Frequently Asked Questions

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

2. Do I need to pick the property I want to buy before I fill out a loan application?

3. How much will my credit history affect my ability to get a mortgage?

4. If I have credit problems, can I still qualify for a loan?

5. What if I filed for bankruptcy?

6. How can I improve my credit score?

7. What is "pre-qualification"?

8. What is a "stated income" or a "no doc" loan?

9. What is the difference between a mortgage broker and a lender?

10. How much money do I need to purchase a home?

Answers

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

A fixed-rate loan is a home loan where the interest rate will remain fixed for the entire loan term. About 75% of all home mortgages today are fixed-rate mortgages.

Adjustable-rate loans are mortgages in which the loan rate is fixed for a set period, usually one, three or five year terms. Thereafter, the interest rate will fluctuate.

We will guide you in deciding which type of loan is best for you.

Back to Questions

2. Do I need to pick the property I want to buy before I fill out a loan application?

No, you can fill out the application first. In fact, many real estate agents require that you be pre-approved before they show you houses.

Back to Questions

3. How much will my credit history affect my ability to get a mortgage?

If you have had credit problems, be prepared to discuss them honestly with us. We know there can be legitimate reasons for credit problems, such as unemployment, illness or other financial difficulties. If you have had a problem that's been corrected, and your payments have been on time for a year or more, your credit will probably be considered satisfactory.

Back to Questions

4. If I have credit problems, can I still qualify for a loan?

Of course! With over 50 lenders to choose from, we are confident that we will be able to find a mortgage loan that is right for you, no matter what difficulty you may be having with your credit.

Back to Questions

5. What if I filed for bankruptcy?

Often borrowers who have filed for bankruptcy assume that they are no longer eligible for a mortgage loan. In many cases, at Cal Coastal, we can offer you a loan even if you're still in bankruptcy!

Back to Questions

6. How can I improve my credit score?

1. If your credit is not in the best of shape, try reducing other expenses, even if it means cutting back on some of the things you enjoy the most. Create a budget by adding up how much you would save by cutting back on leisure activities and apply the savings to your debts. 

2. If you try the above tip and still cannot see the light at the end of the tunnel you may want to consider Consumer Credit Counseling Services (CCCS). Credit Counseling is similar to a Chapter 13 Bankruptcy but is not frowned upon as heavily by lenders. 

3. If CCCS is unable to assist you in paying your debts you may want to consider filing for bankruptcy. A Chapter 13 Bankruptcy is a reorganization of your debts, meaning that you will have to repay your obligations. In contrast, you do not have to repay a Chapter 7 Bankruptcy. Lenders frown upon both forms of bankruptcy but the Chapter 13 is the more favorable of the two as you are showing good faith in attempting to repay your debt. A Chapter 13 remains on your credit report for 7 years. A Chapter 7 remains on your credit report for 10 years. 

4. The most important aspect of re-establishing your credit is to make your payments on time! If you have money available to you before the due date of a bill, pay it. You can save on accruing interest by doing so. Also make sure that you send in your payments at least 7-10 days from the time it's due. You must leave time for your payment to be received and posted. Why pay late fees if you don't have to?

5. Never send cash. Open a checking account if you don't already have one. If you don't have a checking account send money orders and keep your receipt. If you happen to move, notify your creditors that you have done so. 

6. If you think you will have trouble meeting any of your obligations, contact your lenders immediately. By contacting them immediately you can work out a payment schedule with them.

THERE ARE NUMEROUS WAYS OF IMPROVING CREDIT! DO NOT LET A POOR CREDIT SCORE OR A BLEMISHED PAST PREVENT YOU FROM GETTING A MORTGAGE LOAN!

Back to Questions

7. What is "Pre-Qualification"?

Pre-qualification gives you an estimate of how much you may be able to borrow. Click on our online Pre-Qualification form to see the numbers for yourself!

Back to Questions

8. What is a "stated income" or a "no doc" loan?

Stated Income - The borrower states an income amount, which is not verified. Usually, the income amount stated must be reasonable for the occupation stated by the borrower. In addition, the stated income must be enough to keep the borrower from exceeding the maximum debt ratio for this loan program. With most programs, the borrower must be able to verify a 2-year employment history. Documentation required can vary depending upon the program selected and the lender providing the home loan financing.

No Doc - As with the no income, no asset home loan program, the income and assets are not verified or stated. However, with this mortgage program, no verification of employment is required. The No Doc loan decision is based strictly upon the value and condition of the home, and the borrower's credit history. 

Back to Questions

9. What is the difference between a mortgage broker and a lender?

Typically, a mortgage broker works with many different lenders to find the right loan for you. In contrast, a lender works within its own products and resources.

Back to Questions

10. How much money do I need to purchase a home?

The amount of money that is necessary depends on a number of factors. Generally, you will need to supply: 

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

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

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

Back to Questions