monthly payment.
• How is FHA funded?
– FHA operates from self-generated income and costs the taxpayers nothing. The proceeds from
the MI paid by the homeowners is used to operate the program entirely

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time San Diego, CA home buyers purchasing a principal residence on or after January 1, 2009 and closing before December 1, 2009.

1. Who is eligible to claim the tax credit?
San Diego, First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a San Diego, Ca home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

2. What is the definition of a first-time home buyer?
The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

3. How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the San Diego California home’s purchase price up to a maximum of $8,000.

4. Are there any income limits for claiming the tax credit?
The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

5. What is “modified adjusted gross income”?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine “adjusted gross income” or AGI. AGI is total income for a year minus certain deductions (known as “adjustments” or “above-the-line deductions”), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.

6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.

7. Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time San Diego Ca Mortgage home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Here’s another example: assume that an individual home San Diego buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. San Diego Ca Mortgage borrowers should always consult your tax advisor for information relating to your specific circumstances.

8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous “credit” was essentially an interest-free loan. This tax incentive is a true tax credit. However, California home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.

9. How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.

10. What types of San Diego Ca homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

11. I read that the tax credit is “refundable.” What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified San Diego Ca Mortgage home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

12. I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?
Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.

13. Instead of buying a new San Diego home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit with a new San Diego mortgage?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.

14. Can I claim the tax credit if I finance the purchase of my home under a San Diego Ca mortgage revenue bond (MRB) program?
Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.

15. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
No. You can claim only one.

16. I am not a U.S. citizen. Can I claim the tax credit by purchasing a a new home with a San Diego mortgage loan?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of “nonresident alien” in IRS Publication 519.

17. Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the San Diego taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.

18. I bought a San Diego, CA home in 2008 and I took out a San Diego Ca mortgage loan. Do I qualify for this credit?
No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit. Visit the National Association of Home Builders’ Web site for more information.

19. Is there any way for a San Diego, Ca home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?
Yes. Prospective California home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.

Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective California home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a downpayment. Prospective San diego Ca Mortgage home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.

20. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose (”elect”) to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home with a San Diego Ca mortgage who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

21. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.

Source: National Association of Home Builders (NAHB) federalhousingtaxcredit.com

The conventional 30-year fixed loan may not be for you. Consider and compare all the options.

Other mortgage loans to consider if you can take risks:

Interest-only mortgages also let you keep more cash. They do not require principal payments during an initial period, typically three, five or 10 years. After the initial period, borrowers must begin repaying principal over the remaining life of the loan. By comparison, a traditional amortizing loan requires principal and mortgage interest payments from day one, with more of the monthly payment going to interest in the early years and to principal in the later years.
San Diego, Ca homeowners can lower their monthly San Diego Ca mortgage payment by 20 percent to 25 percent by skipping principal payments in the early years, but they must be prepared for a big jump in payments when the interest-only period ends. A lower initial california mortgage monthly payment may also allow you to qualify for a bigger San Diego home loan. The downside? When housing prices fall, you could end up owing more on your home than it’s worth.

To qualify, you normally must have good credit or pay a slightly higher fee or interest rate.

Balloon payment mortgages are short-term, fixed rate loans which involve small payments for a certain time period and then one large payment (the balloon payment) for the remainder of the San Diego mortgage loan.

If the home you want appraises for more than the sale price, you may be able to borrow up to that appraised value to cover closing costs.

If you don’t like debt and risk, you may want to stick with conventional loans with fixed rates and shorter terms, making big down payments and extra principal payments whenever possible. If you go with a 30-year San Diego Ca mortgage, you could refinance after 10 years. You could get a lower rate and dramatically reduce your principal balance in a shorter period.

Here are more tips for finding the right California home loan:

Use mortgage calculators and other tools that let you see exactly how much you’ll have to pay under various scenarios.
Shop for the best rates from both local banks and national lenders. Consider working with a mortgage broker who has access to whoelsale lending rates.
Decide if you’re willing to pay for points to get a lower interest rate, or take a higher rate to receive a no cost loan to help keep closing costs down.
Combine different loan features to create a San Diego, CA loan that’s comfortable for you.
Factor in costs like property taxes, insurance and homeowner’s association fees. Will your lender hold these in escrow?
Ask about alternative loan terms, such as 20 years. They exist though many lenders don’t advertise them.
Consider refinancing your current home mortgage if you need cash for a second home.

Source: Front door.com

Now that you have a reasonable picture of your financial philosophy, shop around and evaluate your options. Don’t rush into the first loan offer you get.

If you can afford to take financial risks and have the assets and credit score to back it up, you can get the best deals. Go for San Diego Ca mortgage products that allow you to pay the least amount of cash while still satisfying your loan obligation. Consider these:

Choose a longer mortgage  loan term, such as 30 years or more. The longer your amortization period, the lower your monthly payments would be, but the more interest you’d pay. If you borrow $100,000 at 8 percent interest over 30 years, you would pay $164,000 in interest along with the principal by the end of the term. Your San Diego mortgage payment would be $733 a month. A 15-year mortgage, in contrast, would require a $955 monthly payment.

Skip the down payment and go for an “80-20″ loan. A standard loan funds the first 80 percent and a second loan with higher interest rates finances a 20 percent down payment. This option also gets rid of private Ca mortgage insurance, or PMI, which is typically required for homes bought without 20 percent down payments. PMI protects the lender in the event that a borrower defaults on a San Diego loan.

Consider an adjustable rate San Diego Ca mortgage (ARM) if you want to keep some cash or take advantage of a low interest rate. The rate is fixed for the first few years, then begins floating. But be aware of market conditions – if rates rise, so do your payments. This option makes sense for serial relocators, who don’t plan to be in a San Diego home for more than five years. A three or five-year ARM lets you make low payments and gets you through the typical mortgage cycle. If rates drop, you can refinance. If rates rise, you can sell. The number of times the rate is adjusted and the period between adjustments vary.

Source:  Front Door.com