Mortgage FAQ’s
Do I have to wait to buy a new house if I currently have debt?
Not necessarily. There are four major factors when considering an application: your employment and income, your assets, your credit record and the value of the home you wish to purchase. All these things are considered when making a credit decision.

What is the right type of mortgage for me –-fixed or adjustable rate?
With a fixed-rate loan, the principal and interest portion of your payment will always remain the same for the life of the loan. With an adjustable-rate loan, the principal and interest portion of your payment will change periodically depending on whether interest rates are increasing or decreasing. Fixed-rate mortgages are the most common type selected by borrowers. Most borrowers enjoy the stability of a fixed principal and interest (P&I) payment when planning their budget. Your Loan Officer can explain the products available and help you select the one that is best for you.

What items make up my complete mortgage payment?
Mortgage payments are made up of four basic components–principal, interest, taxes, and insurance – often referred to as PITI. The principal and interest portion of your payment is based on your loan amount, interest rate, and loan term. Taxes are based on 1/12 of the annual property taxes (calculated at fully assessed value for new properties). Insurance is based on 1/12 of the annual premium for your homeowners insurance.

What happens after my loan application has been completed?
After the loan application has been completed; it will be turned over for processing and underwriting, where the decision to approve or reject the loan will be made. Processing times vary from loan application to loan application, but you will have an idea of the processing time for your application from you loan officer. You will be provided with a Good Faith Estimate of the anticipated closing costs. This will show costs associated with the loan settlement, such as origination fees, mortgage insurance, title insurance, escrow reserves and hazard insurance.

You will also receive a Truth-in-Lending Disclosure Statement, which will among other things show the estimated monthly payment, the total cost of all finance charges on your loan, stated as an annual percentage rate (APR). The APR represents the dollar amount of finance charges you pay either up front or over the life of the loan, converted to an annual interest rate and because the APR includes origination fees and other charges as well as interest on the mortgage loan, the APR is usually higher than the interest rate on the loan.

If the loan is approved you will most likely receive a commitment letter which sets out the terms of the loan and the length of time for which those terms are offered. However, if the loan does not close within the specified commitment period, the terms are subject to change. Make sure to read the commitment carefully due to the fact it may contain conditions that you will still have to satisfy. Once the approval or commitment letter has been received then you can be assured the financing.