GetSmart®

2.	Q. What if I don’t have a lot of money to put down?
	A. Even if you do not have a lot of money to use as a down payment, you may still be able to purchase a home.
	More and more borrowers are taking advantage of low down payment mortgage and becoming homeowners with as little as five percent down. With these loans, however, you may be required to carry private mortgage insurance (PMI).
3.	Q. What is PMI, and when is a consumer required to pay it?
	A. If you put less than 20% down on your home, you may be required to pay mortgage insurance (PMI).
	This insurance protects the lender, should they need to foreclose on your loan, and is usually paid monthly, or in one lump sum. One way to get around a PMI requirement is to do a “piggyback loan.” A piggyback loan is a combination of two loans that close at the same time to purchase a home. The most common piggyback loan is an 80/10/10. 80% of the home’s purchase price is financed through a first mortgage; 10 % is financed with a second (piggyback) loan and 10% is paid with the down payment.
4.	Q. Should I choose a fixed or adjustable rate?
	A. Before you obtain a mortgage, you should consider all your options.
	A fixed rate mortgage stays the same for the entire length of the loan, while the interest rate of an adjustable rate mortgage changes with the market over time. Although an adjustable rate mortgage might offer lower payments initially, if rates go up, your payment will, too. You should carefully analyze your needs before choosing a mortgage loan product, and GetSmart’s lenders will be happy to assist you in this endeavor.
5.	Q. What is a prepayment penalty?
	A. Some lenders include a prepayment penalty – a fee for early pay-off – in their mortgage loan terms.
	Make sure you address this issue directly with your loan officer, as some lenders will charge a substantial fee for early loan payoff. This may be of concern to you later on down the road, if you choose to refinance your mortgage loan.

> Back