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Frequently Asked Questions

Q: How Do I Get The Best Rate?

A: It is never about the best rate. It is about the best MATH, period. There is NO other answer than that. So why isn't the lowest rate the best deal? First, lower rates come with more points and fees. That is not the real issue, however. There is a break-even point to contend with when paying points and fees, tax deductions to figure out. In the case of a purchase loan, points are tax deductible in the year that you pay them. That is good, but then again, so is the interest you think you are saving. With refinances, the points are usually only deductible only over the full term of the loan. That could be 30 years, making the benefits and the break-even point years down the road. So why do lenders advertise really low rates with all of those points and fees? Because they know most consumers look at the rate, not the MATH. That advertising strategy works really well. We don't play that game. How about the lowest APR? Generally, the more points you pay, the lower the APR. True, but not the answer. We take apart each rate and fee quote to find out what the best MATH is, period. It only takes a few seconds for a professional to do it for you using a computer. After that, it's your decision.

Q: How much can I afford to spend on my home?

A: The mortgage industry generally recommends that your mortgage payment does not exceed 1/3 of your gross monthly income. Factors that affect your monthly payment are: the amount of your down payment (the larger the down payment the lower the monthly payment), your interest rate (a lower rate means a lower payment) and the length of your loan (a longer loan equals a lower payment.)

Q: How much do I need for a down payment?

A: This depends on the loan program you choose and your credit history. There are programs that allow a very low down payment or even no down payment at all. As a rule, a down payment will be between 5% and 20% of the home's value. Keep in mind, the size of your down payment greatly affects your monthly payment and the terms of your loan.

Q: Should I choose a Fixed-Rate or an Adjustable-Rate Mortgage Loan?

A: A fixed-rate loan keeps the same interest rate the entire term of your loan. Interest rates for this type of loan are higher than other mortgage options, but a fixed-rate loan provides the security of knowing your loan payment will not change regardless of interest fluctuations during the term of your loan. This is generally a good choice if you plan to stay in your home a long time. An adjustable-rate mortgage (ARM), has an interest rate that can change during the term of your loan. It may have an initial interest rate that is lower than a fixed-rate loan but it can change after a designated period of time and then adjusts to the current market interest rate. This type of loan may work well if you don't plan on staying in your home for a long period of time or you expect an increase in income in a reasonable time.

Q: What are a Good Faith Estimate and the Truth-in-Lending Disclosure Statement?

A: Within three days of receiving your loan application, the lender must provide you with the Good Faith Estimate -an estimate of the final closing costs to be paid at the time the loan is funded. The lender must also provide you with the Truth-in-Lending Disclosure Statement - your estimated monthly payment and the APR of your loan. It is important to carefully review these documents and compare them with the final loan documents on the day of closing before signing the final loan documents.

Q: What are Closing Costs?

A: Closing costs are all fees over and above your loan amount and down payment that are associated with processing your loan. These fees are due at the time the property transfers from the seller to the buyer, or at the Closing. Closing costs may include, but are not limited to, title search fee, title insurance premiums, appraisal fee, recording fees, credit report charges, attorney fees or escrow fees, and discount points. You should receive an estimate of your closing costs in what is called a Good Faith Estimate within 3 days of completing your loan application. It is a good idea to put aside money for these costs before the closing date. Many buyers know they must come up the down payment but are caught off guard when they see the amount of fees required at the closing. In a refinance transaction, most of the closing costs are not out of pocket.

Q: What are discount points and should I pay them?

A: Discount points are fees that lenders can charge to allow you to receive a lower interest rate. One point equals 1% of your loan amount. For example, on a $100,000 loan, one point would equal $1,000. The more points you pay, the greater the discount in your interest rate. Points are not required, but generally, if you plan to stay in your home longer than 5 years it's advantageous to pay 1 to 2 points. If you know you are staying in your home less than 5 years, you may want to choose not to pay points. Your specific situation depends on whether or not paying points makes sense.

Q: What are Pre-Payment Penalties and should I avoid them?

A: Some loans have pre-payment penalties. These are fees incurred if you pay off your loan before the final due date. These penalty fees can be very substantial amounts - as much as 3% of your unpaid balance. They can be charged if you refinance and or sell your home and therefore pay off the loan before the due date. Lenders will, however, in these cases, often waive these penalties. It is still advantageous to avoid them altogether and carefully examine your loan documents to make sure there are no pre-payment penalties. Over 98% of our programs DO NOT have pre-payment penalties.

Q: What is a FICO score and how important is it?

A: A FICO score is a credit score which predicts the probability that borrowers will pay their bills. A higher FICO score enables you to obtain a loan with good terms, lower interest and a lower monthly payment. This score is widely used by lenders and is therefore an important part of the loan qualification process. It is recommended that you check your credit rating and FICO score prior to obtaining a mortgage loan so that any disputed items, errors, etc., that you may encounter can be cleared up before the loan process begins. A letter written to the appropriate credit bureau can start this process.

Q: What is a rate lock?

A: A rate lock means that you have a written agreement with your lender to lock in a specified interest rate while your loan is being processed. This rate is guaranteed as long as your loan closes within a specific time period such as 30 or 45 days or even 60 days. This can be beneficial if rates increase during this time, but if rates decrease, there is no guarantee you will receive the lower rate.

Q: What is an FHA or VA loan?

A: A FHA (Federal Housing Administration) loan is available to qualified first-time home buyers. The FHA guarantees part of the loan which makes the loan easier to obtain. Down payments are low and qualifying ratios are typically more liberal than conventional loans. However, owner-occupation is required for an FHA loan. A VA (The Department of Veteran's Affairs) loan is available to qualified veterans or reservists who are first or second time homebuyers. The main advantage is that no down payment if required. Another advantage is that VA loans can be assumed by a future qualified buyer. David Herley Finance Home provides FHA and VA loans to our clients. There is absolutely No-Obligation. Call us today at 1-321-323-1888 for more information.

Q: What is APR (Annual Percentage Rate)?

A: APR is an annual percentage rate that represents the complete annual cost of your mortgage loan. This means that, in addition to the interest charged on the loan, all other costs such as, discount points, appraisal and credit report fees, processing and document fees, are calculated into your APR or Annual Percentage Rate. Having Annual Percentage Rates on loans makes it easier for the consumer to compare the complete cost of similar loans.

Q: What is escrow?

A: After you and the seller agree on a purchase price, there is a period in which important documents and money related to the sale of the home are held in an escrow account by an impartial third party escrow service. Your loan is said to be "in escrow" during this time. At the closing, when the closing fees have been paid, the loan has been funded, and the property is transferred to the new owner, escrow is said to have closed.

Q: What is LTV or Loan to Value?

A: The LTV or Loan to Value ratio, is the amount of your loan compared to the appraised value of your property. This ratio directly affects the loan programs and rates you will be eligible for. Lenders will offer better loan programs and rates to borrowers with lower LTV ratios.

Q: What is PITI?

A: PITI stands for Principal, Interest, Taxes and Insurance. Your monthly payment is principal and interest and often also taxes and insurance depending on whether or not the lender requires them to be paid with your loan payment.

Q: What is Private Mortgage Insurance (PMI)?

A: This is insurance that protects the lender in case the borrower defaults on the loan. It is generally required by a lender if the down payment is under 20% of the loan or the LTV is 80% or more.

Q: What is the difference between a conforming and non-conforming loan?

A: A conforming loan abides by the guidelines of the federal government. A non-conforming loan has no set guidelines. A conforming loan is a loan which follows all the guidelines and mortgage limits used by Fannie Mae (Federal National Mortgage Association) or FrDavid Mac (The Federal Home Loan Mortgage Corporation). These guidelines cover areas such as maximum loan amount, down payment, borrower credit, and borrower's income. Most of the loans in the U.S. are conforming loans. A non-conforming loan is one that does not follow the guidelines used by Fannie Mae or FrDavid Mac. Typically, the loan amount is either too large (Jumbo loans) or the loan does not meet other credit criteria. (Sub-prime loans). These loans may not be sold to Fannie Mae or FrDavid Mac but the conforming loans may be sold.

Q: What is the difference between pre-qualification and pre-approval?

A: To be pre-qualified for a mortgage loan means that your income, assets and debts have been informally analyzed to estimate how much you can afford to spend on your home. It is not a commitment from the lender but is useful in knowing the range of homes you can afford. To be pre-approved for a mortgage loan means your lender gives you a written commitment to package a loan for you. You have filled out most of the loan application and your income, expenses, assets, and liabilities have been verified. You then receive a pre-approval certificate. This may help you negotiate a better price with the seller and also allows you to close very quickly. It is strongly recommended that you obtain pre-approval before beginning your home search.

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Testimonials

  • "Honesty, Integrity, Loyalty, Dependability. I could go on and on... The team at David Herley Finance Home is very personable, easy to get along with and caring. They make the stress of home buying and refinancing easy to deal with, because you always know that they are in control and they are going to keep working for you until the transaction is closed. Their energy, knowledge and passion to lead and mentor their clients are truly something to aspire to. The depth of their finance and banking knowledge is astounding. The management team at David Herley Finance Home is one of the "best leaders "in the industry that I have ever had the privilege of working with."

    - Gina Taylor

  • "If there ever was a company that I would recommend it would be David Herley Finance Home. Their team has done loans for me several times. When refinancing, it is always hard to trust individuals you are giving all of your personal information to. I can tell you that David at David Herley Finance Home made and makes the entire process easy and safe. I trusted him with my personal business with ease. David and his co-workers are honest, hard working and trustworthy. Their professionalism is remarkable and their dependability is irreplaceable. The David Herley Finance Home team are individuals I will definitly reccommend to anyone looking for help in the real estate/mortgage industry."

    - Joe Kelly

  • "The team at David Herley Finance Home are outstanding Mortgage Professionals. Courteous, diligent, prompt, trustworthy and professional. I recommend their services to anyone seeking to purchase a home or refinance their existing mortgage."

    - Samantha Magallon

  • "To anyone needing help in the financial realm I endorse, most highly, David Luhrassebi & David Herley Finance Home!

    I was in a dire situation in January of 2012, with a high interest loan & I had been trying, for several months, to get a different loan with a lender that had been referred to me by one of my cousins in the lending business.

    Luckily, I had an appointment with my Allstate Insurance man, in the meanwhile, who has done work with David Herley Finance Home before, and he recommended them and David very highly. I called & spoke with David & he immediately got to work on a new loan for me. Not only did he get me a better loan, the 1st lender that I had been working with had just asked me for more information when the loan with David Herley Finance Home was ready to be funded! As I recall it took only a few days & certainly no more than a couple weeks to be funded - I was shocked and very happy to be getting rid of the 1st loan, rather than to still be waiting for the other lender to continue to waste my time!

    I will continue to use David Luhrassebi and David Herley Finance Home for my financial lending needs and I would recommend same to ANYONE needing any kind of loan!"

    - Sincerely, Kathie Kennedy

  • "I really could never thank you enough for all your hard work. A true professional who goes out of his way for his clients - above and beyond the call of duty. You were more than just professional and competent, you were responsive to my specific needs and found a solution. It was so refreshing to have someone who is willing to go that extra mile for their clients. I would highly recommend David Herley Finance Home to anyone I know that are in need of your services. No one could of done a better job that you did. I'm really blessed to know you."

    - Connie Tolmie

  • "David and David Herley Finance Home were a lifesaver. I thought I was never going to get a loan. I tried 3 other lending companies and all 3 strung me along for a month and then said they could not do the loan. David and Evoque came through for me big time. Not only did they get me the loan they went above and beyond with customer service. They made me feel I mattered and made the whole process painless. They have a customer for life. Thank you David and David Herley Finance Home."

    - Marc G.

  • "David Thank you so much for putting this deal together for me. You did everything you said you were going to do and closed in the time frame you said you would.

    Your accessibility and honesty were much appreciated! "

    - Jeffrey B., Yorba Linda

  • "Hi David, Tracy and I wanted to take this opportunity to thank you and your staff for the exceptional work that you performed in assisting us with our loan. Prior to contacting David Herley Finance Home we had attempted to obtain a loan from a couple of other lenders who promised the world and delivered nothing. We had just about given up hope when we contacted your group.

    From the moment that we first spoke I had good feeling about you. You were the first lender that I felt really cared about me, and my situation. Everyone else was more concerned with how much money they could make. You were very professional, courteous, and knowledgeable. I truly felt that if anyone could assist us; you would be that person. By keeping us up to speed during every step of the process, you made the entire ordeal comfortable and stress free. My wife and I agree that not only are we going to use your services again; but we've also referred close friends to you as well. "

    - Respectfully, Jon & Tracy Drummer

  • "My experience with David Herley Finance Home has been very positive. I received fast, reliable professional advice that really helped out in my time of need. I would recommend David Herley Finance Home to anyone who values quality and integrity in business transactions."

    - David Burger

  • "Just got done refinancing a 20 year loan into a 15 year loan. I had a great experience with David Herley Finance Home and my mortgage broker David Luhrassebi who was truly exceptional. He answered any of my refinance questions in a timely fashion not to mention being able to explain things in a simple and professional manner. He walked me through every step and before I knew it I had a new loan. I would highly recommend David if you're in need of refinancing. He saved me thousands of dollars with my new loan. I couldn't be any happier. "

    - Ross Carson

  • "To Whom it may concern, We've been using David for 14 years. He has never let us down and he will not let you down!!! "

    - John and Shirley Lowe

  • "Obtaining a loan assisted by David Luhrassebi through David Herley Finance Home was an absolute pleasure. He is very knowledgeable about the whole loan process.

    David was very professional at all times and made us feel at ease through the whole process. The one thing that stands out most about our experience is David's follow through. He always did what he said he was going to do and with speed and accuracy.

    David went above and beyond in helping make everything come together. We recommend David Herley Finance Home to anyone who is in the market for a loan. If we ever need a loan again we know exactly who to call.

    Thank you, Thank you, Thank you! "

    - Tim & Teresa Manning

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