Lake Arrowhead Real Estate – Loans & Financing

Lake Arrowhead Real Estate – Loans & Financing

Helping you buy and sell real estate in Lake Arrowhead and the surrounding areas.

Take the first steps and become pre-approve before you go cabin hunting in Lake Arrowhead. This will give you a general idea about what price range you should stay within and will allow you to make a strong offer that will often seal deals for the seller.

We provide convenient financing solutions.

Our qualified Lake Arrowhead agents will assist with coordinating appraisals or any aspect of the loan approval process you need.

I found real estate in Lake Arrowhead… What mortgage loan is the best for me?

In order to make the best decision for yourself and your future, it is important to understand the differences between loan types. Our agents will help guide you and answer any questions you may encounter.

Fixed Rate Loans

Fixed Rate loans are those that start at a specific interest level and remain at that rate no matter what happens in the financial markets. If your rate is 6% the day you get your loan, it will be 6% until you pay the loan off. Typically, fixed rate loans are written for a period on 30 years (360 monthly payments), or 15 years (180 monthly payments). Terms of 10 and 20 years are also available from several investors. In a fixed rate loan, lenders charge a premium to hedge against inflation. The borrower pays a premium to lock their rates for 30 years.

Adjustable Rate Mortgage (ARM)

Loans can be complex! They have two components that determine the interest rate, the index and the margin. The index is the rate of a short term maturity, such as the Treasury bond or 6 month certificates of deposit. The margin is a static value, usually between 2 and 3%, which is added to the index to produce the fully indexed rate, which is the one you pay. The amount that the interest rate can change is limited to protect the consumer. It usually only increases 2% per year and 6% over the entire life span of the loan. Starting rates for ARMs are typically lower than Fixed Rate Loans. It is not guaranteed that the rate will stay the same; it can increase or in some cases decrease depending on the financial market changes.

It is important to discuss and fully understand the following factors when considering an Adjustable Rate Mortgage loan. Be sure to address each with your loan officer before deciding to apply. These factors can include:

  • Adjustment Period: A predetermined period of time. At the end of this interval the interest rate is adjusted based on the index. Typically, this is an annual event.
  • Index: The standard used to track the change in the economy that will determine the direction and degree of rate change. Some indexes are less volatile than others.
  • Margin: The percentage that will be added to the index to obtain the rate that your loan interest will adjust too.
  • Annual Cap: The maximum amount the interest rate can increase per year.
  • Lifetime Cap: The maximum amount the interest rate can increase over the life of the loan.

Hybrid Loans: Hybrid ARMs provide homeowners with a unique advantage because they adjust like an ARM but have an initial fixed rate from 1, 3, 5 or 7 years. Often, they are advertised as 5/1 or 7/1 ARMs. This can be decoded as meaning fixed for 5 or 7 years and then adjusting once every year. The start rate increase proportionally with the length of the initial fixed period.

Balloon Payment

After making payments for an agreed upon period of time, the entire loan balance becomes due and payable. There is the possibility of refinancing the loan at the time the balloon payment is due, but the lender is under no obligation to refinance the loan. It is extremely important that the borrower understands all of the terms of this and any other loan type they may be considering.