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Mortgage Tips

Welcome to Realtheon, a professional real estate & mortgage service broker in San Jose, Silicon Valley, Santa Clara County, California ***** We closed over 200 transactions during the last 10 years *****

There are many factors that affect a mortgage

Mortgage Roadmap Tips
Tip #1 - Budgeting
When you think about your future budget as a homeowner, be sure to include money for maintenance. Experts recommend setting aside between 1 and 3 percent of the market value of your house annually for maintenance
Tip #2 - Know  your borrowing limit 
Click How Much Mortgage Can I Afford ? to see What You Can Afford. For most borrowers, the caps for house payments is at 31 percent of gross (pretax) monthly income. If you earn  the median household income of about $4,200 per month before taxes, then  your house payment -- principal, interest, taxes, insurance and association dues  -- should be no more than 31 percent of that, or $1,302.
Some housing counselors say 28 percent to 30 percent is a safer number. The  FHA limits total debt payments to 43 percent of monthly income. Total debt  payments include first and second mortgages, auto loans, credit cards and child  support. Some non-FHA loans let you borrow more, but you don't have to do  it.
Tip #3 - Consider a No-Closing-Cost Refi
You may want to refinance your home, but you don't have a lot of cash lying around. You might be able to refinance the mortgage loan yet pay little out of pocket in a no-closing-costs refi. With a no-closing-cost loan, the bank charges a slightly higher rate. You end up paying closing costs over time, instead of all at once.
Tip #4 - Shopping for a Lender
Compare three or more lenders before making a decision about who will handle your mortgage. You'll want to compare rates, fees, and points. But rates, fees, and points dont tell every thing. Service is also important. Ask your friends. Ask your mortgage broker. Sometimes the brokers can find the best rates for you.
Tip #5 - Good Faith Estimate
Don't put too much faith in a Good Faith Estimate. It is just that — an estimate made in good faith. There is nothing in it that says unseen third party fees can't creep in at the last minute.
Tip #6 - Make Extra Payments
Once you have a home loan, pay more often then you are required. This way, extra payments go to pay down the principal on the loan. (Make sure there is no bank cost for making these extra payments.)

Mortgage Type Tips
Tip #1 - Mortgage Goal
What is your goal ? Will you be in this home until you retire, or you'll trade it for some other home in the next five years ?
Tip #2 - Select Loan Type
A fixed rate loan is good for keeping the home for a long time. It means you have the security of knowing what your payments will be, no mater what the home mortgage interest rates in the future will be. An adjustable rate mortgage (ARM) loan has lower interest rates and you might sell your home before they rise. Or you could look at a hybrid ARM that is fixed for few years, then adjusts annually.
Tip #3 - Rates & Points
You look at rates and points differently depending on the amount of time you will stay in the house. If you keep the house for a long time, pay points and fees. If you sell your home in a few years, dont pay points and other fees to get a better interest rate, because you may or may not recoup the cost of those fees.
Tip #4 - ARM Loan
If you are choosing an ARM, ask your lender to provide examples of monthly payments before and after any rate adjustment, in the event interest rates increase or decrease. It's a reality check.

Mortgage Rate Tips
Tip #1 - Bank Statement & Gift Letter
If you get a portion of your down payment from good ol' mom and dad, you need to leave it in the bank for more than two months. You will need bank statements for the last two months. Or obtain a gift letter explaining that the money is a gift, not a loan.
Tip #2 - Good Faith Estimate
Ask your lender for a Good Faith Estimate (GFE), which includes all costs and fees you will incur. But be aware that it is just that — an estimate. Third-party fees can change and are not under your lender's control. Still, a good lender should be up-to-date on what the fees will be. When you ask for references from friends, ask how close the GFE was to reality.
Tip #3 - Points & Fees
There's no free lunch (or free loan): You can choose between higher rates with lower points, or lower rates with higher points. Compare different types of loans to see what works for you.
Tip #4 - Never More Than 1-1/2 Points.
In general, you should never pay more than 1 to 1-1/2 points to a lender, depending on the loan. (In certain circumstances, you might pay 2 percent, but only if there is a good reason; e.g., bad credit, complex loan, or you are getting a great interest rate.)
Tip #5 - Compare the Exact Same Loan
Shop around for rates. But be sure to compare the exact same loan; look at the points as well as the interest rates.
Tip #6 - Annual Percentage Rate
Compare loans using the Annual Percentage Rate (APR) which wraps up the interest, points and fees in an effective annual rate over the life of the loan.
Tip #7 - Pay More Often
Pay half your house payment every two weeks instead of one monthly payment. This results in 26 payments per year, one more payment annually than if you just paid monthly. The extra payments go to pay down the principal on the loan. (Make sure there is no bank cost for making these extra payments.)
Tip #8 - HUD-1 Settlement
You have the right under federal law to get an itemized list of fees at least one day prior to closing. This is provided on the HUD-1 Settlement Form. Go over the list ahead of time. Make a list of closing costs you agreed to pay and check it against the HUD form.
Tip #9 - Yield Spread Premium
Pay attention to the Yield Spread Premium - a percentage of the loan amount that a lender pays a broker for a loan with a higher interest rate, and lower fees. The YSP must be disclosed on the HUD-1 Settlement form. If your loan includes YSP, your mortgage rate could end up higher than the best mortgage you could qualify for without it.
Tip #10 - Lock-In your Rate
Ask your lender to lock in, or commit to, your rate when you apply for your loan. If you dont, you might end up with a higher rate than quoted. (Of course, if you think rates will decrease between the time you apply and when you actually obtain the loan, you could change it without a lock.) If you ask for a lock-in, ask if there is a fee involved. Be sure to get the agreement in writing. The written commitment should also reveal the points to be paid at closing.
 
Tips on Mortgage related to Crdeit Report are found in Credit Report Tips
 
 
 
 
 
 


Loan Forms
Please download loan forms and a list of required documents, fill them out and return your loan application to us. We will determine if you qualify for a Loan Pre-Approval Letter. There is no cost for a loan pre-approval and no obligation to do a loan with us.
Click Home Loan Forms to download loan forms.


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Realtheon
167 N. White Rd. • San Jose, CA 95127
Tel: +1.408.923.8951 • Cell (Viber): +1.408.835.8811

DRE # 01356627
NMLS # 445911, 451705
San Jose, Silicon ValleyMilpitasCampbell, Cupertino

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