Home Buying Questions & Answers

How much cash will I need for closing costs?

Closing costs generally range from 2% to 6% of your loan amount. Closing costs can be divided into three main categories:

• • Lender fees. Fees can include origination, points, application, credit report, and appraisal.

  • Third-party fees. These fees vary by state and the company you select to close your loan. They can include fees for closing, title exam, title insurance and recording.

  • Pre-paid items. These are items collected at the time of closing but are not really considered costs (for example; interest, taxes, and hazard insurance).

You'll be provided with an estimate of your closing costs within three business days after your application has been received. These estimates will change if you change the product type or loan amount. If this should occur, be sure to ask how the changes will impact your closing costs.

How much home can I afford?

The amount of home you can afford is based on the amount of mortgage loan you can comfortably support. Generally, the amount of mortgage you qualify for is based on three factors:

• • Your monthly payments as a percentage of income.

  • How much cash you have for the down payment and closing costs.

  • Your credit history.

What types of mortgages are available?

• Fixed-rate mortgage

  • The interest rate remains stable and you pay the same monthly payment of principal and interest for the entire term of the mortgage. The term of a loan is commonly 30, 20 or 15 years. Fixed-rate mortgages may be best if you plan on being in your home for a while.

• Adjustable-rate mortgage (ARM)

  • The interest rate stays fixed for an initial period, which generally ranges from 1 to 7 years. After the fixed rate term expires, the rate is subject to adjustment (typically once per year) up or down for the life of the loan based on a specified index. An ARM may be a good option if you believe interest rates will go down over the next few years or if you plan on staying in your home 5 to 7 years or less.

• Combination loan

  • A loan where you receive a first mortgage combined at the same time with a second mortgage. This option may help you avoid the costs of private mortgage insurance (PMI) and/or the higher rate of a jumbo loan. In the current market environment, fewer lenders offer this mortgage type compared to the past due to increased default risks.

What are the benefits of a shorter term mortgage?

A shorter term mortgage allows you to own your home in less time than a conventional mortgage with a standard mortgage term. Although payments are higher with a shorter term mortgage, if you can comfortably afford them, you'll save thousands of dollars in interest and build equity faster.

Are there any special programs for first-time homebuyers?

BankerBroker.com offers special mortgage programs for individuals who are financing property in certain census tracts, or who need certain income or documentation requirement flexibility. These programs may offer:

• • Lower down payments than most other financing options so you won't need as much upfront cash to buy a home.

  • Competitive interest rates.

  • Manageable payments for every budget.

  • Reduced closing costs and mortgage loan fees.

Other restrictions may apply.

What are the tax advantages of owning a home

• • Income tax reduction. In the early years of a mortgage, most of your monthly payment covers interest on the mortgage. In most cases, the mortgage interest (and property tax) is deductible from your taxable income, lowering your overall tax bill.

Therefore, your after-tax cost of home ownership may be equal to, or perhaps even lower, than renting. There may be tax implications if you later sell the home at a profit. Consult your tax advisor for more information.

• • Tax deductible borrowing power. As your home equity increases, you may be able to borrow against it for important needs (such as debt consolidation or medical costs) with a home equity loan or line of credit.

Because your home equity loan or line of credit uses your home as collateral for the loan, you may be able to deduct that interest from your taxable income. This could lower your final tax bill. See a tax professional for complete details.

Should I get prequalified for a mortgage before I shop for a home?

Getting prequalified for your mortgage is an important step before you shop for a home. It provides you an estimate of how much home you can buy and makes applying for your mortgage easier. A mortgage prequalification can also give you additional leverage with a seller in negotiating the terms of the sale.

Can I complete a prequalification form I've already started?

No. You won't be able to return to an incomplete prequalification form.

What is an impound/escrow account?

In addition to the principal and interest payment on your mortgage loan, depending on your individual situation, you may elect or be required by your lender to impound additional funds each month in an impound/escrow account to pay for property taxes and insurance. With some mortgage programs, impounding for taxes and insurance may be required.

Having an impound/escrow account allows you to put aside a small portion each month toward the costs of insurance and property taxes. You send the additional funds each month when you make your mortgage payment. BankerBtroker.com or your designated lender holds the money in an impound/escrow account and makes the payments from the account when they are due.

Can I get a loan if I'm not a U.S. citizen or if I live outside the country?

Yes, as long as the property you are buying or refinancing is in the United States. Restrictions may apply.

After I get a new mortgage, can I access my account information online?

Yes, it's easy with BankerBroker.com Online Banking. You can review your current principal balance and interest rate, payment amount and due date, 24 months of loan activity and more.

Can I pay my mortgage online?

If you are a current BankerBroker.com customer who uses Online Banking, you can make your mortgage payment through Bill Pay. With Bill Pay, you can set up recurring payments so your regular payments are automatically paid when you want. You can also make immediate transfers between your BankerBroker.com mortgage account and other BankerBroker.com accounts that are linked to it.

When will I receive my year-end statement of interest paid for tax purposes?

Year-end interest-paid statements (IRS Form 1099) are mailed out by the end of January. You should expect to receive your statement in early February.

What is BankerBroker.com's Clarity Commitment® Letter?

We believe getting your home loan from a lender you trust is important. That's why you'll appreciate how clearly the Clarity Commitment® Letter is written.

• • It serves as a simple, one page summary of key terms of your mortgage.

  • Details are in easy-to-understand language, so you know what you're getting.

  • All of the important payment terms are highlighted.

The Clarity Commitment® summary is provided as a convenience, does not serve as a substitute for a borrower's actual loan documents, and is not a commitment to lend. Borrowers should become fully informed by reviewing all of the loan and disclosure documentation provided.