Frequently Asked Questions

What's the Difference between Interest Rate and APR?
When you get a mortgage, you are charged two different rates--the annual percentage rate (APR) and the interest rate. Understanding the difference between the two rates is important and will help you make an informed decision when shopping for the right lender and the right loan.

Interest Rate
The interest rate is the yearly rate a lender charges for permitting the borrower to use money for a specific length of time. The rate is calculated by dividing the total amount of interest charged by the loan amount. For example, if a lender charges a customer $60 a year on a loan of $1000, then the interest rate would be (60 / 1000) x 100% = 6%.

Annual Percentage Rate
Annual percentage rate (APR) is the annual interest rate you pay on your loan and is the rate used to calculate your monthly payments. The amount of interest you pay is only one of the costs associated with your loan; there may be others.

Your APR includes both your interest and any additional costs or prepaid finance charges you might pay such as prepaid interest, private mortgage insurance, closing fees, points, etc. It represents the total cost of credit on a yearly basis after all charges are taken into consideration.

It will usually be slightly higher than your interest rate because it includes these additional items and assumes you will keep the loan to maturity.

When shopping for a mortgage--especially if it's your first time--it's important to understand the terminology surrounding the mortgage process. So do your research. Find out as much as you can so that you understand the loan process to make an educated and informed decision when it comes time to choose a loan and lender..

Why are there so many different rates and how should I choose one?
With so many interest rates on so many different kinds of loans out there, it is hard to know which is right for you. You shouldn’t take a rate just because it’s low. In fact, a lower rate on the wrong loan can cost you thousands of dollars. That’s why we discuss your financial goals with you and help you access the best rate on the right loan to help you achieve financial freedom.

What does PMI mean?
PMI stands for Private Mortgage Insurance. PMI protects lenders from losing money should a loan default or foreclosure occur. PMI is required on loans where 80.01% or more of the property is being paid for by the loan.What is an Adjustable Rate Mortgage (ARM)?
With an ARM loan, your interest rate may move up or down every year as market conditions change. ARM loans have rate caps that prevent the interest rate from raising or falling too much. ARM loans are usually amortized over 30 years and typically have the lowest monthly payments.

What are Hybrid ARMs?
A hybrid or intermediate-term ARM has a fixed interest rate for the first 3 to 10 years of the loan and then converts to an ARM that adjusts every year. Typically amortized over 30 years, they have a lower monthly payment than fixed-rate loans, but higher payments than ARMs.

What is a balloon payment or mortgage?
A balloon mortgage has a fixed interest rate and is amortized over 30 years. However, with a balloon mortgage, the loan must be paid in full in 5 or 7 years. Balloon mortgages feature fixed monthly payments that are typically lower than fixed-rate mortgages.

What are closing costs and how can I anticipate what they will be?
When the purchase or refinance of a property is finalized, various closing costs are collected, including:
- Discount Points, or fees paid to lower the interest rate
- Processing Fees
- Escrow Deposit
- Title Insurance
- Appraisal
- Lender Fees
- Credit Report
- Courier Charges
- Miscellaneous Closing

Is it possible to get a home loan with little or no money to put down?
It is possible to get a loan with little or no money down. However, this may not be the best strategy to help you meet your goals. We will work with you to get into the home you need, plus achieve financial freedom.

What does pre-approval involve and should I consider it?
Pre-approval allows you to obtain loan approval before you buy a home. It helps direct you to homes you can comfortably afford, and expedites the loan process when you find the home of your dreams. With The Manders Group, getting pre-approval is a simple, 3-step process:

First…Start by gathering the following documents that you will need when you meet with a FIRM Mortgage Planner from The Manders Group:
- Tax returns from the last two years.
- Your business tax returns from the last two years if you are self-employed.
- W-2 forms from the last two years.
- Your most recent pay stub(s) to include at least 30 days of year-to-date earnings.
- The most recent two months of checking/savings account statements.
- The most recent investment statements (stocks, mutual funds, IRA, 401(k), etc.).
- If applicable, a copy of divorce decrees and property statements.
- For VA loans, a copy of your Certificate of Eligibility and/or Form DD214. If you are currently in service, you will also need a Statement of Service from your Commanding Officer and your most recent LES statement.

Second…Complete the Personal Financial Statement.

Third…Contact us to set up an appointment to get started!What does it mean when you “lock in” a rate and is it a good idea?
Interest rates fluctuate based on a variety of factors, including inflation, the pace of economic growth, and Federal Reserve policy. While interest rates are hard to predict, if you think rates are on an upward trend, you may want to consider locking in your interest rate. (Before you decide to lock in, make sure that your loan can close within the lock in period. If it can’t, it won’t do you any good to lock in your rate.)
If you think interest rates might drop while your loan is being processed, you may want to “float” your interest rate instead of locking it in. You can lock in at least 5 days prior to your loan closing.

The Manders Group offers a variety of lock in programs:
Hard Lock - This is a guarantee that your loan will close at a specified interest rate if you are able to close your loan within the lock in period. Hard locks are available for 15 to 120 days. The longer the lock in period, the more discount points you have to pay.
Lock In With a

Float-Down Option - With this option, your interest rate will improve as market rates improve. If interest rates go up, your interest rate may go up. However, a “cap” limits the amount your rate can go up, and range from 1/2 to 1%. The lower your cap, the more discount points you will pay.

Lock In While You Shop For Your Home - This program lets our pre-approved customers lock in today’s interest rate while shopping for a home, giving them the peace of mind that their interest rate and monthly payments will remain affordable.

What is an Escrow Account?
Lenders put a portion of your monthly mortgage payment into an escrow account – a holding bin of funds to cover hazard and fire insurance and property taxes. When these payments are due, the lender pays them from the escrow account on your behalf. Escrow accounts are required for loans that cover 80.01% or more of the value of the property.

What is PITI?
PITI is the acronym (Principal, Interest, Taxes, and Insurance) used to cover what’s included in your monthly payment. Principal is the portion of your payment that goes toward the repayment of the money you borrowed. Interest is the portion of your payment that goes toward the interest you’re being charged on your loan amount. Taxes and Insurance are the portions of your payment held in an Escrow account to cover real estate tax and hazard and fire insurance when they come due.

When is paying the pre-payment penalty a good idea?
Believe it or not, there are times when we recommend to our customers that they pay a pre-payment penalty. Because everybody has different short and long-term financial goals, when and if to take a pre-payment penalty depends on the individual situation. When a potentially better mortgage loan comes along - as revealed by e-Rate Monitor, or one of First Mortgage Company's financial management tools, we produce a Total Cost Analysis comparison for you to consider how the new opportunity may work for you and your goals.
It's just one of the many ways we work with you for lifelong mortgage management.