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FAQ
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. What should I do during the loan process? Answer
8. What shouldn't I do during the loan process? Answer
9. What is the first time homebuyer $8,000 tax credit? Answer
10. What is the $6,500 move up homebuyer tax credit? Answer
11. What is the definition of a first time home buyer? 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. 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, 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 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. Yampa Valley Bank can help you evaluate your choices and help you make the most appropriate decision.
 
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.
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    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
  • There are some programs that require very little money down. Everything depends on your specific situation, so please call us with any questions.

     
    Q : What should I do during the loan process?
    A : DO:

    Put the cash you need to close into a seperate account and don't touch it until closing

    Promptly get back to us with any information that we request, this will make the process go smoothly

    Set up homeowner's insurance promptly

     
    Q : What shouldn't I do during the loan process?
    A : To make your loan process go smoothly DON'T:

    Buy a car, or make any major purchases on credit cards

    Apply for any type of additional credit because taking out additional credit may change your approval

    Change jobs or change your method of income (for example changing from an hourly wage to commission)

    Become past due on any accounts

    Bounce checks, if they are on the statement that you give to the lender it could hurt the approval process

    Leave town around your closing date without making arrangements with us

     
    Q : What is the first time homebuyer $8,000 tax credit?
    A : A tax credit of up to $8,000 is available for qualified first time homebuyers purchasing a primary residence. The home needs to be under contract by April 30, 2010 and close by June 30, 2010. Time is running out quickly!! Please call us with any questions or visit the link below:

    http://www.federalhousingtaxcredit.com/faq1.php

     
    Q : What is the $6,500 move up homebuyer tax credit?
    A : The tax credit of $6,500 is available to buyers purchasing a primary residence. Homes priced above $800,000 are not elegible for the tax credit. Buyers have to have lived in their previous residence for at least five consecutive years of the eight years prior to the purchase of the new home. There are income limits of $125,000 for a single tax payer and $225,000 for married tax payers filing a joint return. The tax credit amount is reduced for buyers with income above the limits. Please look at the following link for more information:

    http://www.federalhousingtaxcredit.com/faq2.php

     
    Q : What is the definition of a first time home buyer?
    A : Any individual that has not owned a residence in the last three years.