- How much home can I afford? Answer
- How much cash will I need to purchase a home? Answer
- How do I know which type of mortgage is best for me? Answer
- What is the difference between a fixed-rate loan and an adjustable-rate loan? Answer
- How is an index and margin used in an ARM? Answer
- What is a VA Loan? Answer
- What is the minimum information that I will need to complete a loan application? Answer
- What is mortgage insurance? Answer
- What are closing costs? Answer
- What is a flood certification? Answer
- What does my mortgage payment include? Answer
- What is a reverse mortgage? Answer
- Who do I contact if I have questions concerning my existing mortgage loan serviced by Univest? Answer
- Where do I mail my tax and insurance bills if my mortgage loan is serviced by Univest and you escrow for these items? Answer
Q : How much home can I afford?
Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Please contact us and one of our experienced mortgage professionals will assist you in determining how much you can afford.
Q : How much cash will I need to purchase a home?
The amount of cash that is necessary depends on a number of items, most notably your down payment and loan program. An FHA loan is an ideal choice for first-time home buyers as it requires as little as 3.5% down. Generally speaking, though, you will need to supply:
- Earnest Money: The deposit that is supplied when you make an offer on the house
- Down Payment: A percentage of the cost of the home that is due at settlement (total down payment of 20% required to avoid mortgage insurance)
- Closing Costs: Costs associated with transfer taxes, title insurance and other costs such as recording fees.
Q : How do I know which type of mortgage is best for me?
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 (including downpayment funds) and how long you intend to keep your house. Our experienced mortgage professionals can help you evaluate your choices and make the most appropriate decision.
Q : What is the difference between a fixed-rate loan and an adjustable-rate loan?
With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the rate changes periodically, typically in relation to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change: see our fixed-rate vs. ARM mortgage calculator. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to one of our mortgage professionals.
Q : How is an index and margin used in an ARM?
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. For our product menu, the index for conforming and jumbo ARMs is the one-year London Interbank Offering Rate (LIBOR) and the index for FHA ARMs is the one-year Constant Maturity Treasury (CMT).
Q : What is a VA Loan?
VA (Veteran Administration) loans are home loans designed to assist eligible veterans in purchasing or refinancing a home as their primary residence. VA loans are offered by private lenders, such as banks, and are insured by the Department of Veterans Affairs. These home loans offer more flexible income, debt and credit requirements and are available in either fixed or adjustable-rate options. To qualify for a VA loan, you must be a current or former member of the U.S. armed forces or an eligible spouse and you need to obtain a Certificate of Eligibiilty. For more information on eligibility, contact the Winston Salem Eligibility Center at 888.244.6711.
Q : What is the minimum information that I will need to complete a loan application?
Regardless of whether you apply online or directly with one of our experienced mortgage professionals, you will need a minimum of the following:
- Social Security Number
- Gross income amount, including secondary sources, if applicable
- Two most recent paystubs and two most recent W2's (salaried borrowers)
- Two most recent personal and business tax returns (self-employed borrowers)
- Name and address of your employer, and of your previous employer if you have been at your current job for less than two years
- Previous address, if you have been at your current residence for less than two years
- Asset information, including the value of your banking, investment and other accounts and documentation to support available funds for down payment and closing costs
- Current expenses, including housing, credit card and loan payments, child support and other obligations
- Estimated purchase price and down payment amount (if you are purchasing a home)
- Estimated property value and loan amount (if you are refinancing)
- Agreement of sale (if purchasing a home)
Q : What is mortgage insurance?
Mortgage insurance, also known as PMI, is insurance that protects the lender from losses that can occur when a borrower defaults on a mortgage. PMI is required on first mortgage purchase transactions when the borrower has less than a 20% down payment. Likewise, it is required on first mortgage refinance transactions when the borrower has less than 20% equity in the property being refinanced. The cost of PMI is typically added to the monthly mortgage payment. PMI must stay in effect for a minimum of 60 months or until the loan to value ratio is at or below 78%.
Q : What are closing costs?
Closing costs are expenses paid by the borrower in connection with the closing of the mortgage loan. Depending upon the specific loan, these expenses may include an application fee, origination fee, discount points, title insurance, attorney's fees, transfer taxes for purchase transactions and pre-paid items such as tax and insurance payments.
Q : What is a flood certification?
Lenders are required to obtain a flood certification on all loans secured by residential real estate. A flood certification indicates if the property is located in a designated flood zone. If the subject property is located within a flood zone, the borrower must obtain flood insurance.
Q : What does my mortgage payment include?
For most homeowners, the monthly mortgage payments include three separate parts:
- Principal: Repayment on the amount borrowed
- Interest: Payment to the lender for interest on the amount borrowed
- Tax & Insurance Escrows: Monthly payments are normally made into an escrow account for items like hazard insurance and property taxes. This feature is sometimes optional with a one-time waiver fee. If we waive your escrows, the bills will be paid by you directly to the County Tax Assessor and property insurance company.
Q : What is a reverse mortgage?
A reverse mortgage is a special home loan product that allows a homeowner aged 62 or older the ability to access the equity that has accumulated in their home. To qualify, you must own the property outright or have a small mortgage balance. Often, the lender may require, as part of the program, that the small mortgage balance be paid. A reverse mortgage does not require payments back to the lender for as long as you live there. The home itself will be the source of repayment. The loan is underwritten based on the value of the collateral (home) and the life expectancy of the borrower. Current interest rates can influence the available loan amount. The loan must be repaid when you die, sell your home, or no longer live there as your principal residence. You must still maintain homeowners insurance and pay your real estate taxes.
For more information on reverse mortgages, please go to http://www.helpwithmybank.gov/ - Office of the Comptroller of the Currency - Answers about Reverse Mortgages
Q : Who do I contact if I have questions concerning my existing mortgage loan serviced by Univest?
Please contact us in the manner most convenient to you:
Univest Bank and Trust Co.
Mortgage Processing Center
P.O. Box 197
Souderton, PA 18964-0197
Q : Where do I mail my tax and insurance bills if my mortgage loan is serviced by Univest and you escrow for these items?
Please mail original copies of your tax and insurance bills to the following address:
Univest Bank and Trust Co.
Attn: Loan Operations
14 North Main Street
P.O. Box 197
Souderton, PA 18964-0197