What is involved in the online mortgage application?
After your application is completed, a Loan Officer will contact you within 24 hours (excluding weekends and holidays) to introduce him/herself and answer any questions you may have. Your Loan Officer is a mortgage expert and can provide help and guidance during the processing of your loan request. If your request was not approved online, the Loan Officer will ask you for any additional information that is required in order to make a decision about your loan.
Your Loan Officer will then send you an application kit that contains papers for you to sign and a list of items that we will need to verify the information you provided during the online application. Your Loan Officer is available to answer questions and guide you through the process of purchasing or refinancing your home.
What are the differences between Pre-Qualification, Pre-Approval, and Loan Commitment?
Although they are related, the three terms each signify a different level of approval from a lender.
What information do I need to supply in support of my mortgage application?
To find out what documentations you may need for your mortgage application, please click here for our Mortgage Application Checklist. To view this checklist, you will need Adobe Reader. If you do not have Adobe Reader, it is available without charge from Adobe.Get Adobe Reader now.
What is the difference between Fixed-Rate Mortgage and an Adjustable-Rate Mortgage (ARM)?
A fixed rate mortgage is a loan where the interest rate charged and therefore, principal and interest payment, never change during the life of the loan. An Adjustable Rate Mortgage (ARM) is a loan where the interest rate and thus the monthly payment can change periodically. The changes in the interest rate are tied into the market rates that exist at the time the rate is subject to change.
Initial ARM rates are generally lower than fixed rates, but can adjust upward if interest rates go up. There is a predefined cap, which defines how high the interest rate can adjust at each adjustment and cumulatively over the term of the loan.
Fixed rate mortgages are beneficial to those who are on a fixed income, (adverse to interest rate change) and those who prefer fixed payment schedules.
ARMs are advantageous for those who do not plan to stay in their home for a long time, for those borrowers who do not qualify at higher fixed interest rates, and those who can financially handle fluctuating payments.
Fixed vs. ARM, which should I choose?
Typically the starting rate for an Adjustable Rate Mortgage (ARM) is lower than for a fixed rate mortgage. This results in the starting payments on an ARM being less than for a fixed rate mortgage on the same amount.
Your Adjustable Rate Mortgage might also be less expensive over a long period as compared to a fixed rate if interest rates remain steady or move lower.
Against these advantages, you have to weigh the risk that an increase in interest rates would lead to higher monthly payments. In order to assess the risk you need to consider the following questions:
How do adjustable-rate mortgages work?
There are many types of (ARMs), but all have some common features.
One common feature of ARMs is an interest rate change that occurs after a stipulated number of payments have been made. The interest rate can increase or decrease depending on how the new interest rate is calculated. Typically, the interest rate change is based upon a predetermined index value and a margin. If a mortgagor currently has an interest rate that is pending adjustment, the new rate would be calculated by adding the current index rate and a margin. For example, if the mortgagor’s current rate were 6.000% with a 2.000% margin, the new rate would be determined by adding the current index rate (5.000% as an example) to the margin. In this example, the new interest rate would be 7.000%.
The maximum amount the interest rate can change during any adjustment period is usually fixed. This maximum adjustment is called the cap. ARMs also have a lifetime cap, preventing the interest rate from ever exceeding a predetermined rate.
What are “caps”?
"Caps" are associated with Adjustable Rate Mortgages (ARMs). Caps limit how much the interest rate can increase or decrease. Periodic Caps limit the increase or decrease per adjustment period, whereas a lifetime Cap limits the amount the rate can increase over the life of the loan. For example, Windsor Federal Savings’ ARM programs stipulate that the interest rate on an ARM can increase or decrease up to 2% per adjustment period, but not more that 5% (6% for a 1 year ARM) over the life of the loan.
Can I lock my interest rate at time of application?
Contact your Loan Officer and he/she will review the rate lock options available to you depending on the loan type.
In order to obtain my mortgage, do you require any tests on the property?
Windsor Federal Savings typically does not require any inspections for residential mortgages. It is not uncommon for a homebuyer to require certain tests and inspections as part of the purchase and sales agreement. However, if there is an apparent concern regarding the property, test(s) may be required by the Bank.
Can I use my own attorney?
Windsor Federal Savings assigns an attorney to protect the interest of the Bank during the loan process. This attorney will check the title to the property, prepare the loan documents and handle the loan closing. The costs for these services are part of the closing costs associated with the loan. The Bank will allow you to select your own attorney, at your own expense, to represent you at the closing.
What are "closing costs"?
Closing costs are costs that you will incur in the process of obtaining your mortgage. They typically include fees such as (but not limited to) points, (if applicable), credit, flood certification, appraisal, legal, title insurance, plot plan, recording fees, tax service and hazard insurance service fees. Additionally, at closing, there are escrows for property taxes and Private Mortgage Insurance, if applicable.
What other costs will be included in my monthly bill beside the principal and interest?
In addition to principal and interest, an escrow payment for property taxes and Private Mortgage Insurance (if applicable) could be included in your payment.
How can I obtain a copy of my credit report?
The three major credit bureaus can assist you in obtaining a copy of your credit report. There are many websites that can provide that information, such as annualcreditreport.com.
What is a point?
A point is the equivalent of 1% of the loan amount. For example, if the mortgage were $100,000.00, 1 point would be $1000.00. Usually interest rates are offered in combination with 0, 1, or 2 points. If you choose to pay 1 or 2 points, your interest rate will usually be lower. For example, rates that might be offered are 6.25% and 0 points, 6.00% and 1 point or 5.75% and 2 points.
What does APR mean?
APR means Annual Percentage Rate. This should not be confused with your mortgage interest rate. APR is the yield the lender calculates on your mortgage when it takes into account other prepaid finance charges you will pay at closing, such as points, prepaid interest, flood certification, tax and hazard insurance service fees. Your actual monthly payments are based on the mortgage interest rate, not the APR.
What is Private Mortgage Insurance (PMI)?
Private Mortgage Insurance is usually required when your down payment is less than 20%. It protects the Bank against loss if the borrower defaults on the loan. The monthly cost will vary depending upon the type of mortgage you have, the PMI product, and the amount of your down payment.
Can I obtain PMI by myself?
No. The Bank arranges for PMI coverage on your loan. PMI products vary. When you apply for your loan, ask the Loan Officer what options are available.
What is a “Good Faith Estimate”?
A Good Faith Estimate will contain estimates of all costs that are associated with closing your loan. It must be provided to you within 3 business days of your mortgage application.
If my loan is sold, will the terms of my mortgage change?
The terms of your mortgage will not change even if your loan is sold.
What does “Escrow” mean?
Escrow payments are additional payments paid each month for the purpose of taxes, insurance, and PMI if necessary. The Bank collects these payments from you on a monthly basis and is responsible for making timely disbursements of escrow funds to pay these bills.
You can make your payments by any of the following methods:
Save valuable time and sign up for free online banking and bill pay – making your payment is then just a click away – 24 / 7.
Return the payment by mail - be sure to allow enough time so that it is received for processing by the due date.
Stop by any of Windsor Federal Savings convenient branch locations.
Will I receive a monthly statement, or will I use a coupon booklet?
You will receive a monthly statement.
Can I make additional payments on my mortgage?
Yes, you may make additional principal payments on your loan at any time.
What is Flood Insurance?
Flood Insurance is a type of real property insurance coverage to protect against losses arising from floods. The National Flood Insurance Reform Act of 1994 requires all properties located in a Special Flood Hazard Area to carry flood insurance for the life of the loan.
How do I know if my property is in a Special Flood Hazard Area?
During the processing of your application, the Bank will notify you if your property is in a Special Flood Hazard Area. You will receive a letter and a Disclosure of Flood Hazards form.
How much flood insurance coverage am I required to carry on my residential property?
You will be required to carry enough to cover our mortgage with you or 100% of the replacement cost (maximum $250,000 for single residential buildings).
What if I refuse to obtain flood insurance on my property?
The Bank’s policy is that we will not schedule a closing without written acknowledgement that the borrower has obtained or is in the process of obtaining flood insurance.
What if I refuse to carry the flood insurance for the life of the loan?
If the borrower refuses to carry flood insurance for the life of the loan, the Bank is required by law to purchase the insurance and may charge the borrower for the cost of the premiums and any fees incurred by the Bank in purchasing the insurance.
What if I am not in a flood zone at the time of origination, but later my property is determined to be in a special Flood Hazard Area, am I required to purchase flood insurance?
Yes, during the life of the loan, if your property is determined to be in a Special Flood Hazard Area, you are required by law to obtain flood insurance for the life of the loan. In addition, if your loan is determined to no longer be in a Special Flood Hazard Area, the Bank will notify you.