Loan Programs

How are interest rates determined?
Interest rates fluctuate based on a variety of factors, including inflation, the pace of economic growth, and Federal Reserve policy. Over time, inflation has the largest influence on the level of interest rates. A modest rate of inflation will almost always lead to low interest rates, while concerns about rising inflation normally cause interest rates to increase. Our nation´s central bank, the Federal Reserve, implements policies designed to keep inflation and interest rates relatively low and stable.

To get a better understanding, always consult with your Pride loan officer for advice on whether to lock or consider floating while your loan is in process and observe the market indices that will make the mortgage rates fluctuate.

What is an adjustable rate mortgage (arm)?
An adjustable rate mortgage, or an "ARM" as they are commonly called, is a loan type that offers a lower initial interest rate than most fixed rate loans. The trade off is that the interest rate can change after the initial term(1,3,5,7 or 10 years), usually in relation to an index, and the monthly payment will go up or down accordingly.

Weighing the feature of the lower payment at the beginning of the loan, you should consider the risk that an increase in interest rates would lead to higher monthly payments in the future. It´s a trade-off. You get a lower rate with an ARM in exchange for assuming more risk.

For many people in a variety of situations, an ARM is the right mortgage choice, particularly if your income is likely to increase in the future or if you only plan on being in the home for three to five years. This option can make the home more affordable to purchase.

Here´s some detailed information explaining how ARM´s work.

Adjustment Period
With most ARMs, the interest rate and monthly payment are fixed for an initial time period such as one year, three years, five years, or seven years. After the initial fixed period, the interest rate can change every year. For example, one of our most popular adjustable rate mortgages is a five-year ARM. The interest rate will not change for the first five years (the initial adjustment period) but can change every year after the first five years.

Index
Our ARM interest rate changes are tied to changes in an index rate. Using an index to determine future rate adjustments provides you with assurance that rate adjustments will be based on actual market conditions at the time of the adjustment. The current value of most indices is published weekly in the Wall Street Journal. If the index rate moves up so does your mortgage interest rate, and you will probably have to make a higher monthly payment. On the other hand, if the index rate goes down your monthly payment may decrease. The most common index used is the LIBOR (London Interbank Offered Rate) index.

Margin
To determine the interest rate on an ARM, we´ll add a pre-disclosed amount to the index called the "margin." If you´re still shopping, comparing one lender´s margin to another´s can be more important than comparing the initial interest rate, since it will be used to calculate the interest rate you will pay in the future.

Interest-Rate Caps
An interest-rate cap places a limit on the amount your interest rate can increase or decrease. There are two types of caps: 1. Periodic or adjustment caps, which limit the interest rate increase or decrease from one adjustment period to the next. (usually 3,5 or 7 years) 2. Overall or lifetime caps, which limit the interest rate increase over the life of the loan.

As you can imagine, interest rate caps are very important since no one knows what can happen in the future. All of the ARMs we offer have both adjustment and lifetime caps. Please ask your Pride Mortgage loan officers for more details.

Negative Amortization
"Negative Amortization" is a term that describes a situation when your monthly payment changes to an amount less than the amount required to pay interest due. If a loan has negative amortization, you might end up owing more than you originally borrowed. The option arm or pay option loan is a product that may create negative amortization. These loans allow you to up to 4 monthly payment options with minimum payment being an option which may cause the “negative amortization”

Contact a Loan Officer
Selecting a mortgage may be the most important financial decision you will make and you are entitled to all the information you need to make the right decision. Don´t hesitate to contact a Loan Officer at Pride Mortgage if you have questions about the features of our adjustable rate mortgages.

Should I pay points?
Each point is equal to one percent of the loan amount. You pay them, up front, at your loan closing in exchange for a lower interest rate over the life of your loan. This means more money will be required at closing, however, you will have lower monthly payments over the term of your loan.

To determine whether it makes sense for you to pay points, you should compare the cost of the points to the monthly payments savings created by the lower interest rate. Divide the total cost of the points by the savings in each monthly payment. This calculation provides the number of payments you´ll make before you actually begin to save money by paying points. If the number of months it will take to recoup the points is longer than you plan on owning this home, you should consider the loan program option that doesn´t require points to be paid.

An example of paying 1 point would be:
A loan for $150,000; one point would be equal to $1500. Two points would equal $3000

Is comparing APR’s the best way to determine the lowest rate?
You can use the APR as a guideline to shop for loans but you should not depend solely on the APR in choosing the loan program that´s best for you. You are best served by looking at total fees and considering future rate adjustments and the length of time that you plan on having the mortgage. The Federal Truth in Lending law does require that all financial institutions disclose the APR when they advertise a rate. The APR is designed to present the actual cost of obtaining financing, by requiring that some, but not all, closing fees are included in the APR calculation. These fees in addition to the interest rate determine the estimated cost of financing over the full term of the loan. Please note, most people do not keep the mortgage for the entire loan period so it may be misleading to spread the effect of some of these up front costs over the entire loan term. Also note that the APR does not include all the closing fees and lenders are allowed to interpret which fees they include. Fees for things like appraisals, title work, and document preparation are not included even though you´ll probably have to pay them.

For adjustable rate mortgages, the APR can be even more confusing. Since no one knows exactly what market conditions will be in the future, assumptions must be made regarding future rate adjustments. The APR on an ARM are typically less than the proposed interest rate.

Don´t forget that the APR is an effective interest rate--not the actual interest rate. Your monthly payments will be based on the actual interest rate, the amount you borrow, and the term of your loan.

Pride Mortgage does its utmost to provide you with the most accurate estimates of closing costs in your particular state. We are very proud that our customers will not get any surprises when they go to sign the final mortgage documents at the closing.

Should I lock in my rate or let it float?
Mortgage interest rate movements are as hard to predict as the stock market and no one can really know for certain whether they´ll go up or down.

If you have a hunch that rates are on an upward trend then you´ll want to consider locking the rate as soon as you are able. Before you decide to lock, make sure that your loan can close within the lock-in period. It won´t do any good to lock your rate if you can´t close during the rate lock period. If you´re purchasing a home, review your contract for the estimated closing date to help you choose the right rate lock period. If you are refinancing, in most cases, your loan could close within 30 days. However, if you have any secondary financing on the home that won´t be paid off, allow some extra time since we´ll need to contact that lender to get their permission. If you think rates might drop while your loan is being processed, take a risk and let your rate "float" instead of locking. After you apply, you can lock in by contacting your Loan Officer by telephone. Your Loan Officer will then send you a rate lock form to sign and return, locking your interest rate for the term of the rate lock.

As always, consult with your loan officer at Pride Mortgage to discuss the current rate environment and your loan particulars to determine your best course.

What are the advantages to applying on line with Pride Mortgage?
Apply at your convenience.
There´s no need to make an appointment with a Loan Officer when you choose Pride on- line. You can complete the loan application in the morning or at midnight in the convenience of your own home without any pressure to make a final decision until you are ready!

Personal Assistance whenever you need it.
Pride Mortgage offers personalized support during the entire loan process. At any time, you can call or e-mail your Loan Officer or loan analyst who can answer your questions or provide advice. Applying on Line with Pride offers you the convenience of applying at home with the added benefit of a full service lender. We will always answer your questions!

What are the advantages to a 15 year mortgage?
A 15-year fixed rate mortgage gives you the ability to own your home free and clear in half the time of most home owners! And, while the monthly payments are somewhat higher than a 30-year loan, the interest rate on the 15-year mortgage is always lower, and more important - you´ll pay less than half the total interest of the traditional 30-year mortgage.

Consult with the mortgage calculator to illustrate the difference in payments and see the total savings you will experience by paying your mortgage off in 15 years. You can also consult with a Pride Mortgage loan officer for a full analysis of the savings and they will help you determine if a 15 year mortgage will work for you.

Why Consider a 15-Year Mortgage?
The 15-year fixed rate mortgage offers an alternative to the common 30 year term and saves you thousands of dollars in interest. Consider making only 15 years of mortgage payments and saving the same monthly payment for 15 years into a savings or investment account and the 15 year mortgage may be for you!

You will own your home faster with this kind of mortgage, and can then begin to consider the opportunity to use the extra money for other pursuits. Homebuyers, who are more established in their careers, have higher incomes and whose desire is to own their homes before they retire, may prefer this mortgage.

Advantages and Disadvantages of a 15-Year Mortgage
Advantages associated with a 15-year fixed rate mortgage: 1.A lower fixed interest rate! 2.You will own your home in half the time it would take with a traditional 30-year mortgage. 3.You will save a tremendous amount of interest over the life of your loan. The lower interest rate added to the shorter loan life that creates real savings for 15-year fixed rate borrowers.

Disadvantages associated with a 15-year fixed rate mortgage are:
1.The payments are larger vs a 30 year mortgage. 2. You won´t have the maximum mortgage interest tax deduction possible because you´ll pay less total interest on the 15-year fixed rate mortgage.

Compare Them Yourself
Use our 15-year to 30-year comparison calculator to help decide which loan term is best for you.

What are the fees to apply on line with Pride Mortgage?
There is no cost at all for completing our on line application! After your loan is approved, you can decide whether you wish to pay the application fee so that you can lock in an interest rate and we can begin to process your request.

Please consult with your Pride Mortgage loan officer to discuss the application fee.

When can I lock in my interest rate?
You can lock in your interest rate and points as soon as your loan is approved and you pay the application fee. If you complete your application today, and your request is approved, you´ll have the opportunity to pay the application fee via credit card and can lock in your great rate immediately.

If we need to review your information before providing your loan approval, a Loan Officer will contact you and you´ll have the opportunity to lock your rate and fees at that time.

What is your rate lock policy?
General Statement

The interest rate market is subject to movements without advance notice. Locking in a rate protects you from the time that your lock is confirmed to the day that your lock period expires.

Lock-In Agreement
A lock is an agreement by the borrower and the lender and specifies the number of days for which a loan´s interest rate and points are guaranteed. Should interest rates rise during that period, we are obligated to honor the committed rate. Should interest rates fall during that period, the borrower must honor the lock.

When Can I Lock?
You can lock in your interest rate as soon as your loan has been submitted and approved using out automated underwriting system. Your Pride loan officer will consult with you;
Review the current rates and programs that interest you and offer to lock your interest rate for the underwriting period. Leading up to your planned closing.

Fees
We do not charge a fee for locking in your interest rate.

Lock Period
We currently offer 30, 45 and 60 day lock-in periods on our site. This means your loan must close and disburse within this number of days from the day your lock is confirmed by us. Pride also offers extended locks to cater to your individual needs.

Lock Confirmation
Once locked,

Lock Changes
Once we accept your lock, your loan is committed into a secondary market transaction. For the most part, we are not able to renegotiate lock commitments. However, on a case by case basis, locks can be extended for specific time periods. Please note that fees will be attached to any extension.

Do you charge a pre-payment penalty
None of the loan programs mentioned on this site have pre-payment penalties. You can pay off your mortgage any time with no additional charges. However, there are other alternative programs offered by Pride Mortgage which may require pre-payment penalties. Ask your Loan Officer for more details.

Tell me more about associated closing fee’s and how they are determined?
A home loan often involves many fees, such as the appraisal fee, title charges, closing fees, and state or local taxes. These fees vary from state to state and also from lender to lender. Any lender or broker should be able to give you an estimate of their fees, but it is more difficult to tell which lenders have done their homework and are providing a complete and accurate estimate. We take quotes very seriously. We´ve completed the research necessary to make sure that our fee quotes are accurate to the city level - and that is no easy task!

To assist you in evaluating our fees, we´ve grouped them as follows:

Third Party Fees
Fees that we consider third party fees include the appraisal fee, the credit report fee, the settlement or closing fee, the survey fee, tax service fees, title insurance fees, flood certification fees, and courier/mailing fees.

Third party fees are fees that we´ll collect and pass on to the person who actually performed the service. For example, an appraiser is paid the appraisal fee, a credit bureau is paid the credit report fee, and a title company or an attorney is paid the title insurance fees.

Typically, you´ll see some minor variances in third party fees from lender to lender since a lender may have negotiated a special charge from a provider they use often or chooses a provider that offers nationwide coverage at a flat rate. You may also see that some lenders absorb minor third party fees such as the flood certification fee, the tax service fee, or courier/mailing fees.

Fees that we consider to be taxes and other unavoidables include: State/Local Taxes and recording fees. These fees will most likely have to be paid regardless of the lender you choose. If some lenders don´t quote you fees that include taxes and other unavoidable fees, don´t assume that you won´t have to pay it. It probably means that the lender who doesn´t tell you about the fee hasn´t done the research necessary to provide accurate closing costs.

Lender Fees
Fees such as points, document preparation fees, and loan processing fees are retained by the lender and are used to provide you with the lowest rates possible.

This is the category of fees that you should compare very closely from lender to lender before making a decision.

Required Advances
You may be asked to prepay some items at closing that will actually be due in the future. These fees are sometimes referred to as prepaid items.

One of the more common required advances is called "per diem interest" or "interest due at closing." All of our mortgages have payment due dates of the 1st of the month. If your loan is closed on any day other than the first of the month, you´ll pay interest, from the date of closing through the end of the month, at closing. For example, if the loan is closed on June 15, we´ll collect interest from June 15 through June 30 at closing. This also means that you won´t make your first mortgage payment until August 1. This type of charge should not vary from lender to lender, and does not need to be considered when comparing lenders. All lenders will charge you interest beginning on the day the loan funds are disbursed. It is simply a matter of when it will be collected.

If an escrow or impound account will be established, you will make an initial deposit into the escrow account at closing so that sufficient funds are available to pay the bills when they become due.

If your loan requires mortgage insurance, up to two months of the mortgage insurance will be collected at closing. Whether or not you must purchase mortgage insurance depends on the size of the down payment you make.

If your loan is a purchase, you´ll also need to pay for your first year´s homeowner´s insurance premium prior to closing. We consider this to be a required advance.

What is Title insurance and why do I need it?
If you´ve ever purchased a home before, you may already be familiar with the benefits and terms of title insurance. But if this is your first home loan or you are refinancing, you may be wondering why you need another insurance policy.

The answer is simple: The purchase of a home is most likely one of the most expensive and important purchases you will ever make. You, and especially your mortgage lender, want to make sure the property is indeed yours: That no individual or government entity has any right, lien, claim, or encumbrance on your property.

The function of a title insurance company is to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly, and that your interests as a homebuyer are fully protected.

Title insurance companies provide services to buyers, sellers, real estate developers, builders, mortgage lenders, and others who have an interest in real estate transfer. Title companies typically issue two types of title policies:

1) Owner´s Policy. This policy covers you, the homebuyer.
2) Lender´s Policy. This policy covers the lending institution over the life of the loan.

Both types of policies are issued at the time of closing for a one-time premium, if the loan is a purchase. If you are refinancing your home, you probably already have an owner´s policy that was issued when you purchased the property, so we´ll only require that a lender´s policy be issued.

Before issuing a policy, the title company performs an in-depth search of the public records to determine if anyone other than you has an interest in the property. The search may be performed by title company personnel using either public records or, more likely, the information contained in the company´s own title plant.

After a thorough examination of the records, any title problems are usually found and can be cleared up prior to your purchase of the property. Once a title policy is issued, if any claim covered under your policy is ever filed against your property, the title company will pay the legal fees involved in the defense of your rights. They are also responsible to cover losses arising from a valid claim. This protection remains in effect as long as you or your heirs own the property.

The fact that title companies try to eliminate risks before they develop makes title insurance significantly different from other types of insurance. Most forms of insurance assume risks by providing financial protection through a pooling of risks for losses arising from an unforeseen future event, say a fire, accident or theft. On the other hand, the purpose of title insurance is to eliminate risks and prevent losses caused by defects in title that may have happened in the past.

This risk elimination has benefits to both the homebuyer and the title company. It minimizes the chances that adverse claims might be raised, thereby reducing the number of claims that have to be defended or satisfied. This keeps costs down for the title company and the premiums low for the homebuyer.

Buying a home is a big step emotionally and financially. With title insurance you are assured that any valid claim against your property will be borne by the title company, and that the odds of a claim being filed are slim indeed.

What is mortgage insurance and why do I need it?
First of all, let´s make sure that we mean the same thing when we discuss "mortgage insurance." Mortgage insurance should not be confused with mortgage life insurance, which is designed to pay off a mortgage in the event of a borrower´s death. Mortgage insurance makes it possible for you to buy a home with less than a 20% down payment by protecting the lender against the additional risk associated with low down payment lending. Low down payment mortgages are becoming more and more popular, and by purchasing mortgage insurance, lenders are comfortable with down payments as low as 3 - 5% of the home´s value. It also provides you with the ability to buy a more expensive home than might be possible if a 20% down payment were required.

The mortgage insurance premium is based on loan to value ratio, type of loan, and amount of coverage required by the lender. Usually, the premium is included in your monthly payment and one to two months of the premium is collected as a required advance at closing.

It may be possible to cancel private mortgage insurance at some point, such as when your loan balance is reduced to a certain amount - below 75% to 80% of the property value. Recent Federal Legislation requires automatic termination of mortgage insurance for many borrowers when their loan balance has been amortized down to 78% of the original property value. If you have any questions about when your mortgage insurance could be cancelled, please contact your Loan Officer. Mortgage Insurance can be creatively avoided by reviewing options with your Loan Officer. Your Loan Officer at Pride Mortgage can often offer a second mortgage or Equity line of credit in order to avoid the monthly mortgage insurance fees. Ask your Loan Officer if you are eligible and how this type of mortgage could work for you.

What is the maximum amount of money I can borrow?
The maximum percentage of your home´s value depends on the purpose of your loan, how you use the property, and the loan type you choose, so the best way to determine what loan amount we can offer is to complete our on-line application and discuss your options with a Pride Mortgage loan officer.