Guide to Refinance, Mortgage,
& Home Equity Loans in
Calexico, California (CA)

You have made the important decision to purchase a home in Calexico, California. You have decided to seek out the guidance of a loan officer to help you with your loan selection and to guide you through the loan process. During this process you might hear words or phrases that will seem foreign to you.

Applying for a Loan

Let’s look at the first step in the loan process – the loan application. This form will ask for both personal and financial information. Your loan officer will request a credit report. This will show your credit history and establish whether or not you are a good risk to get a loan. Prequalification will help determine how much money you will be able to borrow before you even apply for a loan. Information will also be gathered regarding how you will make the down payment for your loan. This payment is not part of the actual mortgage and will need to be paid in cash. Be aware that there will be an origination fee to process the loan application and possibly a fee to obtain the credit history. There will need to be an appraisal done on the property you wish to buy to see if the house is worth what you are willing to pay.

Mortgage Types

Next your loan officer will explain the many mortgage options available to you in Calexico, California. These will include fixed rate, adjustable rate, interest-only, and balloon loans, along with any special loans, such as a VA loan. A fixed rate mortgageis the most common type and gives the homebuyer a stable mortgage payment for the duration of the loan since the interest rate will never change. An adjustable rate mortgage,or ARM, has an interest rate that can change when it reaches an adjustment period. The current interest rate at that time is applied. Interest-only mortgages allow your mortgage payment to go towards the interest for a set period of time and then the principal is added in. Your mortgage payment will increase at this time. Balloon mortgageswill have a stable mortgage payment for the duration of the loan but will need to be paid in full with a lump sum payment in as early as 5 years. If you or a member of your family is a veteran, you might qualify for a VA loan. This loan is guaranteed by the Veterans Administration.

You need to be aware that you can lock-in an interest rate. Lock-in is a written agreement that guarantees you will get a specific interest rate if you close before a certain date.

It is also important to understand points. Pointsare the amount paid to the lender to keep or lower the interest rate charged. A point is equal to 1 percent of the loan amount.

After your loan has been approved, your loan officer will schedule the final step in the loan process, closing. At closing you will finalize the purchase of your home. You will sign the necessary documents, make your down payment, and pay your closing costs. When all is said and done, you will be handed the keys to your new home.

Options for Existing Homeowners

Terms that might seem foreign to existing homeowners in Calexico, California are equity and refinance. Equity is the difference between the amount you owe on your home and the value of your home. Using this equity will enable you to obtain a home equity loan. These loans are available either as a line of credit or a lump sum payment and are typically for 10 to 15 years. Interest rates on home equity loans are usually low. You can use this money to buy a new car, pay for college tuition, or remodel your home.

A refinance loan is a new loan that you obtain to pay off your existing loan. This type of loan is especially beneficial if you are unhappy with the terms of your existing loan. You might want to consider switching to a different mortgage type or changing the duration of your loan. Optimally your goal is to receive a lower interest rate that will lower your mortgage payment.

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