What does a lender look at to approve me?
At the heart of approving a potential borrower is what lenders call "the three C's of underwriting:"
- Credit -- your credit history
- Collateral -- the value of the property securing the loan (your house)
- Capacity -- your financial ability to assume and repay debt
Taken together, these create a portrait of a potential borrower's risk - that is, whether or not he or she will pay back his or her loan. If the risk seems high, the lender will be reluctant to make the loan. Depending on the degree of risk, a lender may choose to charge higher rates and/or fees, or decline to make the loan altogether.
How do I know what my loan rate will be?
Rates vary primarily based on the type and purpose of the loan, your credit history and income, loan amount, value of the property, and the number of points you are willing to pay.
What are points and how many do I have to pay?
Generally speaking, points are fees added onto loans. One point is equal to 1 percent of your loan amount. Points are paid when the loan closes, not at the time you apply for the loan.
How do I determine the points I want to pay?
Points are paid when the loan closes, not at the time you apply for the loan. Generally speaking, points are fees added onto loans. One point equals 1 percent of the loan amount.
Do I get a tax advantage from having a mortgage?
You should consult a tax attorney or accountant for specific details, but interest on a mortgage is usually tax deductible. Interest on credit cards or automobile loans is not normally tax deductible.
How do I qualify for a loan?
Lenders use specific criteria to determine if you qualify for a loan and the amount you can qualify for. You can use our calculator tools to determine whether you can qualify for a loan, the types of loan products that are best for you, and many other things
How do I receive my loan documents?
After you complete your application with a loan agent. The lender will provide your loan documents to an Escrow Agent. A Notary would then come to your home and notarize the transaction or you may go to your escrow office.
How do I refinance my existing loan?
To refinance your loan in order to obtain a lower interest rate and start saving on your monthly payments, Lakeside Lending, CA will offer you the loan that you are interested in or present you a loan that meets your needs
How much can I borrow and why?
Income, debt, and mortgage payments are the primary factors that affect whether you qualify for a loan. If you do qualify for a loan, you can apply and ditech.com will move to the next step of checking to see if you can be approved.
To determine your qualification, the first thing ditech.com will do is divide the monthly payment of your proposed loan by your gross monthly income. This provides your housing-to-income ratio.
If the resulting percentage falls within a certain range, the next step is to divide your total monthly debt by your gross monthly income. This provides your debt-to-income ratio. Again, if the ratio falls within prescribed limits, you are qualified for the loan.
The limits within which your housing and debt ratios must fall are determined primarily by the size of the loan, the value of the property, and the ratio between the two (known as the loan-to-value ratio, or LTV). This loan-to-value ratio is one of the most important factors in determining a home loan.
Why is the loan-to-value ratio important?
Your loan-to-value ratio (LTV) shows your equity in the property. Your equity is basically the amount of the property you own, expressed as a monetary figure. Another way of thinking of your equity is that it's the amount of money you'd receive if you sold your property at its valued price, less what you'd have to return to your lender to repay the loan.
Example: $100,000 value minus $50,000 to repay loan = $50,000 equity. Your LTV and equity are crucial because common wisdom among lenders is that the higher the LTV (and the lower the equity), the higher the risk of a borrower defaulting on his or her loan. Thus, low equity loans present lenders with greater risk, forcing them to increase their costs.
Should I roll in my fees?
The choice basically comes down to "pay now" or "pay later." If you have the funds now, it makes sense to cover the expenses out-of-pocket and save through lower loan payments and interest costs on a smaller loan. On the other hand, if your budget is currently tight, rolling in the costs with your loan amount makes sense because it allows you to get the loan without immediate expense.
Should I choose a fixed rate or an adjustable rate?
Most mortgage loans have either a fixed interest rate or an adjustable interest rate. With a fixed-rate mortgage, the interest rate never changes and your payments remain stable throughout the life of your loan. With an adjustable-rate mortgage (ARM), the interest rate changes at regular intervals -- usually once every year -- based on a formula that uses a market index. For most ARM options, rate adjustments begin after an initial period -- usually between three months and ten years -- during which the rate is fixed.
A fixed rate is usually best if you plan to stay in your home for the long term and are buying at a time when rates are relatively low. An ARM is usually best if you plan to move before the rate adjustments begin, or if you are buying when rates are relatively high.
