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Frequently Asked Questions

How do I know how much I can afford?

How much can I save by refinancing my loan?

Are there any special programs for middle- or low-income buyers?

Are there any special programs for first-time home buyers?

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

How do I know what mortgage program is best for me?

What does my mortgage payment include?

How much cash will I need to purchase a home?

Why choose a mortgage broker over a bank?

Why should I trust Central Coast Lending with my mortgage?



Q : How do I know how much I can afford?

A : Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford.



Q : How much can I save by refinancing my loan?
A : Refinance can lower your monthly payment, save you thousands (even tens of thousands) off of interest payments, and shorten your loan term. Give us a call at 805.543.LOAN for an honest assessment of the refinance possibilities.



Q : Are there any special programs for middle- or low-income buyers?

A : Many! Our society (and the U.S. government) has decided that homeownership in this country is a core value. Check out FHA and USDA financing for low rate, low down payment programs that are specifically designed for middle- and low-income buyers.



Q : Are there any programs with special terms for first-time buyers?

A : First-time borrowers will find favorable terms for FHA and USDA programs, among others. Give us a call (805.543.LOAN) or an email us here to learn about the many options for first-time buyers.



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

A : 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 changes periodically, typically in relation to an index. 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.


Q : How is an index and margin used in an ARM?

A : 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).



Q : How do I know which type of mortgage is best for me?

A : 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. Central Coast Lending can help you evaluate your choices and help you make the most appropriate decision.



Q : What does my mortgage payment include?

A : For most homeowners, the monthly mortgage payments include three separate parts:

1. Principal: Repayment on the amount borrowed

2. Interest: Payment to the lender for the amount borrowed

3. Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like 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.



Q : How much cash will I need to purchase a home?

A : The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:

1. Earnest Money: The deposit that is supplied when you make an offer on the house

2. Down Payment: A percentage of the cost of the home that is due at settlement

3. Closing Costs: Costs associated with processing paperwork to purchase or refinance a house



Q: Why use a mortgage broker over a bank?

A : Freedom of choice. Mortgage brokers work for you, not for the bank. We can shop around your loan to find the lowest rate and the best price.



Q : Why should I trust Central Coast Lending with my mortgage?

A : We pride our company on our honest, straightforward approach. Expect the type of trust you have with your neighbor, while getting the no-frills expert advice from the mortgage experts. Hundreds of locals swear by our service (link to testimonials).