Our mortgage bankers have compiled a list of questions that our customers most often ask. If you have a question that's not on this list, any of our mortgage bankers would be pleased to answer your question.
How do I know how much house I can afford? What is the difference between a fixed rate loan and an adjustable rate loan? How is an index and margin used in an ARM? How do I know which type of mortgage is best for me? What does my mortgage payment include? How much cash will I need to purchase a home?
Q: How do I know how much house I can afford?
A: Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and monthly debts, and the amount of down payment you are prepared to make. Give us a call, and we can help you determine exactly how much you can afford.
Q: What is the difference between a fixed rate loan and an adjustable rate loan?
A: With a fixed rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable rate mortgage (ARM), the interest rate is fixed for a determined period of time and then adjusts periodically, typically in relation to a specified index. While the monthly payments that you make with a fixed rate mortgage are relatively stable, payments on ARM loan will likely change a few years into the loan. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan program is to speak with us.
Q: How is an index and margin used in an ARM?
A: An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).
Q: How do I know which type of mortgage is best for me?
A: There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your home. Urban Trust Bank can help you evaluate your choices and help you make the most appropriate decision.
Q: What does my mortgage payment include?
A: For most homeowners, the monthly payment includes three separate parts:
- Principal: Repayment of the amount borrowers
- Interest: Payment to the lender for the amount borrowed
- Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like homeowners (hazard) insurance and property taxes.
Q: How much cash will I need to purchase a home?
A: The amount of cash that is required depends on several items:
- Earnest Money: The deposit that is supplied when you make an offer on a home
- Down Payment: A percentage of the cost of the home that is due at closing
- Closing Costs: Costs associated with the loan processing paperwork and other required third party fees to purchase or refinance a home.
Buy a house with a 3.5% down payment*
We offer mortgages with 3.5% down payment, flexible credit options and excellent interest rates. Contact our team today.
Find a surcharge FREE ATM
Access your cash at 37,000 surcharge free ATM's across the country. Learn More and Locate an ATM.
(1) We offer free ATM transactions on our consumer accounts excluding Opportunity Checking and The Urban Trust Success Card
Copyright © 2010 Urban Trust Bank. FDIC,
Equal Housing Lender, All Rights Reserved. 