Q:  What are Supplemental Property Taxes?
A: In addition to annual taxes, you may be responsible for paying supplemental property taxes. State law requires the Assessor to reappraise property upon a change in ownership or new construction. The supplemental assessment reflects the difference between the new assessed value and the old or prior assessed value. If the property is reassessed at a higher value than the old assessed value, a supplemental bill will be issued. If the property is reassessed at a lower value than the old assessed value, a refund will be issued. The taxes are prorated based on the number of months left in the fiscal year from the date of ownership change or the new construction completion date. If the change in ownership or new construction occurs between January 1st and May 31st, two supplemental tax bills will be issued. The first supplemental bill will be for the remainder of the fiscal year, and the second supplemental bill will be for the fiscal year that follows. Supplemental tax bills are mailed directly to the property owner and are your responsibility. In general, they are not paid out of your impound account. Please check with your lender.Posted from the Los Angeles County Property Tax Portal, Monday, January 31, 2005
Q:  How do I know how much house I can afford?
A: Generally speaking, you can purchase a home with a value of five to seven times your annual household income depending on the loan program chosen and terms you apply for. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and other debts (auto payments, credit cards, student loans, etc.), 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 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 Deposit: The deposit that is given when you make an offer to purchase a property.
  • Down Payment: A percentage of the cost of the home that is due at settlement which determines the loan amount you borrower. Example: Purchase Price minus Down Payment = Your loan amount.
  • Closing Costs: Costs associated with processing paperwork to purchase or refinance a house In early 2011, down payment for a convention loan can be as low as 3% of the purchase price (depending on property type). This covers loans underwritten by Fannie Mae (FNMA) and Freddie Mac (FHLMC).  FHA on the other hand requires as little down as 3.5% of the purchase price. Also under FHA and VA guidelines, there are grant programs that can reduce your down payment to as little as 1/2% of the purchase price or give you 3% of the loan amount for closing costs. These programs are subject to qualifying and availability. In addition, often times a lender credit can be applied to your required closing costs to reduce your out of pocket funds at closing. This option will increase your interest rate, but is used quite often to help buyers close their transactions.
  • Keep in mind, the mortgage industry has seen unprecedented change since mid 2007. Daily, we see new changes. It is always best to ask your loan officer which changes apply to your individual situation.

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, how your life may change over the next 5, 10  or more years. Bixby Knolls Mortgage 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 components:

  • 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.
  • Also if you put less that 20% down expect that a mortgage insurance premium will likely be charged on both conventional and FHA loan types. In addition, on FHA loans there is an Up Front Mortgage Insurance premium required. This premium can be paid in cash or financed.
  • VA Home loans continue to allow NO Down Payment and No Monthly Mortgage Insurance Premiums. VA may require a VA Funding Fee. Some Veterans qualify for waiver of the Funding Fee if there is a service related disability of 20% or more.  There are some variations so always ask for details. The Veterans Administration make the final determination.

Q: How can I purchase a home with a $100 Down Payment?
A: This special program applies to HUD Homes and subject to availability. They are available through approved Realtors. Call us and we will pre-approve you and refer you to one or our many Realtors approved to do business on HUD homes.

Q: How is an index and margin used in an ADJUSTABLE RATE MORTGAGE?
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).