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Orange County Home
Buyer Resources
Financing Options |
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| One of the first steps involved with
buying a new home is to discuss financing with a lender. There are
many questions you will need to discuss, including how much home can I
afford, what types of loan programs do you have, and what will the
monthly payments be. The lender will discuss your financials
with you, including how much of a down payment can you make, what is
your debt to income ratio, what are your reserves (savings,
investments, etc) what is your income and job history, and what are
your credit scores. Based on your financial profile, the lender will
be able to give you an idea of how much home you can comfortably
afford and what the payments will be under various loan
programs. |
There are several types of
mortgage loans available and you may be familiar with some of these terms:
Conventional Loans (also
known as a Conforming loan)
A Conventional loan
is a mortgage loan that typically has a traditional, fixed-rate
structure. Theses loans are not insured by federal agencies, like the
FHA or the VA. A conventional loan is sometimes referred to as a
"conforming loan", which is a mortgage that is eligible for
resale to Fannie Mae and Freddie Mac. The current conforming limit for
loans in Orange County, CA is $625,000. This is an increase from the
original ceiling of $417,000.Loans above $625,000 in Orange County are
called "jumbo" loans. There are many conforming loan
programs including 15 and 30 year fixed loans as well as a number of adjustable
loan options.
FHA Loans
An FHA loan is a loan that is insured
by the Federal Government, thereby limiting the lender's risk. The
borrower pays an insurance premium upfront which is approx 1.75% of
the loan total. This can be financed directly in the loan amount. The
borrower is also required to pay a monthly premium of .55% of the loan
amount divided by 12 months. An FHA loan requires a down payment of
3.5%. This money can be a gift, and no reserves are required. FHA loan
interest rates are competitive with conventional loan rates, and FHA
loans are easier to qualify for than similar conventional loans. FHA
loan limits in Orange County are for loan amounts up to $729,500. FHA
loans are discussed in detail on one of my following web pages
Jumbo Loans
Jumbo loans are loans that exceed the
conventional loan limit of $625,000. These loans are usually acquired
for higher end, or "luxury" properties. Jumbo
mortgage loans are a higher risk for lenders. This is because if a jumbo
mortgage loan defaults, it is harder to sell a luxury residence quickly
for full price. Luxury prices are more vulnerable to market highs and
lows. That is one reason lenders prefer to have a higher down payment
from jumbo loan seekers. Jumbo home prices can be more subjective and
not as easily sold to a mainstream borrower, therefore many lenders may
require two appraisals on a jumbo mortgage loan. The interest rate
charged on jumbo mortgage loans is generally higher than a loan that is
conforming, due to the slightly higher risk to the lender.
Estimating your
monthly mortgage payments
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If
you would like to try some "what ifs" on what your mortgage
payments might be under various purchase scenarios, you may use the
mortgage
loan calculator web page, or the mortgage calculator widget below. The
loan tool will bring up your results in a separate browser session. Your
actual payments will of course vary, depending on the final loan program and your
qualifications. |
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Help
for first time buyers |
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Get
pre-approved |
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Congratulations on your
decision to purchase a home! If you are looking for assistance
with your first home purchase, looking to up-size or downsize,
or are looking for an investment property, you have come to
the right place! Please call me to arrange a
consultation with my team.
We can help you all phases of your purchase, from showing you
your home to referring you to financing.
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