Big Bear Real Estate
All of Your Big Bear Lake Real Estate Buying, Selling & Management
Big Bear Real Estate, Big Bear Lake, CA
Bear Real Estate - Mortgage & Loan info
to look for a home?
First get pre qualified. This will give you a good idea about what price
range you should stay within and will allow you to make a strong offer,
that often seals to deals for the seller.
Bear Real Estate provides convenient financing solutions.
Our agents will assist with coordinating appraisals or any other aspect
of the loan approval process.
What mortgage loan is the best for me?
How to select the best loan when buying Big Bear Real Estate
In order to make the best decision for yourself, it is important to
understand the differences between loan types.
Fixed Rate Loans
are those loans that start at a specific interest rate and remain at
that rate no matter what happens in the financial markets. If your rate
in 6% the day you get your loan, it will be 6% until you pay the loan
off. Typically, fixed rate loans are written for a period on 30 years
(360 monthly payments), or 15 years (180 monthly payments). Terms of
10 and 20 years are also available from some investors. In a fixed rate
loan, lenders charge a premium to hedge against inflation. The borrower
pays a premium to lock their rates for 30 years.
Rate Mortgage (ARM)
Loans are more complex, as they have two components that determine the
interest rate, the index and the margin. The index is the rate of a
short term maturity, such as the Treasury bond or 6 month certificates
of deposit. The margin is a static value, usually between 2 and 3%,
which is added to the index to produce the fully indexed rate, which
is the one you pay. The amount that the interest rate can change is
limited to protect the consumer. It can usually only increase 2% per
year and 6 % over the entire life of the loan. Start rates for ARM’s
are typically lower than for Fixed Rate loans. It is not guaranteed
that the rate will stay the same, it can increase or in some cases decrease
depending on financial market changes.
is important to discuss and fully understand the following factors when
considering an Adjustable Rate Mortgage loan. Be sure to address each
with your loan officer before deciding to apply for one. These factors
Period A predetermined period of time. At the end of
this interval the interest rate is adjusted, based on the index. Typically,
this is an annual event.
Index The Standard used to track
the change in the economy that will determine the direction and degree
of rate change. Some indexes are less volatile than others.
Margin The percentage that will
be added to the index to obtain the rate that your loan interest will
Annual Cap The maximum amount
the interest rate can increase per year.
Lifetime Cap The maximum amount
the interest rate can increase over the life of the loan.
Hybrid Loans Hybrid ARM’s
provide homeowners with a unique advantage because they adjust like
an ARM but have an initial fixed rate from 1, 3, 5 or 7 years. Often
they are advertised an 5/1 or 7/1 ARM’s. This can be “decoded”
as meaning fixed for 5 or 7 years and then adjusting once every year.
The start rate increase proportionally with the length of the initial
Interest Only Loans
As the name implies, these are loans that are designed to have only
the interest generated by the loan paid on a monthly basis. A “fully
Amortized” loan, which is the traditional mortgage type, requires
both the interest and principle to be paid each month. By only collecting
the interest due each month, the monthly payments are reduced.
month the lender informs the borrower of three optional payments. First,
there is the normal principle and interest payment, which if paid each
month would result in a gradual decrease in the loan balance. Then there
is the interest only payment which pays the interest due for the month
and leaves the loan balance constant. Finally there is the deferred
interest (negative amortization) payment. The deferred interest payment
is based on an artificially low interest rate. The payment is not enough
to pay the full interest earned for the month. The unpaid interest is
added to the loan balance. Each time this option is selected, the principle
amount of the loan increases.
After making payments for an agreed upon period of time, the entire
loan balance becomes due and payable. There is the possibility of refinancing
the loan at the time the balloon payment is due, but the lender is under
no obligation to refinance the loan. It is extremely important that
the borrower understands all of the term of this and any other loan