Why use a broker?
What should I expect when applying for a mortgage?
How much of a mortgage can I afford?
Should I pay points?
What is an escrow account?
What is title insurance and why do I need it?
What is Private Mortgage Insurance (PMI)?
How much will PMI cost me?
What is an appraisal?
What are closing fees?
What is the difference between my annual percentage rate (APR) and actual interest rate?
How much money do I need to bring to closing?
What is a Survey? Do I need one?
Do I need Homeowner's Insurance prior to closing?



FREQUENTLY ASKED QUESTIONS:

Why Use A Broker?

With so many home loan options to choose from, it can be difficult to find your way.  A broker takes the guesswork out of shopping for a mortgage because they use their relationships and specialized knowledge of multiple lending sources to customize a loan product for your needs.  The availability of multiple banks provides access to the most competitive rates and largest array of mortgage products.

At PAR East Mortgage we represent over 75 of the nation's top wholesale lenders and have available over 1,000 loan products. Our Mortgage Consultant's expertise offers our customers the most efficient and cost effective method of pursuing custom tailored financing.

What should I expect when applying for a mortgage?

The first step in obtaining a home loan is to meet with a Mortgage Consultant.  They will counsel you about the various mortgage products available and provide you the information needed to make a sound decision regarding the type of loan you should pursue.  Once the loan product has been selected, your Mortgage Consultant will guide you in gathering the needed documentation to submit your application to a lender.  The lender will then return an approval letter, sometimes called a commitment letter.  From there, you will work with one of our dedicated closers to clear any conditions that that bank may be requesting.  Finally, once all conditions are cleared, a closing will be scheduled.

How much of a mortgage can I afford?

So you're looking for the home of your dreams! You're probably also wondering whether or not you can afford it. In order to know how much home you can purchase, it is necessary to do some homework first. The best place to start is by visiting our Apply Now section and completing a fast and easy loan application.  One our qualified Mortgage Consultants will pre-qualify you and help determine what you can afford in total mortgage amount and monthly payment.  We also have a number of Mortgage Calculators available in our tools section of our website that can assist you.

Should I pay points?

Buying points is a way to pay money upfront to lower your interest rate and consequently lower your monthly payments over the life of the loan.  The cost for a point is equal to one percent of your loan amount. For example, one point on a $100,000 loan costs $1,000.

There are commonly three situations when you should consider paying points:

1. You are planning on staying in the home for an extended period of time. You need to feel confident that you will be staying in the home long enough to save enough money to cover the initial cost of the points

2. You are relocating. Some companies will offer a relocation benefit and pay points on your behalf.

3. Buying a home vs. refinancing a home. Points paid when you buy a home are 100% tax deductible in the year in which the house is bought. Points paid when you refinance your home must be amortized and deducted over the life of the loan.  Therefore, people will frequently be more apt to pay points when purchasing a home if they are in need of a tax break at year end.  Consult your tax advisor when you are thinking about using this financing strategy.

When paying points there is a time at which the monthly savings will break even with the upfront cost.  If you terminate your loan buy selling your home, refinancing or paying off the loan prior to the break even point, it is not worth paying the points.  If your loan remains in place beyond the break even point, then you have an ongoing monthly savings.  One of our Mortgage Consultants can assist you with this calculation.

What is an escrow account?

Lenders often set up an account, called an escrow or impound account, to hold money to pay your taxes and homeowners insurance.  At closing, the lender will collect sufficient money to establish reserves in these savings accounts. Each month thereafter, a portion of your monthly payment is deposited into the account.  The lender will then use the money from the account to pay the tax and homeowners insurance bills when they are due.

What is title insurance and why do I need it?

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 as well as if there are any liens on the property. Title insurance protects you against claims from outside parties to the title of your home.  It further protects the lender against illegal or fraudulent title transfers that may have occurred and assures them that their lien on the property will be valid.  

What is Private Mortgage Insurance (PMI)?

Private Mortgage Insurance (PMI) is the insurance you are required to pay if you have less than 20% equity in your home.

This insurance protects the lender 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, your lender may eliminate your PMI.

How much will PMI cost me?

The cost of PMI varies according to your type of loan, your loan amount and the amount of equity you have in your home.

It typically ranges between .15% and 2.5% of your loan amount.

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 into the marketplace prepares the document. This ensures you're paying fair market value for your home. An appraisal is required in order to close on your new home or property.

At PAR East Mortgage, we will coordinate the appraisal of your property.

What are closing fees?

Closing fees are all of the items you pay in order to obtain a mortgage. Closing fees vary, but typically include:
 One of our Mortgage Consultants can provide you with a Good Faith Estimate that will accurately estimate the amount of closing costs for your specific loan. 

What is the difference between my Annual Percentage Rate (APR) and Interest Rate? Your Interest Rate, sometimes referred to as the Note Rate, is the actual rate used to calculate your monthly payments. The Annual Percentage Rate (referred to as the "APR") encompasses both your interest and any 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. Your APR represents the total cost of credit on a yearly basis after all charges are taken into consideration. It will usually be slightly higher than your Interest Rate because it includes these additional items and assumes you will keep the loan to maturity.

How much money do I need to bring to closing? How much you need to bring to your closing will depend on your specific situation. Generally, you only need to bring money to the closing if you're purchasing a new home. The money needed is used to pay for down payment, closing costs and prepaid items such as escrow accounts.  The good faith estimate provided by your Mortgage Consultant will estimate the amount you will need to close and then PAR East Mortgage will provide you with the exact amount due a few days prior to your closing.   If you're refinancing your current home, you may be able to include all of your closing costs into your loan.

What is a Survey? Do I need one?

A survey is a bird's eye view sketch of your property.  It shows the boundary lines of your lot, footprint of your house and accessory structures and details any encroachments between you and your neighbors.  Surveys are not always required when obtaining a home loan and you should consult your PAR East Mortgage Consultant regarding whether or not you will need to obtain one.  

Do I need Homeowner's Insurance prior to closing?

A homeowner's insurance policy valued at the amount of your mortgage or the replacement cost of your home must be obtained prior to closing your loan.  If you are buying a condominium, you'll probably not need homeowner's insurance.  PAR East Mortgage will verify with your condominium association that they maintain an acceptable blanket policy.

If you need an insurance agent, contact us and we'll be happy to recommend one in your area.