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What are the benefits of owning a home?
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I can barely pay my monthly bills. How can I possibly buy a home?
Answer - What are the advantages of working with Park Bank on my mortgage or refinance?
Answer -
How do I determine how much I can afford to pay for a house?
Answer - How do I know which type of mortgage is best for me?
Answer - Can I apply for a loan before I find a home?
Answer - What is the difference between a fixed-rate loan and an adjustable-rate loan?
Answer - What is the difference between a mortgage with local servicing and one that is "sold"?
Answer - What is an ARM?
Answer - What is PMI?
Answer - What is APR?
Answer - What are points?
Answer - What is a Title Commitment?
Answer - What type of insurance is required on my property?
Answer
Q : What are the benefits of owning a home?
A : Homeownership provides benefits both to the families that enjoy what many refer to as the “American dream” as well as to the communities in which they live.If you’re waiting to buy a home until you’ve saved more money or paid off your debts, you may be overlooking the costs of not buying a home. Among these are big tax breaks. On a typical mortgage, you can deduct approximately $13,000 a year in interest and real estate taxes on your annual tax return.
Moreover, the accrued equity that homeowners enjoy as they pay down their mortgage and their property retains its value or even appreciates in value has led some to refer to homeownership as a “forced savings plan.” Consider, for example, that if you buy a home today for $180,000 and it appreciates at a rate of five percent per year (a conservative estimate based in Dane County), your home will be worth about $253,000 in just seven years (the typical period of time first time buyers stay in their homes). That’s a $73,000 return on your investment!
Homeownership also contributes to general well-being. Studies show that owning a home increases self esteem and overall satisfaction with one’s life. Homeowners tend to feel a greater sense of control over their environment, and studies show that homeownership benefits children, as judged by behavior and scholastic performance.
Homeownership also strengthens society. Homeowners have a greater economic and emotional stake in their communities, and, thus, are more likely to work to maintain social harmony.
Q : I can barely pay my monthly bills. How can I possibly buy a home?
A : As part of Park Bank's mortgage process we will, when appropriate, recommend steps you can take to improve your financial situation so that you can buy a home -- even if that goal seems unattainable to you now. With the help of a Park Bank mortgage lender, you may be able to achieve this dream sooner than you think possible.
Q : What are the advantages of working with Park Bank on my mortgage or refinance?
A: At Park Bank, our purpose is not to close loans, but to open doors. When it comes to mortgages, we do more than a typical bank. From helping you determine how much home you can afford to putting together the right mortgage to fit your situation and being right by your side at closing, we do everything we can to maximize your savings and minimize your hassles.
Q : How do I determine how much I can afford to pay for a house?
A : There's nothing worse than finding a home that makes your heart swell and then learning that you can't afford it. Our mortgage planning calculator will help you determine how much home you can afford. A Park Bank mortgage lender can also provide guidance on down payment and monthly payment amounts that will fit your budget. We will also prepare you for the upfront costs associated with buying a home.
Q : How do I know which type of mortgage is best for me?
A : 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 and how long you intend to keep your house. Park Bank can help you evaluate your choices and help you make the most appropriate decision.
Q : Can I apply for a loan before I find a home?
A : Yes. By obtaining pre-approval, you gain the upper hand in searching for and negotiating the price of the home that's right for you. Pre-approval assures home sellers that you are a qualified buyer, thereby increasing your bargaining power and boosting the odds of having your offer accepted.
Park Bank will approve your loan subject to you finding the right home. When that happy day arrives, you can simply call your mortgage lender to complete your application.
Q : What is the difference between a fixed-rate loan and an adjustable-rate loan?
A : With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest 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. There are advantages and disadvantages to each type of mortgage, and a Park Bank lender will discuss these with you when determining the best lending solution to fit your needs.
Q : What is the difference between a mortgage with local servicing and one that is "sold"?
A : Park Bank offers both types of mortgages and each has its advantages. Locally-serviced means that your payment is mailed to Park Bank and we process the payments and administer the tax escrow account. If you ever have a question about your mortgage, you can contact our loan servicing department here in Madison where up-to-date information concerning your payment history and loan balance is kept.
A "sold" loan, on the other hand, is not so serviced by Park Bank. Your payments and inquiries on current balance and escrow accounts will be handled by the service organization. A person may opt for a sold loan because of a special loan program offered or due to a better available interest rate.
Q : What is an ARM?
A : ARM stands for Adjustable-Rate Mortgage. An ARM is an attractive alternative for those who plan to own their homes for the time of the initial fixed portion of the loan or less. The loan is fixed for the initial adjustment period and then adjusts annual based on an index, such as the One-Year Treasury Bill rate plus a margin. A 5/1 ARM, for example, is fixed for five years and adjusts each year thereafter. ARM loans have annual and lifetime caps in case of an extreme change in the indexed rate. Many borrowers can save a substantial amount of money by choosing an ARM loan that fits their specific situation.
Q : What is PMI?
A : PMI stands for Private Mortgage Insurance. PMI is generally required on conventional loans when a borrower makes a down payment of less than 20% of the cost of the home being purchased. PMI protects the lender from loss if the borrower fails to make the mortgage payments. You may, depending on the loan program, ask for the PMI requirement to be removed when you have paid off 20% of your mortgage. This will decrease your total monthly loan payment. Please contact Park Bank's loan servicing department for more information on the PMI requirements of your loan.
Q : What is APR?
A : APR is the Annual Percentage Rate, the cost of the loan plus the rate and fees expressed as a yearly rate. This figure allows consumers to compare different loan programs according to a common denominator. Loans with the same interest rate but different fee structures will have different APRs.
Q : What are points?
A : One point is 1 percent of the loan amount. For example, one point on a $300,000 mortgage is $3,000. The number of points charged for a mortgage depends on the circumstances. Sometimes it makes sense to pay higher points to get a lower interest rate as you will end up paying less over the life of the loan. You will pay the points at closing and can deduct the point amount as interest on your income tax return. Consult a tax professional for more specific requirements and instructions for claiming this tax deduction.
Q : What is a Title Commitment?
A : Title Companies review all recorded transactions on record to determine whether any title defects exist that may interfere with the clear transfer of ownership of the property. Such a commitment expressed by a title company ensures that the property can be legally sold.
Q : What type of insurance is required on my property?
A : If you are purchasing a home, you must obtain homeowner's insurance prior to closing.
If you are purchasing or refinancing a condominium, you will be required to provide the name and contact information for the homeowner's association or the name of the homeowner's association's insurance agent. Condominiums generally have a blanket insurance policy covering the structure of the buildings. Most association policies do not provide interior structural or personal content coverage. You may elect to have a separate unit owner's policy.
If you are refinancing your mortgage, you will be asked to provide the name and contact information of your insurance provider.
If you are building a new home, you must provide proof of builder's risk insurance prior to your loan closing. Builder's risk is a rider on a policy that covers potential problems -- such as theft of materials -- during construction.
If the home you are purchasing is non-owner occupied, you must carry a fire policy. This type of policy may also be referred to as a landlord's or commericial policy.
If any of the structures you are financing are located in a Special Flood Hazard Area, Federal Law requires flood insurance.
Coverage amounts must be equal to 100% of the full replacement cost (or insurable value) of the improvements. The policy must be in effect for a full year.
For locally-serviced loans, the policy must have the following mortgagee clause: Park Bank, its Successors and/or Assigns, P.O. Box 8969, Madison, WI 53708-8969. For servicing-sold loans, contact your mortgage lender for information.
