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Frequently Asked Questions (F.A.Q.)
What types of property will you finance?
Single family homes, condominiums, townhouses, investment properties, second
homes and manufactured housing with some restrictions.
What fees are involved in financing my mortgage?
Costs can vary widely amongst lenders and from State to State. At Equity
Mortgage, our loan officers will provide you with an estimate of fees; this is
called a good faith estimate and lists all fees that will apply to your
particular set of circumstances. Of course this is just an estimate and your
personal financial situation may or may not warrant additional fees. Typical
fees might include the appraisal, survey, credit report, processing,
underwriting, title insurance, escrow, notary State/ Local taxes and recording.
Check with one of our senior loan officers for a good faith estimate.
Should I choose a traditional fixed-rate mortgage or adjustable
rate mortgage (ARM)?
Choosing a traditional fixed rate mortgage over an adjustable rate mortgage
usually depends on the length of time you plan to be in the home and mortgage
rates at the time you apply for a mortgage. Please use the mortgage calculator
"Fixed or Adjustable? " and see which applies to your personal financial
situation. Or, contact one of our senior loans officers toll-free for advice.
Should I pay discount points?
Discount points are each equal to one percent of the loan amount and considered a
form of interest. You pay them, up front, at your loan closing in exchange for
a lower interest rate over the life of your loan. This means more money will be
required at closing, however, you will have lower monthly payments over the
term of your loan. To determine whether it makes sense for you to pay discount
points, you should compare the cost of the discount points to the monthly
payments savings created by the lower interest rate. For your convenience, we
have provided a handy 'Should I pay points?' calculator in this section.
How much should my down payment be?
Depending on your credit history, most lenders offer programs with little or no
down payment these days but mortgage insurance is required when putting less
than 20% down. See 'What is mortgage insurance and when is it required?'
What is mortgage insurance and when is it required?
By protecting the lender against the additional risk associated with low down
payment lending, mortgage insurance makes it possible for you to buy a home
with less than a 20% down payment. In fact, most lenders are comfortable with
down payments as low as 3 - 5% of the home's value. It also provides you with
the ability to buy a more expensive home than might be possible if a 20% down
payment were required.
Mortgage insurance premiums are based on loan to value ratio, type of loan, and
amount of coverage required by the lender. Usually, the premium is included in
your monthly payment and one to two months of the premium is collected at
closing as a required advance. Recent Federal legislation now requires
automatic termination of mortgage insurance for many borrowers when their loan
balance has been amortized down to 78% of the original property value.
What is title insurance and do I need it?
Purchasing a home is one of the most important decisions and expensive purchases
you will ever make. You, and especially your mortgage lender, want to make sure
that no individual or government entity has any right, lien, claim, or
encumbrance on your property. The function of a title insurance company is to
make sure your rights and interests to the property are clear, that transfer of
title takes place efficiently and correctly, and that your interests as a
homebuyer are fully protected.
Title companies typically issue two types of title
policies:
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Owner's Policy. You, the homebuyer, are covered.
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Lender's Policy. The lending institution is covered by this policy over the life
of the loan.
Both types of policy are issued at the time of closing for a one-time premium, if
the loan is a purchase. If you are refinancing your home, you probably already
have an owner's policy that was issued when you purchased the property, so only
a lender's policy will be issued. Title insurance assures that any valid claim
against your property will be borne by the title company.
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