Disclaimer: This calculation is an estimate. Accurate payments must be given by one of our licensed mortgage loan originators.
Frequently Asked Questions
What is an appraisal?
An appraisal is a written analysis of the estimated value of your property. A qualified appraiser who has knowledge, experience and insight to the marketplace prepares the document. This ensures that you’re paying fair market value for your home. An appraisal is required in order to close on your new home or property.
What is Private Mortgage Insurance (PMI)?
Private Mortgage Insurance (PMI) is the insurance you are required to pay if you have less than 20% (some cases 25%) equity in your home. The insurance protects lenders if you default on the loan and the lender must foreclose. The lender then uses the money collected from PMI to offset any losses. Once you achieve enough equity in your home, the lender may eliminate your PMI.
What is the difference between my annual percentage rate (APR) and actual interest rate?
There are two interest rates that apply to your loan; your Actual Interest Rate and Annual Percentage Rate (APR). The Actual Interest Rate is the annual interest rate of your loan (Also called “note rate”), and is the interest rate used to calculate your monthly payments. Your Annual Percentage Rate (APR) encompasses both your interest rate and any other additional costs or prepaid finance charges you may pay such as prepaid interest (necessary to adjust your first payment if you close mid-month), private mortgage insurance, closing fees, points etc.
What are closing fees?
Closing fees are all of the things you pay for in order to get a mortgage. Closing fees are NOT the fees that you pay to the bank. In fact, very little of the fees incurred go directly to the bank. The Good Faith Estimate will give you the estimate of the fees that go into getting a mortgage.
What is title insurance and why do I need it?
Title insurance protects against any title dispute that may arise over any particular property like your home. Before your closing, a title company researches your property’s title to ensure it was legally passed from buyer to seller, each time it was bought or sold. Title insurance further protects the lender against any illegal or fraudulent title transfers that may have occurred during an investigation. Title insurance is required to close on your home.
Do I Need Homeowner's Insurance prior to closing?
Yes. You must bring a homeowners insurance policy valued at least as much as the amount of your mortgage to your closing. This policy must be issued by an insurance company rated at B class III or higher. You should instruct your insurance agent to have the “mortgage clause” on your policy to read as directed on your loan commitment letter. Please fax us a copy of the insurance binder page and paid receipt at least 5 days prior to your closing date.
What is an escrow account?
Lenders often set up an escrow account also known as an impound account to hold the tax and insurance portion of your mortgage payment. At closing, the Lender will collect sufficient funds to establish the necessary monies in this account. The reserves, plus monthly deposits are held until they need to be used by the Lender to pay the taxes and insurance.
How do I know if I should pay points?
Upon deciding whether or not to pay points, please consider the following:
- Are you purchasing or refinancing? Points paid when you buy a home are 100% tax deductible in the year in which you buy your home. Points paid when you refinance, must be amortized and deducted over the life of the loan.
- Relocating? Typically, companies will offer a relocation benefit and pay up to three points on your behalf.
- Planning to stay in your home? You need to feel confident that you will be residing in this home long enough to save enough money to cover the initial cost of the points.
What is a survey? Do I need one?
A mortgage survey is an aerial view sketch of your home. It show boundaries of your lot, encroachments between you and your neighbors. Your attorney should advise you regarding whether or not a new survey is needed (sometimes an old survey is acceptable).
How much money do I need to bring to closing?
Funds needed for closing is dependent upon your particular situation. Generally, you only need to bring funds to the closing on a purchase transaction. If you are refinancing your current home, you may include the closing costs in your loan amount. Because the required funds to close varies on every loan, we provide you with a Good Faith Estimate at application and a few days prior to closing, your attorney will provide the final numbers. Money owed includes the following:
- Closing Fees (title fees, appraisal, recording, survey, flood cert etc.)
- Escrow Account (Taxes, Insurance and PMI if applicable)