What is an origination fee?
The amount charged for services performed by the lender for processing the loan.

What is a discount point?
A discount point is paid to the lender to permanently buy down or lower an interest rate. Each point is 1% of the loan amount.

May I pay additional discount points to reduce my interest rate?
Yes, AFS will allow you to pay additional discount points to lower your interest rate.

How can I compare rates and fees when shopping for a mortgage?
When comparison shopping, look at points, fees and the Annual Percentage Rate (APR). The APR includes the fees that are charged on your loan. Although one lender may have a slightly lower interest rate, they may charge more fees, and hence have the same APR or higher as a lender with the higher interest rate.

What is the difference between APR and interest rate?
The APR (annual percentage rate) reflects the cost of your mortgage loan as a yearly rate. It incorporates the cost to obtain the loan, such as discount points and loan origination fee. The interest rate is the actual note rate.

What is the difference between "locking in" an interest rate and "floating"?
If you are concerned that interest rates may rise during the time your loan is being processed, you can "lock in" the current rate for 60 days. When you "lock in" to an interest rate, you are guaranteed that rate for that agreed upon length of time. The benefit is security of knowing the rate is fixed if interest rates should increase. If you are locked in and rates decrease, you will not get the benefit of the decrease in interest rates. If you choose to "float" or defer "locking in" an interest rate, your rate will fluctuate with the market and will be subject to both upward and downward trends in the market. The benefit to floating a rate is if interest rates were to decrease, you would have the option of locking into a lower rate.

What is the difference between a prequalification analysis and a pre-approval application?
A prequalification analysis is typically the result of information shared between a mortgage lender and a potential mortgage borrower and does not incorporate information obtained from a credit report. There is no cost or commitment on behalf of either party for a prequalification analysis.A mortgage loan pre-approval typically results in a written loan decision following a complete mortgage application. AFS charges a nominal application fee for a pre-approval. You can apply for a pre-approval mortgage prior to signing a purchase agreement for a home. A pre-approval can also add to your negotiating strength when you are ready to make an offer on a home.

How do I determine which mortgage product will meet my needs?
Everyone's situation is different. Most people will benefit from either consulting by phone or in person with a AFS mortgage professional who is committed to discovering your needs, and helping you match those needs with a suitable mortgage product.

What is title insurance?
Title insurance provides the lender and the buyer (if you purchase owner's coverage) with coverage for losses resulting from specific title defects listed in the policy. In cases where land and property have changed hands over time, there is always the possibility an error has occurred. If an error has occurred, it may be that someone else may be in title to or have an interest in the property, that improvements encroach on property lines or that other similar problems may exist. In these scenarios, if you do not have title insurance you could lose your investment in your home. Lenders require "lenders coverage" to protect their investment and it only protects the lender. Owner's coverage is optional and provides separate coverage for the borrower.

What is PMI and why is it required?
Private mortgage insurance (PMI) is insurance written by a private company that protects the lender from losses in the event the borrower defaults on the mortgage. Borrowers are required to pay the premium for private mortgage insurance. Private mortgage insurance limits a lender's exposure to financial loss resulting from loan default. If you make a down payment of less than 20% even if you have a good credit profile, lenders generally require private mortgage insurance.

What is the minimum down payment required by a lender in order to eliminate PMI?
Typically, on a primary residence, the minimum that you need to put down to eliminate PMI is 20%. If you are putting less than this down, but wish to avoid PMI, Astoria Federal has alternative products that we can review with you.

How long will I be required to have PMI on my loan?
The Homeowner's Protection Act of 1998 allows borrowers whose loans originated after July 29, 1999, to request cancellation of PMI at 80% loan to value (LTV) based on amortization or actual payments if the borrower has a good payment history, if the borrower provides evidence the property value has not decreased, and certifies there are no subordinate liens on the property. Lenders are required to terminate borrower paid PMI at 78% LTV based on the amortization schedule if the loan is current. If none of the above is done, PMI will terminate automatically at the midpoint of the loan term.For loans originated prior to July 29, 1999, PMI guidelines will vary from lender to lender and can change at any time. Some investors will not allow the cancellation of PMI. Typically, PMI is required on your loan for minimum of 24 consecutive payments absent any law to the contrary. After that time, if you have 20% or more equity in your property and meet certain other conditions, you may request to have it removed. Typically, there is no guarantee that your PMI will be removed, and most loan investors will require a new appraisal at your expense prior to removing PMI.

How much does mortgage insurance cost?
The cost of PMI is divided into two parts. The first part is a payment made at the time of closing. The second is an ongoing payment made each month with your principle and interest payment.

If I refinance my loan with my existing lender, will I have to pay all the closing costs again?
Typically, yes, as there is a cost to process any new application. This cost may include fees paid to third parties, such as the appraisal provider and the title and closing providers.

Does the lender require title insurance for purchase transactions?
Yes, a Mortgagee's Title Insurance Policy will be required on purchase transactions.

Can I have my mortgage payment deducted automatically from my checking or savings account each month?
After closing your mortgage loan, you will have the option of enrolling in an automatic mortgage payment program. You will be asked to provide an authorization form with a voided check or savings account slip attached to set up the draft. The payment is typically debited on a preset day each month.

What is an escrow account?
An escrow account is typically established at the time you close your mortgage loan. This account is held by AFS for the future payments of recurring items related to the mortgaged property, such as real estate taxes and insurance premiums, as they become due. Lenders usually require you to pay an initial amount for each of those items to start the reserve account at the time of closing.

Are there any limitations on how much lenders can collect from a borrower for the borrower's escrow account?
All lenders and servicers are required to follow standards set forth in the Real Estate Settlement Procedures Act (RESPA) and applicable state law. RESPA and some states set limits on the amount that can be collected by the lender or servicer to pay for escrow items, such as property taxes and insurance, and place a cap on the amount of the reserve. Reserves are funds that a servicer may require a borrower to pay into an escrow account to cover unanticipated disbursements that will need to be made before the borrower's payment is available in the escrow account. There are limits on the additional amounts that can be collected as reserves.