Get Your Mortgage Questions Answered by Your Local Prescott AmeriFirst Financial, Inc.

Do you have questions about Mortgages? Your local Mortgage Banker – Prescott’s own AmeriFirst Financial Branch located at 222 W Gurley St, Suite 202, Prescott, AZ 86301 has the answers for you. Here are some commonly asked Q & A’s.

What is a 30 Year Fixed Rate Mortgage?

The traditional 30-year fixed-rate mortgage has a constant interest rate and monthly payments that never change. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, then adjustable-rate loans are usually cheaper. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for adjustable rate loans. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.

What is a 15 Year Fixed Mortgage?

This loan is fully amortized over a 15-year period and features constant monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate-and you’ll own your home twice as fast. The disadvantage is that, with a 15 year loan, you commit to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan in 15 years. This approach is often safer then committing to a higher monthly payment, since the difference in interest rates isn’t that great.

What is an ARM?

Adjustable Rate Mortgage is unlike a fixed rate mortgage. The rate will change based on a pre-determined plan made by the lender. It is important to check your loan documentation because this loan can vary depending on the program selected. The adjustable period can be a monthly basis like a 1 month T-Bill ARM or a 5 year cost of funds index. You can have a 2 year fixed rate, a 3 year, 5 and 10. Once the fixed period is over the mortgage will move into an uncertain and adjustable period. Ask your loan officer how long your arm is fixed for? What the floors and caps may be? What index is your rate tied to? Is there a pre-payment penalty? What happens if you pay more each month? When will the loan be paid off?

What is a 2/1 Buy Down Mortgage?

The 2/1 Buy-Down Mortgage allows the borrower to qualify at below market rates so they can borrow more. The initial starting interest rate increases by 1% at the end of the first year and adjusts again by another 1% at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan term. Borrowers often refinance at the end of the second year to obtain the best long-term rates. However, keeping the loan in place even for three full years or more will keep their average interest rate in line with the original market conditions.

What is an Annual ARM?

This loan has a rate that is recalculated once a year.

What is a Monthly ARM?

With this loan, the interest rate is recalculated every month. Compared to other options, the rate is usually lower on this ARM because the lender is only committing to a rate for a month at a time, so his vulnerability is significantly reduced.

What is an Additional Principal Payment?

A way to reduce the remaining balance on the loan by paying more than the scheduled principal amount due.

What is Adjusted Basis?

The cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.

What is Adjustment Date?

The date that the interest rate changes on an adjustable-rate mortgage (ARM).

What is Adjustment Period?

The period elapsing between adjustment dates for an adjustable-rate mortgage (ARM).

What is an Affordability Analysis?

An analysis of a buyers ability to afford the purchase of a home. Reviews income, liabilities, and available funds, and considers the type of mortgage you plan to use, the area where you want to purchase a home, and the closing costs that are likely.

What does Amortization mean?

The gradual repayment of a mortgage loan, both principal and interest, by installments.

What is APR (Annual Percentage Rate)?

The cost of credit, expressed as a yearly rate including interest, mortgage insurance, and loan origination fees. This allows the buyer to compare loans, however APR should not be confused with the actual note rate.

What is an Appraisal?

A written analysis prepared by a qualified appraiser and estimating the value of a property.

For answers to other questions you may have, please contact us, your local Prescott AmeriFirst Financial, Inc. Branch at (928) 227-0586.