- What are the various closing costs involved in a mortgage transaction?
Closing costs can be divided into 3 main categories:
You will be provided with an estimate of your closing costs soon after your application has been received. These estimates may change if your loan program or loan amount changes.
- Lender fees. Fees paid to the lender for the processing of your loan, such as discount points and origination and application fees.
- Third-party fees. Fees paid for services rendered by parties other than the lender, such as title insurance, flood determination and recording fees.
- Prepaid costs. Costs that are collected at the time of closing for items such as prepaid or per diem interest, property taxes and hazard insurance.
- How much home can I comfortably afford?
The amount of home you can afford is based on the amount of mortgage loan you can comfortably support. Generally, the amount of mortgage you qualify for is based on 3 factors:
- Your monthly payments as a percentage of income.
- How much cash you have for the down payment and closing costs.
- Your credit history.
- What types of mortgages are available?
There are many types of mortgages available, including mortgages that could be a good fit for first time homebuyers, homebuyers who need a low down payment and buyers who need very large loan amounts.
The most general concepts for types of loans are as follows:
Fixed-rate mortgage. You pay the same interest rate and same monthly payment of principal and interest for the duration of the mortgage. The most common terms are 30, 20 and 15 years. Fixed-rate mortgages are best if you plan on being in your home for many years.
Adjustable-rate mortgage (ARM). The interest rate stays fixed for an initial interest rate period, which typically ranges from 3 to 10 years. After that, the rate and monthly payment will adjust up or down annually for the life of the loan based on a specified index. An ARM is a good option if you believe interest rates will go down over the next few years or if you plan on staying in your home for just a few years. Due to the potential for significant monthly payment increases, borrowers should carefully consider their ability to comfortably handle increases if interest rates rise.
Combination loan. “Combination loans” refer to taking out two loans at the same time; a 'first lien' mortgage and a ‘second lien’ home equity loan or home equity line of credit. Taking out two loans may help you avoid the higher rates of a jumbo first mortgage when paired with a conforming first mortgage. Combination loans may allow you to build equity faster and/or lower your total monthly payment.
Affordable housing programs. I can assist in offering you information about affordable housing assistance programs in which we participate that can help with down payment and/or closing costs for qualified low-to moderate -income home buyers.
- What are the benefits of a 15-year mortgage?
A 15-year mortgage allows you to own your home in half the time of a conventional 30-year mortgage. Although payments are higher with a 15-year mortgage, you may save a considerable amount of money in interest over the life of your loan and build equity faster.
- What are the tax advantages of owning a home?
In most cases, the mortgage interest (and property tax) may be itemized and deducted from your taxable income, lowering your overall tax bill. This can make your after-tax cost of homeownership lower than renting. Please consult your tax advisor regarding interest deductibility.
- Should I get prequalified for a mortgage before I shop for a home?
Getting prequalified for your mortgage is an important step before you shop for a home. It tells you how much home you can buy and makes applying for your mortgage easier.Footnote 1
After completing your online Mortgage Prequalification Request, you simply follow up by phone with a mortgage loan officer to complete the prequalification process.
Pre-qualification is neither pre-approval nor a commitment to lend; you must submit additional information for review and approval.
- Can I complete a prequalification form I've already started?
No. You won't be able to return to an incomplete prequalification form.
- What’s an impound/escrow account?
An impound/escrow account is an account set up by a lender to hold funds that are set aside for the payment of property taxes and insurance. In addition to the principal and interest payment on your mortgage loan, you may elect—or be required—to put aside additional funds each month in an impound/escrow account to pay for property taxes and mortgage and hazard insurance. The lender holds the money in an impound/escrow account and makes the payments from the account when they are due.
- After I get a new mortgage, can I access my account information online?
Yes, it's easy with Bank of America Online Banking. You can review your current principal balance and interest rate, payment amount and due date, 24 months of loan activity and more.
- Can I pay my mortgage online?
If you are a current Bank of America customer who uses Online Banking, you can make your mortgage payment through Bill Pay. With Bill Pay, you can set up recurring payments so your regular payments are automatically paid when you want. You can also make immediate transfers between your Bank of America mortgage account and other Bank of America accounts that are linked to it.
- When will I receive my year-end statement of interest paid for tax purposes?
Year-end interest-paid statements (IRS Form 1098) are mailed out by the end of January. Contact us if you do not receive it by February 15. You may also be able to access a copy of your IRS Form 1098 by going to the Account Details tab for your mortgage account in Online Banking.
- What is Bank of America's Clarity Commitment® Document?
We believe getting your home loan from a lender you trust is important. That's why you'll appreciate how clearly the Clarity Commitment® document is written.
- It serves as a simple, one page summary of key terms of your mortgage.
- Details are in easy-to-understand language, so you know what you're getting.
The Clarity Commitment® summary is provided as a convenience, does not serve as a substitute for a borrower's actual loan documents, and is not a commitment to lend. Borrowers should become fully informed by reviewing all of the loan and disclosure documentation provided.