Frequently Asked Questions

Q :	Is it safe to purchase a home now?
A :	Our area of Texas has not been hit by the decline in real estate values like other areas of the country. We still see strong sales and home appreciation throughout the Golden Triangle in homes averaged priced homes of up to $300,000. With the incentives of home purchase that are allowable by the IRS, an individual should consider purchasing. Ultimately, deciding to purchase versus rent is a personal decision, but the indicators are positive.

Q :	Is it a buyers or sellers market?
A :	These terms describe if it is more favorable for the buyer or seller in the transaction…a sellers market means that prices are stable and good for the sellers. A buyers market typically means properties are not selling and buyers can get a better purchase price. Our current market is one most agents consider “stable.” This means there is a balance of sellers versus buyers and it is favorable for both parties.

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 picture and how long you intend to keep your house. Superior Mortgage and Equity Corp. can help you evaluate your choices and help you make the most appropriate decision.

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. Give us a call, and we can help you determine exactly how much you can afford.

Q :	Can the seller pay my closing costs?
A :	Different types of mortgages allow the seller to pay various amounts of the closing costs for the buyer. Typically conventional loans with a 5% down payment allow the seller to pay 3% of the purchase price towards the buyers closing costs. In most cases if the buyers needs closing cost assistance we use an FHA mortgage since they allow the seller to pay 6% of the purchase price towards the buyers closing costs.

Q :	What is the difference between a fixed-rate loan and an adjustable-rate loan?
A :	With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. 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 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 picture and how long you intend to keep your house. Our mortgage professionals will work with you to determine whether a Conventional, VA, or FHA mortgage is best. Then we will discuss the differences with fixed versus a variable rate and help you select the correct repayment term.

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. In addition if your loan has private mortgage insurance this amount will be added to your monthly mortgage payment.

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