What are loan points?
Loan points are the fees a lender charges for making the loan. Loan points correspond to a percentage of the actual loan made to a client. As an example 1point on a $100,000.00 loan would be $1,000.00 or one percent.

Loan points are often used to buy down rates, making the long-term cost of the loan less. As an example, if you were to pay 2 points on a $100,000.00 loan in order to get a 6% rate your payment for 15 years would be $843.86. If the same loan with out points cost 6.750%, that payment would be $884.91. In this case paying 2 points saved you $ 5,388.90 over the life of your loan.

While often viewed as a "evil" item, points if used properly could save you thousands of dollars. Our loan consultants at 1st Columbia can review your situation and help you decide if points are right for your loan.

The Loan Process, how long does it take?
This often asked question is probably the one client's control the most. It normally takes 1st Columbia 3 business days to get your title work and appraisal done. If the client provided all the necessary income, insurance and personal documentation required, that loan could close on the 4th business day. Often this process takes 10 to 15 business days due to scheduling or documentation complications. The tougher the loan, the longer it will take.

How is Debt Ratio calculated?
Assume your total monthly expenses for mortgages, car payments, other personal loans, and minimum payments to your credit cards equals $1500/month and that your gross pay equals $3000/month. $1500 divided by $3000 equals 50%. Your debts are 50 % of your income, therefore you have a 50% Debt Ratio.

How is Loan to Value calculated?
Assume you are borrowing $75,000 against your house that has an appraised value of $100,000. $75,000 divided by $100,000 equals 75% LTV. You are borrowing 75% of your home's value; therefore you have a 75% LTV.

How is credit graded?
Generally, lenders look at your last 18-24 months of credit history to determine your credit rating. As a rule, derogatory credit in order of highest to lowest as damaging to your credit grade is as follows:

Judgements/Liens
Late payments to Mortgage
Collection Accounts/Charge Offs
Late payments to Car
Late payments to Credit Cards