Ray and Nimi Office: 651-486-5628 Cell: 651-398-6261 Res: 763-795-8979 Fax: 651-483-3681

Questions to Ask When Pursuing a Loan
Things to Consider When Buying a Home
How to Choose the Right Mortgage
The Home Financing Process

Budget
What is my current financial situation: income, debts, other expenses? How will that change with a new house?

Income
What do I think my future income will be? Are there any plans to change my income stream? Will I be able to absorb future mortgage payment increases?

Assets
What types of assets do I have and how much is available for a down payment and closing costs? What will my other purchase needs be when I buy a house and how will I fund those purchases?

Housing Needs
How long do I plan on staying in this house? How fast do I want to build equity? What are my long term equity needs (retirement funds, college tuition, etc.)?

Economic Outlook
What do I feel will be the direction of future interest rate movements? How confident am I about that view?

Tax Situation
Would I benefit from making a "prepaid interest" payment in the form of discount points? What will be the impact of this purchase on my tax situation?

Risk
What is my risk tolerance for payment changes? Will I have enough cushion to absorb a 15 to 20% payment increase?

The answers to these questions should assist you in determining which type of loan program you need. A loan program that has a fixed interest rate and a fixed payment for the term of the loan is the most conservative. With an adjustable rate mortgage (ARM), you have the risk of payment increases. However, you may have a lower initial payment and would be able to take advantage of reduced payments if interest rates fall. Most ARMs have caps that restrict the amount your rate can increase or decrease at the scheduled Change Dates, as well as caps that restrict the overall maximum rate. To fully evaluate an ARM, you must understand the terminology used in describing its features. A glossary of real estate and mortgage terms follows.

Key features with an ARM program that need to be analyzed include the type of index, life and payment change caps, margin, fully indexed rate, negative amortization, start rate, discount points, conversion to fixed rate options, and payment change frequency.

There are many loan programs available, including a variety of fixed rate mortgages, ARMs, and other variations. For example, a fixed rate mortgage may have payments that change, or an adjustable rate mortgage may have payments that are fixed for a specified period of time. Or, there can be a mortgage with numerous combinations of these features. Because of the many different options available, the best resource to help you evaluate your loan needs will be your Burnet Home Loans Loan Officer.

Information provided by http://www.cbburnet.com

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Ray and Nimi Singhal  (651) 486-5628 direct  Coldwell Banker Burnet 100 Village Center Drive St. Paul, MN 55127 (763) 795-8979 res CRS, ABR, GRI, e-Pro 500, ESA, SRES Platinum Producer (top 1% nationally)