Mortgage FAQ’s

Fixed-Rate loans – The interest rate as well as the principal and interest payments stay the same over the term of the loan.  However, Taxes and insurance are likely to increase.  This type of loan gives you the greatest “payment certainty” for your budget.

Adjustable-Rate Mortgages (ARMs) –_  An ARM loan may make sense for someone who plans to sell the house in the first 5-7 years.  It may also be a good choice for someone who is comfortable with the risk of the payment going up in 5 or 7 years if market interest rates rise.

Construction Mortgage Loans – Loans designed for someone who plans to build a home with a contractor (or who is performing the general contractor role himself/herself). Here at SBW, our construction loan features the simplicity of a single closing.  You pay interest-only during the first year on the balance of the loan you have used.  At the end of twelve months, construction should be complete and you begin to pay both principal and interest on the full loan amount.  We have options for a longer construction period. Talk to us!

Land Loans – These loans are designed for someone who wants to purchase land without a dwelling.  Often, borrowers will use a land loan to purchase property with the intent to construct a home at a later date. For many people, it’s a nice way to get started on the dream of home ownership!

Manufactured Home (previously called “Mobile Home”) Loans – These loans are designed for a home built on a frame and placed on a slab or foundation. Some manufactured homes are remodeled with significant additions and may also be eligible for this loan. We’d be happy to discuss your specific situation with you – so give us a call!

Home Equity Loans (HELOANs) and Home Equity Lines of Credit (HELOCs) — When you live in a home, your equity is tied up in the home itself. You can make use of this value through a home equity lending product.

• HELOAN provides you with a single lump sum upfront, and in return you make fixed payments over the life of the loan.
• HELOC gives you a revolving credit line to use for large expenses or to consolidate other higher-interest rate debt (such as credit card debt). Your home is used as collateral and these are considered mortgages. Call or come see us and we’ll be happy to help you determine if one of these options makes sense for your situation.

Accessory Dwelling Unit (ADU) Construction Loan – An Accessory Dwelling Unit is a self-contained living space that includes its own kitchen, bathroom, and sleeping/living area. It can be attached to, within, or detached from your primary residence. Our ADU Construction Loan features interest-only payments during construction, then automatically converts to a fixed-rate mortgage when the ADU is finished (no second closing).

SBW will focus on four major categories for approval.  ** There are specialty programs that may not require all.

1. Credit score

• • Most lenders require a minimum FICO score of 620 for conventional loans. Having a high score can lead to better interest rates.

2. Income and Employment

• • Lenders want to verify stable income that can comfortably cover your monthly mortgage payments.
  • Ability to repay – Lenders will review your income sources such as annual salary, bonus, commissions or self-employment income.
  • Lenders will verify your employment history, ideally at least two years in the same field.

3. Debt to Income – DTI

• • Monthly debt to income compares your total monthly debt payments to your gross monthly income.
  • Lenders generally prefer a debt to income (DTI) to be 43% or less. This would be your total monthly debt payments (including new mortgage, taxes and ins) should not exceed 43% of your monthly income.

4. Down Payment and Savings

• • Review your assets, such as savings, investments, retirement accounts and other property to assess your ability to repay the mortgage loan.
  • Having sufficient savings to cover the down payment, closing costs and potential future expenses demonstrates your financial stability.

Pre-qualification is a non-binding estimate of what you might be able to borrow for your mortgage. Getting pre-qualified before you start house-hunting is a smart move because it shows sellers that you have the borrowing power to back up an offer. Here at SBW, if you want to get pre-qualified we’ll ask you for information about your income, savings, and debts. We may also ask for documents to show your financial history. Once the information has been verified, you will receive a letter (valid for 120 days) stating that you are “pre-qualified” for a mortgage loan of a certain amount. Providing the seller with a pre-qualification letter will make your offer to buy a home much more attractive. If you don’t want to show the seller your full pre-qualification limit, we can provide you with a letter showing a lower qualified amount tailored to your offer so you can negotiate more effectively.

Private Mortgage Insurance protects the lender if you stop making payments. Generally, PMI is required for loans where the borrower down payment is less than 20% of the home’s purchase price or appraised value (whichever is lower).

You can request that your PMI be cancelled once you have paid the loan down to 80% of the purchase price or original appraised value (again, whichever is lower). PMI will automatically be cancelled once the loan has been paid down to 78%.

If you have made significant improvements that raise the value of your home two to five years after closing, you can also request that your lender order an appraisal to see if the PMI may be cancelled (Note: the appraisal must be ordered by the lender and you will need to pay the cost of the appraisal). If your loan balance is less than 75% of the new appraised value, you can request that the lender cancel your PMI.

By definition, mortgage points paid in conjunction with mortgage is prepaid interest.  Typically results in obtaining a lower interest rate.

APR stands for Annual Percentage Rate, this is the annual cost of the loan, expressed as a percentage.  Important to note, this is NOT your interest rate on the loan.

• The interest rate is the percentage of the loan amount you pay as interest. The APR includes other fees such as origination fee, closing costs, and other charges associated with the loan.
• A higher APR means you will pay more for the loan over it’s lifetime, while the lower the APR means you will pay less.
• When comparing multiple loan offers, it is important to consider the APR rather than just the interest rate to get a more accurate comparison of the true cost of the loan.

Your relationship with our Mortgage Lending Team does not end at the closing table, it actually begins.  With the exception of the few specialty loan programs, SBW will continue to service your mortgage loan.  Loan Servicing is the process of managing a loan after it has closed.  Tasks include collecting monthly loan payments, record keeping, managing escrow accounts for taxes, flood insurance and homeowner’s insurance and providing customer service.   If you should need to speak to our loan servicing department, contact (877)-925-7653.

Loan servicing is important as it plays a crucial role in maintaining the smooth functioning of the loan and protects the lender and YOU as the borrower.

• Our servicing team ensures loan payment collections
• Our team is your dedicated primary contact for you to call with any questions and general inquiries.
• Our team manages the escrow accounts for your annual home owners insurance, property taxes and flood insurance (if needed).

At Savings Bank of Walpole, every loan we originate is serviced locally by knowledgeable people right here in New Hampshire. When you call us, after a short-recorded introduction, you are automatically connected to a real, local person — so you are not caught in an automated voice response system. In addition, your local SBW Mortgage Loan Officer is always willing to help. If you ever have a problem with your loan, that really matters.

Mortgage Broker:

•  They work on behalf of the borrower to find the most suitable mortgage from a variety of lenders.
• Do not lend their own money or approve mortgage loans
• They facilitate the loan application process, helping customers with the complexities of finding the best loan.
• They may charge a fee for their services

Mortgage Banker:

• They are employed by a specific lending institution.
• Works directly with borrowers to provide loans from their employer’s product line.
• Offers a range of loan products and services beyond mortgage
• Can service the loans themselves or sell to investors

Portfolio Lender:

• The Lender holds the mortgages on their books instead of selling them on the secondary market (ie. Freddie Mac or Fannie Mae)
• Often offers more flexibility on loan terms due to not needing to meet specific investor guidelines
• Sometimes has more specialized lending criteria, such as focusing on specific types of properties. Such as SBW offers a ADU (Accessory Dwelling Unit) loan product.

SBW is all of these! We encourage you to contact us to get started finding the best mortgage for your home buying journey.

A home appraisal and a home assessment each deal with the value of a home; while a home inspection deals with the condition of the home.

Appraisal:

An appraisal is typically required by the lender to provide an estimate of the fair market value of the home. The lender will use the appraisal as part of the lending decision. An appraisal is a walk-through and a general assessment of a home, analyzed with the help of nearby comparable sales. It is conducted by a professional state-certified or licensed appraiser. While an appraiser will visit a home in person, the majority of the work will be done in their office, as they compare the home’s features, location, and finishes with other comparable recent sales in the area.

Assessment:

An assessment is a different expression of the value of a home. This is a value determined by the city or town in which the home is located, for the purpose of calculating property taxes. An assessment has no bearing on a mortgage lender’s loan decision.

Inspection:

An Inspection is typically requested by the buyer and is an in-person evaluation of the condition of the home. A licensed home inspector will spend time on site doing a comprehensive review of the home’s condition, both visually and by testing functionality of major systems (items like the roof, the heating, electrical, plumbing, etc.). The inspector will typically provide a report to the buyer on the condition of the home and any areas that may need work. The buyer will consider this report and potentially request items be fixed by the seller before the closing on the purchase of the home. On rare occasions, the lender may ask for a copy of the inspection if a

The main difference between a fixed rate mortgage and an adjustable rate mortgage (ARM) is how the interest rate is handled over the life of the loan.

Fixed Rate Mortgages:

• Consistent Interest Rate
• Stability and predictability with knowing exactly what your monthly payments will be and avoid potential increases in interest rates
• Fixed Rate mortgages can be for 15, 20 or 30 years

Adjustable Rate Mortgages (ARMs)

• Initial Fixed Rate Period – ARMS start with a fixed rate for a specific period such as 3, 5, 7 or 10 years.
• Variable Interest Rate after the Initial Fixed Rate period – after the fixed rate period, the interest rate adjusts periodically (e.g. annually or semi-annually)
• Potential for lower initial payment – ARMS often start with a lower interest rates for a initial fixed period making the loan more affordable.
• Risk of Increasing Payments – after the initial fixed rate period, the interest rate can increase. Therefore the monthly payments will increase which could make the loan less affordable.
• Most ARMS have limits on how much the interest rate and monthly payments can increase or decrease at each adjustment period, and over the life of the loan. SBW ARM products have an interest rate change of 2.0% up or down per year with a maximum increase (or “cap”) of 6% over the life of the loan.  These are referred to as Interest rate CAPS and Life of Loan CAP.

Come on in and see us, and we will gladly explain all your options as you decide whether to apply for a Fixed-Rate mortgage or an ARM.

A jumbo loan, also known as a non-conforming loan, is a mortgage that exceeds the confirming loan limits set forth by Fannie Mae and Freddie Mac.

Jumbo Loans may feature different interest rates (and sometimes different fees) versus conventional “conforming” mortgages. Talk to us if your loan fits into the Jumbo Loan category!

The answer depends on your situation and your financial goals. If you’re considering refinancing any home mortgage, one of SBW’s local home loan specialists will listen to your goals, discuss the variety of loan options available to you and walk you through the process. That’s the benefit of working with a local lender such as Savings Bank of Walpole.

• We are a local mutual savings bank; we only operate in our communities.
• We care about a relationship with you — not just booking a mortgage.
• We are competitive and we want to serve you and our community
• We make local underwriting decisions and understand our communities and the local real estate market better than a faraway lender.
• We service your loan right here in New Hampshire with people who will answer the phone when you call.
• When you bank with us, your money stays right here, working in your community.