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Thank you for inquiring about our real estate financing program. We are often asked what our terms are on real estate loans and frankly, the answer is that it depends upon several different factors as explained below.
How are your interest rates determined?
General economic conditions will dictate interest rates for a given period of time and provides the primary basis for interest rates in general. What we have to pay for money and how successful we are in our local community to attract and retain depositors is the key to what we can offer borrowers for a real estate loan product. Our cost of operations is also a very relevant factor in our pricing.
Where will I make my payments?
We do keep the loans that we make, which means that you will not be doing business with a stranger. This can be very helpful in the future if a change in your loan for home improvements and so forth should arise.
Do you offer a fixed rate loan?
We offer what is referred to as a balloon loan. This is a loan that is structured with all the similar options of a long-term fixed-rate real estate loan, except that it "balloons" at the end of the stated period of time, usually one, three, five or seven years after the loan's start date. The language is such in a balloon loan that the full interest and principal is due upon the maturity of the balloon.
What happens when the loan balloons?
Generally, a modification document would be drawn up at the balloon date to adjust the terms and conditions to the then-current terms and the loan would proceed on accordingly. The only cost would be a recording fee for the modification of mortgage, currently $15.00-$18.00.
Why isn't the rate "locked in"?
We can't lock in a fixed rate as banks used to do. Just as you are adverse to an interest rate change upward, so too is the bank. In addition, we are required to match terms of loans and deposits. Depositors simply do not lock-in rates for a long term in the rate environments we have experienced in recent times.
How is my rate determined?
Your specific rate is determined by several factors. The lower the loan to value ratio (LTV), the lower the interest rate, in keeping with the element of risk pricing. We also offer discounts for substantial relationships with the bank and last, a deduction if your payment is automatically deducted from a deposit account with us each month.
Why should I have an automatic payment?
This keeps you from having to write a check each month and it helps us to hold our operating costs down. Each month you will be provided with a detailed breakdown on your checking account statement as to the beginning balance, the principal and interest paid, and the ending balance of the loan after the payment as well as the interest paid year-to-date. Your only responsibility is to have the money in the account on the designated date.
What will my closing costs be?
Closing costs can be expensive, but we strive to keep costs to a minimum. The only expenses are those that are regulatorily required, such as an appraisal which typically runs $175.00-$200.00. Other buyer's costs include a fee for the recording of the deed and mortgage, which usually runs $35.00-$41.00.
Do you include taxes and insurance in the payment?
We do not escrow for insurance and real estate taxes, but highly suggest that you establish a monthly savings program for those periodic payments. This can be accomplished by letting one of our customer service representatives know how much you would like transferred each month from your checking account to a your savings account. Then, when your bill is due, the money is already saved and has been earning interest for you as well.
Can I pay more than my payment?
We have no prepayment penalties. As long as you make the minimum payment as set forth in your loan documents, any amount paid above that will help to retire your simple interest loan faster.
How much of a home can I afford?
http://fnbpana.com/calcs/mortgage_calc.html
How much will my payments be?
http://fnbpana.com/calcs/loan_calc.html
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