Please take the time to view some preferred lenders on Guam. You can learn more about each lender and the type of mortgage loan products they offer. You can even pre-qualify or apply online. Feel free to talk to them directly or we will be happy to assist you as part of the buying process. Also, you may want to use the Mortgage 101 Service below. Although Guam is not included in the program, there is a multitude of useful information, articles and interactive tools available for your use.
Mortgage 101 by Pacific Rim Realty
With over 175 informative documents and interactive tools, Mortgage 101 can help you find the answers to your mortgage questions. View current interest rates, sign up for a monthly newsletter, use interactive calculators and more.
Summary of the Financing Process
Whether you are financing a real estate transaction, refinancing your existing loan or obtaining a real estate equity line of credit, the following tips might help you get started.
Start a Green File: A Green File should contain all of your important financial documents. Regardless of the loan type, lenders will need information about you. Make copies of financial statements; bank accounts, investments, credit cards, auto loans, recent pay stubs and two years’ tax returns.
Check Your Credit Rating: Credit scores range between 400 and 800. 620 + is considered “good”. 680 + is considered “premium” and may possibly help get you a lower interest rate.
Below you will find the contact information for the 3 major credit reporting agencies to help you determine your credit rating. Ask your lender how to improve your credit score if you need to. Going forward, treat your credit like gold.
Savings & Debt: If you are buying real estate, try to accumulate funds towards your down payment, closing costs (appraisal, miscellaneous fees, escrow, title insurance, etc.) and expenses such as inspections. Furthermore, try to pay down existing revolving and high interest rate debt like credit cards.
Toe The Line: Now is not a good time to change careers, move your money around, or buy big ticket items. Lenders like stability. So if you are considering any major changes, it pays to meet with a lender and ask them how to proceed before you make any changes! If you are tempted to buy a big ticket item, consider the following:
A $500 a month debt payment (like a credit card or auto loan) could lower the amount of home you can afford by about $83,000! *
* Based on a 30 year mortgage at 6% interest.
Shopping for a Lender and Loan
Interview several lenders to help you create the kind of loan, and loan officer, that best suits your needs.
How to Find a Lender: Today, lenders can be found through a variety of sources. In addition to calling on listings in the phone book, you can also find and apply to lenders over the internet, and through referrals from your REALTOR®. We would be happy to suggest lenders we have used successfully, who are very competitive and some capable even with problem properties or poor credit. Please see our list of recommended local lenders with their contact numbers and website addresses.
Choosing the Right Lender: Interview several lenders to evaluate the following:
Ability to explain things clearly and return your phone calls in a reasonable time period
Competitiveness of interest rates, costs & fees.
Availability of loan programs that suit your credit profile and desired property
Access to local loan approval committee that understands the kind of property you are buying
Choosing the Right Kind of Loan: Today there are so many types of loans on the market that it is beyond the scope of this page to list or explain them all. Your lender is the best person to help you select a loan program to suit your needs. Below is a summary of the three most popular loan types we see in practice; for more detailed information please see “Types of Mortgages” in the “Home Buyers Tips” section. You can also see Mortgage 101.
Fixed loan: The fixed rate loan assures your monthly payments will stay the same over the life of the loan, which is typically between 15 and 30 years. Fixed rate loans may be best if you intend to hold the property for a long period of time, say over 7 years.
ARMs (adjustable rate mortgages): ARM’s may be suitable if you plan to sell or refinance your home within the next few years. The starting interest rate is typically lower than a fixed rate loan, saving you money initially. However, it is important to understand the index, the readjustment interval, the capitalization rate and downside risks of an ARM before making a final decision to use this type of loan.
Intermediate ARMs: Also called Hybrid Loans, these loans can offer fixed interest rates for the first 3, 5, 7 or 10 years after which the interest rate adjusts with the market every 6 months or year thereafter.
Knowing the Numbers (Understanding Interest Rate, Points, Costs and Fees)
Let us help you make informed decisions about your loan.
Credit Report: Typically, it costs under $100 to check your credit. With your permission the lender will order a review of your outstanding loans and your repayment history from a third party credit agency.
Application / Processing Fee: This cost, typically a few hundred dollars, is charged to cover the lender’s work to evaluate your ability to repay the loan. Some lenders will credit this back to you upon closing.
What is APR? The APR, or annual percentage rate, is the sum total of all your borrowing costs expressed as a percentage interest rate charged on the loan balance.
For example: After fees, the original interest rate quote of 5.875% might work out to a 6% APR loan, where the interest costs about $6,000 per year for every $100,000 borrowed, and the principal payments are calculated based on the length of the loan term (for example 15, 20, or 30 years).
Indexes: The interest rates on variable loans readjust periodically based on changes in an index. Typical indexes include the Federal Funds Rate, Treasury Bill.
Points: When mortgage companies are competing by offering lower interest rates, they may charge you a one-time pre-paid interest payment calculated as a percentage of the loan. Called “points”, this may range from 0.25% to 2% of the loan balance, and is usually paid up front. Points may be tax-deductible; consult with your tax advisor.
Appraisal Cost: Lenders hire experienced, often independent appraisers to evaluate the property’s purchase price, condition and size compared to similar recent neighborhood sales. This helps ensure the purchase price is not too high, and gives the lender more confidence in getting repaid in the event they are forced to sell the property if the borrower defaults. The appraisal costs vary depending on the type of property or type of appraisal.
Miscellaneous Fees: Expect to see various charges incurred in the processing of your loan which might include notary, documentation and recording fees.
Prepayment Penalties: These vary widely, so be sure you know in advance if your lender will charge a penalty if you refinance or sell, and the certain period during which the penalties apply.
Please make use of our financial calculators.
Getting Pre-Approved (The Advantages of Pre-Approval over Pre-Qualification)
Does it Help to be Pre-Qualified by a Lender? The pre-qualification process can be completed fairly quickly, based on less information than is required for getting pre-approved. While it is fast and it does help, a pre-qualification letter is an opinion from a lender of the maximum amount of real estate you can qualify for. In a competitive seller’s market, an offer from a buyer with a pre-qualification letter could lose out to a person who is pre-approved.
Get Pre-Approved by a Lender. There are several benefits to going the extra mile and getting a pre-approval letter. First of all, you will know exactly how much real estate you can afford. When you find a property you want to buy, your offer will be better positioned than someone less prepared. Finally, being pre-approved is more efficient; it reduces the amount of time it will take your lender to fund your loan. Be prepared to provide comprehensive documentation, which the lender may independently verify, including but not limited to:
Job and career status
Monthly debt payments
Total assets and debts
Application and Processing
Here is a summary of what to expect during this phase of the financing process.
Mortgage Brokers and Lenders – Who Does What? You are either working with a lender directly or using a mortgage broker. If using a mortgage broker, he or she is the person or company who would be your main contact throughout your loan. They are often able to work with a number of lenders, who actually provide the funds for the loan. Typically, the lender would pay the mortgage broker a fee for acting as the intermediary and providing all the customer service.
Filling Out the Application: There are standard forms to be completed when applying for a loan. Some lenders keep these on their website so you can fill out and submit the forms online. The information will be verified and used to qualify you for your loan, so take the time to answer questions accurately.
Documentation: The lender will need copies of the documents you began gathering in the first phase of the loan process, including:
Either 2 years of W-2 forms from your employer or 2 years of tax returns if you are self-employed
Recent pay stubs
3 months bank and money market statements
Brokerage, mutual fund and retirement account statements
Proof of other income sources (alimony, trusts, rental income, etc.)
Credit card statements
Auto /boat / student / miscellaneous loans
Drivers’ license or form of ID
If you’re not a US citizen, then copy of your green card or visa
Copy of any existing mortgage debts if you are applying for a home equity line of credit or another mortgage
Stay in Communication: The lender will have an analyst, usually called an “underwriter”, crunch your numbers and verify your documentation to confirm your ability to repay the loan. Once you are in contract on a property, there may also be a loan approval committee which will meet to review the underwriters’ conclusions regarding your creditworthiness, and to evaluate the property on which they are lending. This is called the underwriting process, and questions are bound to arise. Be sure to return your lender’s calls promptly to keep the process moving forward smoothly. Check in with your lender periodically.
Funding the Loan
Congratulations! Your loan has funded!
The Signing: When the lender is ready to ”close” your loan, or “fund” it, you will be asked to sign the final loan documents. Signing will typically take place in front of a notary or an escrow officer. Ask your lender if there is anything you need to do to prepare for this, such as bringing a photo ID or perhaps a cashiers’ check if you are purchasing real estate. Allow yourself enough time to review the documents for accuracy.
If funds are being wired: “Wiring instructions” direct the electronic transfer of money between financial companies. If possible, arrange to have the wiring instructions in place ahead of time and checked for accuracy by both the sender and recipient of the wire. It is critical that these instructions be exact, and even so, delays are all too common.
Congratulations! Your lender will probably call you to confirm that the money has been transferred and the loan has closed. Always follow up with a phone call to confirm that your loan funds went where they were supposed to go. It is a good idea to keep records of this critical phase of the transaction once completed.