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Phone: 415.454.3644

Toll Free: 800.491.1944

Fax: 415.454.1405

Donna J. Barron

Mortgage Specialist

Vice-President

Broker License

# 01511099

1.	How do I know how much house I can afford? Answer
2.	What is the difference between a 'fixed rate' loan and an 'adjustable rate' loan? Answer
3.	How is an index and margin used in an ARM? Answer
4.	How do I know which type of mortgage is best for me? Answer
5.	What does my mortgage payment include? Answer
6.	How much cash will I need to purchase a home? Answer
7.	How do I know the information I send to you is safe? Answer

Q :	How do I know how much house I can afford?
A :	Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Because there are so many infuential factors that may determine your affordability, please do not hesitate to give us a call and we can help you determine exactly how much you can afford.

Q :	What is the difference between a 'fixed rate' loan and an 'adjustable rate' loan?
A :	With a 'fixed rate' mortgage, your interest rate and monthly payment stay the same during the life of the loan. With an 'adjustable rate mortgage' or 'ARM', the interest may change each period (usually every 6 months or 1 year), typically in relation to an index and margin. There are interest only periods in which the interest rate and monthly payment do not change. At the end of the interest only term (commonly 3, 5, 7, or 10 year terms) the rate is then subject to the adjustments. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.

Q :	How is an index and margin used in an ARM?
A :	An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).

Q :	How do I know which type of mortgage is best for me?
A :	There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial stability and how long you intend to keep your house. Barron Mortgage Company can help you evaluate your choices and help you make the most appropriate decision for your short or long term goals.

Q :	What does my mortgage payment include?
A :	For most homeowners, the monthly mortgage payments include three separate parts: Principal: Repayment on the amount borrowed Interest: Payment to the lender for the amount borrowed Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.

Q :	How much cash will I need to purchase a home?
A :	The amount of cash that is necessary depends on a number of items. Generally speaking, though, 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

Q :	How do I know the information I send to you is safe?
A :	Your information is sent to us over a secure encrypted connection that is password protected. It is double encrypted and sent directly to the loan officer of your choice.