Answers to your home loan questions

FAQ

It’s OK to have questions. With our FAQ database covering a range of different Home Loan topics, we’ve got the answer you’re looking for.

GENERAL

Do I need a fixed rate or an adjustable rate?

A fixed-rate loan has an interest rate that remains the same over the life of the loan, which makes the loan principal and interest payment the same every month. Adjustable-rate loans, although they tend to provide a lower interest rate, come with more risk than a fixed-rate because the interest rate is subject to change over the life of the loan. Consider whether your budget can handle an increase in the loan payment over time; also take into consideration the length of time you plan to remain in the property.

Can I finance my rental property?

Yes, you can. The interest rate may be higher than a loan for a primary residence.

Why should I refinance?

There could be many benefits to a refinance of a loan. Refinances help re-structure the debt by either reducing the interest rate or the term of the loan, which can help save money over the life of the loan. A refinance can also convert an adjustable-rate loan to a fixed rate.
Calculate how much you would save each month by refinancing to help see if it makes sense to refinance.

What are points?

Points are a one-time fee that a borrower pays to lower the interest rate. One point equals one percent of your loan amount.

What is the difference between interest rate and APR?

The interest rate is the contract rate of the loan, and essentially what it will cost you to borrow the money. The APR is the total cost over the life of the loan, including other fees paid.

How is my interest rate determined?

Rates are based on a variety of factors such as the loan purpose, your credit history and ability to repay, the value of the collateral, and the loan amount, to name a few.

Is the interest I pay on the loan tax-deductible?

Your tax situation is unique. Please consult a tax adviser to assess your individual situation.

What are the closing costs?

Closing costs are items paid in connection with the settlement of your loan, including any appraisal fees, title insurance fees, pre-paid interest, and documentation fees. These costs will vary from loan to loan, depending on the loan type chosen, property location, and other factors. You will receive an estimate of your closing costs prior to closing in order for you to review and decide whether to proceed with the transaction.

What is mortgage insurance (also known as PMI)?

Private Mortgage Insurance (PMI) is a type of insurance product that is protection for the lender against a lost which can occur if a borrower defaults on the loan. PMI is typically required on a purchase transaction when the borrower has less than a 20% down payment, or a refinance transaction when the borrower has less than 20% equity in the property being refinanced. The cost of the mortgage insurance is usually added to the monthly mortgage payment.

What factors are considered in making the loan decision?

The main factors we examine are your credit history, the property value, and your debt-to-income ratio.

Do I need a down payment?

Traditionally, a down payment is needed on a purchase transaction, unless it is a loan product that allows for 0% down. The amount of downpayment required will vary depending on a variety of factors, and can also affect the interest rate you receive, and whether PMI will be required.

What documents will I have to provide?

Documents required for each transaction are proof of income and assets, which usually include copies of W-2 statements or full tax returns, recent pay stubs, and account statements. Whether more documentation will be needed varies with every transaction.

How long will it take to process my loan?

Depending on how busy the lender is, it can take up to 45 or 60 days. Providing requested documents as soon as possible to the lender may help speed up the process. Make sure any job change, change in salary, or new debt is reported to your lender as soon as possible, as these changes can cause delays in the process.

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