Loan Amount Tiers/Terminology

Loan Amount Tiers are different for each county, see Santa Clara County below. Email or Call me for your specific county!

$150,000 – $484,350  – Conforming 
This is generally the best interest rate pricing depending on your LTV, FICO SCORE, DTI

$484,351 – $726,525   –  Agency High Balance
This is second best interest rate pricing tier

$726,526 – $3,000,000+    Jumbo Loans
We do have lenders that go to $5mm

PITI:
Principle, Interest, Tax and Insurance this refers to your Total Monthly Housing Payment, IF condo HOA fee will also be included

LTV:
Loan to Value is the amount of your loan divide by your appraised value, the lower the LTV the better the pricing as a general rule:

Example: ($100,000 Loan Amount ./. $125,000 Appraised Value = 80% LTV) 80% LTV is the maximum general guideline for the best rates and pricing

Products for LTV’s up to 95% and even 97% are available for conforming loan amounts of $484,350 or less, interest rates are higher for these LTV’s.

You need to: Submit your documentation to a licensed Loan Agent to pre-qualify

DTI:
Debt to Income is the amount of your PITI total housing plus any other installment or revolving debt divided by your income.

DTI: 50% is the highest DTI allowable, some programs are only 36% maximum Debt to Income for > $1,000,000.00 loan amounts:

Example: ($4,500 PITI + $500 car payment = $5,000 is Total Housing
Your PITI and Other Debt (car, student, credit cards) divide by $10,000 monthly income is 50% DTI

Example: $4,500 PITI + $500 Car payment =$5k Debt ./. by $10k Income =50% DTI
Fifty Percent DTI is the maximum debt to income to qualify

FICO:
This is your Credit Score to determine if you will qualify. The higher your Credit Score, the better the rate as a general rule, taking into account all criteria mentioned above.

The Lowest middle of the three scores of both borrowers will be used as one of the factors to determine your interest rate

TERM:
This is the length of the loan, for example 30 Year Fix, 10 Year Fix, 7 Year Fix, 5 Year Fix, the longer the Term the higher the interest rate.

This is similar to insurance coverage, i.e. the 30 Year Fix offers longer period of time guaranteeing, insuring  your interest rate)

RESERVES:
This is the amount of money in the bank you are required to have after close that the lender will require, some programs do not require reserves, most do.

ILLUSTRATION for the ARM is EXAMPLE ONLY for ILLUSTRATION Purposes and each lender will have specific language of the Terms you’ll agree to obtain the loan:

ARM :
Adjustable Rate Mortgage. The loan is fixed for a 3/1 ARM, 5/1 ARM, 7/1 ARM, 10/1 ARM are FIXED for the first 3 Years, 5 years, 7 years or 10 years Term.

After the Fixed period is over the loan will adjust to the Index named in the Note

Index: The LIBOR Index, the rate of the Index is subject to change to the rate at the time of the adjustment period for the Index that is named in the Note, plus the Margin    specified in the Note.

Margin: is fixed throughout the life of the loan.
A prevailing Margin is between 2.25% and 3.25% in today’s market.
Every lender has different adjustment  periods AFTER your fixed period has expired.

Adjustment Periods: Generally, from 1 time every month, every 6 Months,  to every 12 Months are possible adjustment periods.

For Example Only: if you were in a 5/1 ARM Fixed Product today and your Fixed period expired, your first adjustment may look like this:

1.07%     1 Year LIBOR INDEX, example Index named in your Note
2.50%     Margin which stays constant throughout the life of the loan
3.57%     Example Interest Rate until next Adjustment period in Note

Generally 1 Month, 6 Months or 12 Month are the adjustment period

Floor Rate
For an ARM is generally the Margin and your interest rate will not go below the named Floor and or Margin in the language of your Note

Ceiling Rate
For an ARM is the Maximum interest rate you will pay, generally 8% to 12% up to 18%+ Ceiling named in the language of your Note

Note
The signed agreement for the Terms and Conditions you agree to for a specific loan amount, rate, payment and schedule, fixed or adjustable over a certain period of years with very specific conditions you must adhere to keep your home or be subject to the terms laid out in the Note.

ALL above are Examples and for illustration purposes only.

All Rights Reserved  |  Copyright © 2019 | www.LisaMelby1.com. 

Lisa Melby | 877-685-6631 | lisamelby1@yahoo.com
DRE 01230770 | NMLS 298325 | DOI CA 0843024 | MT 742264
Firestone Financial Group
4010 Moorpark Ave, #104
San Jose, CA 95117

 


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