FAQ

 
General Mortgage Information
 
 
 
Rates, Terms & Points
 
 
 
Closing
 

What is a mortgage?
What are the benefits of different kinds of mortgages?
What are the respective advantages of 15-year and 30-year loans?
What is a Home Equity Loan?

What is a Home Equity Line of Credit?
How do I figure out how much equity I have in my property?
How do I figure the amount of mortgage I qualify for?
Should I refinance my existing mortgage?
What are the components of a monthly payment?
Where can I obtain my amortization schedule?
Can I make extra principal payment to pay off my loan sooner?
How long will it take to process my application?
Who do I call if I have questions?
 
What is a mortgage?

A mortgage is a secured loan that uses your property as collateral to secure repayment of your loan. When you settle your loan, the lender will place a lien against the value of your property. A property cannot be sold unless all liens have been satisfied. Mortgages are used to purchase a home, while a refinance mortgage allows you to use your equity to renew your original mortgage at a lower rate or a different term, or to use the proceeds for any purpose you desire.

 

What are the benefits of different kinds of mortgages?

The most popular mortgages available to home buyers today can be divided into two general categories: those which offer fixed interest rates and monthly payments, and those where one or both of those factors are adjustable.
Fixed rate/fixed payment loans are more traditional, and remain the most popular home financing method, currently accounting for about two-thirds of all residential mortgages. Their advantages are well-known: You always know what your monthly principal and interest payment will be, so your basic housing cost will remain unaffected by interest rate changes until the mortgage is paid off.
Mortgages that entail flexible rates and/or payments have grown in popularity in recent years, primarily during periods of high interest rates and/or rapidly rising home prices. Many, including the popular ARMs (Adjustable Rate Mortgages), offer lower-than-market initial interest rates that allow buyers a measure of affordability unavailable in fixed-rate loans. The tradeoff may be higher interest rates and higher monthly payments later on.
 

 

What are the respective advantages of 15-year and 30-year loans?

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The 30-year fixed rate mortgage remains the standard mortgage, with an array of valuable benefits designed especially for buyers who expect to stay in their homes for a long time. Because the borrower pays more interest than principal for the first 23 years, the tax deduction is substantial. And as inflation causes income and living expenses to increase, your unchanging monthly mortgage payments account for a relatively smaller portion of income as the years go by.
As you would expect, a 15-year monthly mortgage means higher monthly payments than an equivalent 30-year loan, but not as much higher as you may think. At the same rate of interest, payments on the 15-year mortgage are roughly 20-25% higher than a loan that takes twice as long to pay off. And one of the benefits of choosing a 15-year mortgage is that you can generally get a lower interest rate for an otherwise similar loan. Another advantage is faster equity build-up because a larger portion of your early payments are going to pay off principal. This makes the 15-year mortgage an ideal alternative for couples approaching retirement or anyone else interested in owning their home free and clear as quickly as possible.
 

 

What is a Home Equity Loan? top

A Home Equity Loan allows homeowners to borrow against the equity in their property. Equity is the value of a homeowner's interest in real estate. Homeowners often apply for this type of loan to make home improvements or to pay college tuition or pay off debt. Home Equity Loans (also known as second mortgages) have a fixed rate and term. If you have equity in your property, the lower rate of an equity loan may be preferable to an unsecured personal loan.

 

What is a Home Equity Line of Credit?

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This is a secured loan that allows you to borrow against the available equity in your home. A Home Equity Line of Credit (HELOC) can be used for expenses such as home improvements, education, a vacation or even a down payment for a second home. Checks are available if you wish to write a check against your line of credit.

 

How do I figure out how much equity I have in my property?

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Equity is determined by subtracting any outstanding liens against the property and the remaining balance on your mortgage from the fair market value of the property. Equity increases as the balance of the mortgage loan decreases or as the property appreciates in value.

 

How do I figure the amount of mortgage I qualify for? top

Our affordability calculator will help you determine how much you can afford, based on your income and expenses.

 

Should I refinance my existing mortgage? top

Refinancing to a lower rate can save your money. Refinancing makes sense when current interest rates are at least one to two percentage points below your existing loan rate. You can better determine if it pays to refinance by comparing your current payment to the reduced payment of the new mortgage and comparing these savings to the cost to close the loan. By dividing the closing costs of your refinance by the difference in these two payments you can see how many months it will take you to recover your closing costs in payment savings.

 

What are the components of a monthly payment?

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The monthly payment is determined by the loan amount, the term of your loan, and the interest rate. The bulk of your monthly mortgage payment goes toward paying off the principal and interest of your loan. In addition, most lenders require that you pay a sufficient amount to cover your local real estate tax, plus your homeowner's or hazard insurance. This amount is placed in an escrow account, from which your lender then pays your tax and insurance bills as they come due. For a quick overview of what your monthly principal & interest will be, use our Payment Calculator.

 

Where can I obtain my amortization schedule? top

You can obtain an amortization schedule by using our calculators.

 

Can I make extra principal payments to pay off my loan sooner? top

Yes. You can make principal payments at any time, in part or in full. (Please note that some other lender's loans may be subject to prepayment penalties.)

 

How long will it take to process my Mortgage or Equity Loan application? top

You should hear back from us with a lending decision within one business day. You will be asked to provide us with some information and some documentation. We will have your home's value determined by a state-licensed appraiser or a property valuation model and title insurance will need to be obtained. We can settle your loan once these things are done. Our goal is to close your mortgage loan in 31 days from the date of application and close your home equity loan in 21 days from the date of application.

 

Who do I call if I have questions? top

You can reach us via email or by calling 510-623-8800 and requesting to speak to a mortgage advisor in our mortgage department.