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General Loan Questions

What are the loan products that PacAlly offers to purchase a house? PacAlly Mortgage of Southern California offers 30yr, 25yr, 20yr, 15yr, and 10yr fixed rate loans, as well as 3/1 Arm, 5/1 Arm, 7/1, Arm, and 10/1 adjustable rate mortgages.

Choose a 30yr Fixed if:

  • Your income is consistent and reliable
  • You’re willing to pay more for security of fixed monthly payments
  • You plan on keeping the same mortgage for seven years or more
  • You’re looking to get into a home with the lowest down payment possible

Choose a traditiona ARM if:

  • You want the stability of a low fixed rate for a set period of time
  • You prefer to keep extra cash on hand for investing or other things
  • You’re looking for a fully amortizing product
  • You intend to stay in the home for 5 years or less

If you have a fixed loan, your house payment remains the same regardless of the interest rate. This means if the interest rate increases, your house payment will not. However, if rates go lower than your loan rate, PacAlly will help you refinance quickly and possibly with no out-of pocket costs (depending on the loan program you choose and the size of the loan amount).

The interest you pay on your loan can be tax deductible. Please consult your tax preparer for specifics of how your taxes will be affected.

30 year fixed rate loans are by far the most common and popular loans available. They are ideal for first time buyers, and buyers with smaller reserves of cash.

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 change higher rates and/or fees, or decline to make the loan altogether.

Traditionally, all three were of equal importance. PacAlly, however, places the most stress on your credit history.

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.

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.

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 then loan amount.

When you get a loan, you’ll have the opportunity to “buy down” the interest rate by paying discounts points. Essentially paying a fee to lower your interest rate.

By lowering yoru interest rate, you will be lowering your monthly payment and the amount of interest you’ll be paying over the life of the loan. You pay more at the beginning of your loan but will save money in the long run. Keep this in mind as you determine whether to pay points.

Paying points requires a higher immediate expenditure, so it may not be for you. In that case, let the loan do its job by allowing you to borrow the money you need, and pay it back as you can.

PacAlly provides loans to individuals who are self-employed. Income documentation will be requested with all loan products.

How do I calculate my loan to value ratio (LTV)?

The loan to value ratio (or LTV) is one of the most important factors in your loan process. It is used to determine the limits within which your housing and debt ratios must fall for you to be approved. It can also determine which fees you will be charged for your loan and the amount of these fees. It will also determine whether you must pay Private Mortgage Insurance (PMI) and use and impound/escrow account.

Your loan to value ratio (LTV) is simply the amount you are borrowing divided by the value of the subject property you are purchasing or refinancing. This gives you a simple ratio. For example, a house valued at $100,000 which you intend to purchase with and $80,000 loan (and a $20,000 down payment of your own cash) is said to have an LTV OF 80 percent. That is, the loan represents 80 percent of the value of the house.

The value of your property is its appraised value OR the amount you pay for the property (the market value), which ever is lower. In the initial stages of qualification and approval, your property’s vaule is understood to be an estimate. It will be confirmed, if necessary for your particular loan, by a professional appraiser hired by an independent third party appraisal management company (AMC).

Depending on the loan, and what your state permits, it is feasible for you to make extra payments on the loan. Extra payments will have an effect on the amortization schedule over the remaining term of your loan, hence, paying your home off quicker and saving on interest cost.

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.

In some cases, PacAlly will provide loans on manufactured houses. The house must be at least a “double-wide” and be permanently attached to a foundation.

Lenders use specific criteria to determine if you qualify for a loan and the amount you can qualify for. You can call (855) 940-HOME to speak with a PacAlly mortgage consultant to determine whether you can qualify fo a loan, the types of loan products that are best for you, and many other things. pacificallymortgage.com allows you to complete a loan purpose request form to request a quote. It’s fast, easy and free(PacAlly Mortgage charges no application fee).

To refinance your loan in order to obtain a lower interest rate and start saving on your monthly payments, PacAlly can offer you the following loan products with the security of fixed rate payments:

15 Year Fixed Rate Refinance

  • You want a shorter loan life and lower rates
  • Low monthly payments are not a priority
  • You’re planning to stay in your house for less than 10 years

Roll Down Option

Our roll down option allows you to refinance with few upfront fees*. While the rate is slightly higher, you will pay few upfront fees for your new loan. In effect, as long as our rolldown rate is lwoer than your existing rate, it makes financial sense to refinance because there is little or no cost in doing so.

Cash Out Option

If your equity in your property qualifies, you can refinance with a loan amount greater than your current mortgage, and keep the difference. Use it for home improvement, debt consolidation, or what ever you want.

A “roll down” loan is one that the lender pays all non-recurring closing costs for the borrower. The borrower is still responsible for paying all prepaid interest, property taxes, and hazard insurance, as well as other recurring items. Minimum loan amount is $150,000 under perfect circumstances, and will be higher in most cases. Closing costs assume that the borrower will escrow monthly property tax and insurance payments.

30 Year Fixed Rate Refinance

Choose this when:

  • You want low monthly payments that do not change
  • You want a loan that’s generally easier to qualify for
  • You’re planning on keeping the same mortgage for seven years or more
  • You want the maximum tax advantage (please consult your tax advisor)

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 with a PacAlly mortgage consultant will move to the next step of checking to see if you can be approved.

To determine your qualification, the first thing a PacAlly mortgage consulatant 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 withing a certain range, the next step is to provide your total montly debt by your gross monthly income. This provides your debt to income ration. Again, if the ration falls within prescribed limits, you are qualified for the loan.

The limits within which your housing and debt ratios must fall are determined 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.

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.

Your loan-to-value ratio 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 it’s value priced, 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 loan 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.

Equity is the value of a homeowner’s interest in real estate. Equity is computed by subtracting the total of the unpaid mortgage balance and any outstanding liens or other debts against the property from the property’s fair market value. A homeowner’s equity increases as he or she pays off his or her mortgage or as the proeprty appreciates in value. When a mortgage and all other debts against the property are paid in full, the homeowner has 100 percent equity in his or her property.

Since a mortgage is a loan secured by a piece of real property, a crucial factor is in the correct value of the property in question.

Property value can be determined in a number of ways:

The market value of the property, which is what a buyer will pay for it and what other comparable properties (comparable sales) in the neighborhood have recently sold for.

The appraised value of the property, which is what a trained and licensed professional deems the property to be worth based on an inspection, comparable sales, and a thorough analysis of the property and its neighborhood.

Additionally, the appraiser estimates the replacement value of the property, which is the cost to build a house of similiar size construction on a vacant lot. The appraiser reduces this cost by an age factor to take into account deterioration and depreciation.

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