Mortgage Loan Questions
Q. How much home can I afford?
A. That depends on a few factors. Our Calculator can help you make an estimate.
Q. Do you have any info for first time home buyers?
A. Visit our First-Time Homebuyers page for information on how to take the first step toward your first home. We offer several first time home buyer programs and work with numerous down payment assistance agencies.
Q. What is an appraisal?
A. An unbiased report on the value of a home in the fair market, performed by a trained and licensed individual.
Q. What is a credit score?
A. Your credit score is a number based on compiled information from credit bureaus and your creditors about your lending and payment history. Lenders use credit scores to indicate the likelihood that an individual will repay a debt. The higher the credit score, the less of a risk they see in you.
Q. What happens at the loan closing?
A. All of the documents necessary to finalize your mortgage are signed. If it is a purchase, the seller will sign the documents transferring ownership of the home to you along with other necessary forms. The mortgage and deed are recorded at the appropriate county registry.
Q. Will I need to have an attorney represent me at closing?
A. The attorney for Rockland Trust will prepare all the necessary documents so it is not required, but you may decide to consult an attorney.
Q. What are "closing costs"?
A. Payments that cover the expenses and fees associated with finalizing a mortgage and completing a real estate transaction. Your closing costs may include:
• Appraisal fees
• Closing/attorney fees
• Recording fees
• Survey fees
• Investor fees
• Credit reports
• Title or tax services
• Homeowner's insurance
• Private mortgage insurance
• Title insurance
• Escrow fees (fees associated with setting up an account to pay tax and insurance monthly with a mortgage. Escrow accounts are required for any purchase with less than 20% down payment.)
• Loan origination charges points (charges for "buying down" your interest rate)
To help you firm up your budget, your home mortgage professional will provide you with a Loan Estimate describing your closing costs shortly after you apply for your mortgage.
Q. What are "points"?
A. One point = one percent of your loan amount. You may wish to pay points at the closing in order to reduce your loan interest rate and lower your expenses over the life of your mortgage.
Q. What is "pre-paid interest"?
A. Say you close your loan on the 10th of the month. Interest will then accrue between that day and the last day of that month. Rather than assessing you with a larger first monthly payment, your lender will add that accrued interest to your closing costs.
Q. If I am selling my current home to purchase a new home, what documentation is required before I close?
A. You will need a copy of the Closing Disclosure on your previous home. This confirms that your current mortgage is paid off and that you can close on the new home.
Q. What is PMI?
A. Private Mortgage Insurance (PMI) protects your mortgage holder in the event you fall behind on your payments or end up in foreclosure. Your PMI premiums are part of your monthly mortgage payment and are required until your principal balance is paid down to a percentage of the appraised value of your home. This percentage is dependent on the specific mortgage program that you select. PMI is typically for buyers who have less than 20% down payment on a conventional mortgage loan.
Q. What is a fixed-rate mortgage?
A. A fixed rate mortgage is a loan where the interest rate you pay does not change over the life of the loan. In other words, the monthly principal and interest mortgage payment you make will remain the same for the length of the loan.
Q. How do 15-year loans work?
A. A 15-year fixed rate mortgage lets you pay off your home in less time but with higher monthly payments. This type of loan also means you pay less interest to the loan agent than with a 30-year fixed rate mortgage.
Q. What is an adjustable rate mortgage or ARM?
A. An adjustable rate mortgage (ARM) also known as a variable-rate mortgage is a loan where the interest rate adjusts over time. You can place interest-rate caps to limit how much the rate can increase or decrease.
Q. Should I choose a fixed-rate or adjustable rate mortgage (ARM)?
A. The answer mainly depends on how long you expect to stay in your home. Interest rates on fixed-rate residential home mortgages never change over the life of the loan, no matter how long the term. Fixed rates are preferable if you plan to stay in your home for more than five or seven years. If Massachusetts mortgage interest rates go up, you're protected; if they drop, you can refinance.
Adjustable rate mortgages (ARM) are pegged to an index and therefore, may change upward or downward. You may be able to save on interest costs with an ARM if you only expect to stay in your home for a few years. If you're confident that you'll move before your rate resets, an ARM may save you money. You can also refinance an ARM to a fixed-rate mortgage if rates go down.
Q. How are "interest rate" and "APR" different?
A. The interest rate is the cost to borrow the money for your home purchase. Annual percentage rate (APR) includes interest as well as many other loan costs, points, and fees and expresses them as an annualized rate.
Q. What is an escrow account?
A. An escrow account requires you to make monthly payments for real estate taxes and other insurance for your monthly mortgage payment. The bills are sent to the lender who makes the payments from your escrow account.
Q. What is the maximum percentage of my home's value that I can borrow?
A. We offer many different financing options and mortgage types so it would depend on what program you qualify for. One of our Loan Officers can help you determine that figure. To schedule a meeting, visit our Mortgage Lenders page.
Q. What will my monthly mortgage payment include?
A. The answer depends on the terms of your mortgage. Your monthly payment pays down principal, covers interest, and some of your monthly payment may go toward your escrow which can cover any or all of these costs:
• Private mortgage insurance (PMI)
• Homeowner's insurance
• Property taxes
• Flood insurance if applicable
Q. What will my rate be?
A. Several factors determine your interest rate:
• Your credit history
• Your ability to repay
• The value of your collateral
• The loan amount
The less of a risk you present, the lower interest rate you can expect.