Frequently Asked Questions

Frequently Asked Questions about Mortgages

You may have arrived at the Dollar Bank mortgage site with an idea of which mortgage you think you want. But, are you sure that this is the mortgage that best meets your needs?

Click on the topic below to find the answers to your questions.


Is it safe to apply for a mortgage at Dollar Bank over the Internet?
Yes. Dollar Bank takes seriously the need to protect your privacy. We've utilized several security technologies to protect your personal information online. They include secure socket layer protection, firewalls, filters and unique IDs and passwords to ensure the privacy of confidential data. And, in accordance with our privacy policy, Dollar Bank also prohibits the sale of customer information to third parties for marketing purposes

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Do I need good credit to purchase a home?
Yes, before lending you money, lenders want to see a history of debt owed and repaid on time. Lenders order credit reports as part of the mortgage process to verify your debts, the amount of your monthly payments and how many months or years remain on each loan. Another key piece of this record is how regularly these debts are paid. Although lending standards vary, being late on a payment or two or going over a credit limit once or twice doesn't mean you don't have good credit, particularly if you have a reasonable explanation

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Can I have a co-signer for the mortgage who will not be on the deed?
Yes, after you and the co-signer have received credit qualification, you will both be required to sign the note and mortgage

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What type of income is acceptable when qualifying for a mortgage?
Salary, hourly wages, social security, pension, alimony and child support are considered acceptable sources of income. Commission, overtime, bonuses, dividends, interest and net rental income may also be used if received consistently over the past 24 months and is likely to continue.

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Can I apply for a mortgage loan before I find a property that I want to purchase?
Yes, getting approved for a mortgage amount prior to house shopping can make your buying experience easier and faster. Because you already know your mortgage amount, you can focus on houses within your price range. (Dollar Bank's Express Mortgage Pre-Qualification, can evaluate your credit and income information to qualify you for a mortgage loan amount in a few hours!)

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How do I qualify for a bigger mortgage?
Initial adjustable rate mortgage (ARM) rates are generally lower than rates for fixed rate mortgages, making it easier to qualify. This can be an attractive feature for first-time home buyers. It can also enable you to buy a larger or more expensive home. And, of course, you pay less interest when your initial rate is lower.

Just as you would expect, the rate on an ARM changes periodically to reflect market conditions. However, there is protection built in for borrowers in the form of annual and lifetime rate caps. For example, a Dollar Bank three-year adjustable rate mortgage currently offers a 2% annual cap on rate increases and a 6% cap over the life of the loan.

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How do I lock in my interest rate for Express Mortgage Pre-Qualification?
Because Express Mortgage Pre-Qualification uses current rates to determine how much house you can afford, you may want to lock in your rate soon after receiving qualification and signing your sales agreement before rates rise so that your loan amount does not change. Simply call 1-800-344-5626 between 8:30 AM and 5:00 PM, Monday - Friday to discuss current rate options and lock in the rate you want.

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What is a good faith estimate?
Within three days after you've submitted your mortgage application, you will receive an itemized estimate of the charges you're likely to incur at the settlement or closing of the loan. This is called a Good Faith Estimate. The fees listed are estimates, the actual charges may be more or less. At closing, you will receive a HUD-1 Statement which will show the actual costs for items paid at settlement.

It is important to compare fees when shopping for a mortgage. Lenders typically charge fees for services such as underwriting, processing and document preparation. They may also have charges relating to the origination, application, funding of the loan and tax services to list a few. Lender's fees vary and can have a substantial impact on the overall cost of obtaining your loan.

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What if I don't have a two year credit history (or no credit history)?
If you have never had credit cards or borrowed money from a financial institution, your credit history can still be documented by reviewing your monthly rent and/or utility payments. A mortgage lender can help you gather this information

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How much of a down payment is required to purchase a house?
Typically, a down payment of at least 3 - 5% is needed to purchase a house. Closing costs, which are approximately 2 - 3% of the mortgage amount are also required. Deciding how much to put down beyond the minimum requirement depends on a few factors such as:

  • The return you may receive by investing your cash elsewhere.
  • The cost of mortgage insurance incurred if your down payment is less than 20% of the property value.
  • The taxes you save due to mortgage interest deductions.

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What sources of funds are acceptable to cover down payment, closing costs and reserves?
Funds from checking, savings, money market funds, certificates of deposit, retirement accounts, 401K, IRA, Keough, mutual funds, stocks and bonds may all be used. Funds from the sale of personal assets, including, but not limited to homes, automobiles and boats are acceptable if the appropriate documentation is available. Cash or other funds that cannot be verified may only be used in specified mortgage programs

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How much mortgage do I qualify for?
There are two ways to find out how much mortgage you qualify for.

  1. Determine Your Buying Power - Before you go house shopping, try our interactive mortgage calculator. It will help you determine how much house you can afford before and during your house shopping experience. When you plug in your income and debt figures, our calculator will determine the mortgage amount you can afford. See how these numbers change with your changing financial picture. Click here to try it!
  2. Express Mortgage Pre-Qualification - When you take the worry out of getting a mortgage qualification, you can focus on negotiating the best deal possible to purchase your new home! To apply, call 1-800-344-5626 Monday through Friday, 8:30 AM to 5:00 PM.

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What is the difference between locking in an interest rate and a floating interest rate?
An interest rate that is locked in is guaranteed to be the rate of the mortgage if the mortgage is closed within the defined period (usually 30 or 60 days). If the interest rate has not been locked in, it is considered to be floating. That means the rate at the time of application is not guaranteed to be the rate on the mortgage. During this period, interest rates may move up or down until the borrower actually locks a rate for the defined period.

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How do I lock in an interest rate when filling out a mortgage application?
Because rising interest rates will increase the cost of your loan, you may want to lock in your rate as quickly as possible. Once you've submitted your completed mortgage application, you can call 1-877-261-2820 between 9:00 AM and 4:00 PM, Monday - Friday to discuss current rate options and lock in the rate you want.

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What are the benefits of a fixed rate loan?
With a fixed rate loan, your monthly principal and interest payments will remain the same for the entire term of the loan. The rate never changes and the principal balance is steadily reduced as you make your payments. You'll also have the maximum interest deduction possible for tax purposes.

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What are the benefits of an adjustable rate loan?
An adjustable rate loan (ARM) offers lower monthly principal and interest payments. The interest rate changes periodically, but includes borrower protection in the form of annual and lifetime rate caps. An ARM can also qualify you for a higher mortgage amount which means you can buy a larger or more expensive house. And, with an adjustable rate, you may not have to refinance when interest rates drop

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When should I consider an adjustable rate mortgage?

  • When you expect that your income will rise.
  • When you aren't planning to stay in your house long term.
  • If you believe that rates will stay fairly steady or decrease.
  • If you want to avoid the cost of refinancing in the future.
  • If you can handle the higher payments that could result from a rate increase.

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When should I consider a fixed rate mortgage?

  • If you aren't expecting significant income increases.
  • If you plan to stay in your home a while.
  • If you believe that rates will increase.
  • When you have other financial obligations that would make a payment increase difficult to handle.
  • If you feel more comfortable knowing that your rate and payment won't change.

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Which mortgage lets me use the lowest down payment to get into a house?
Many lenders expect a substantial down payment when buying a house. Dollar Bank can offer most of its mortgage loans with as little as five percent down depending upon the size of your loan. Loans with down payments of less than twenty percent usually require private mortgage insurance (PMI). We also offer customized mortgage programs which enable you to reduce your down payment and possibly eliminate PMI. Programs like Federal Housing Administration (FHA) and U.S. Department of Veteran's Affairs (VA) mortgages are also offered by Dollar Bank along with our Rent-No-More Mortgage for first-time home buyers.

If you're afraid that accumulating the cash for a big down payment could keep you out of the housing market for a while, talk to one of our mortgage representatives at 1-877-261-2820. We'll be happy to tell you about programs that can reduce your down payment and get you into a home sooner.

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What is the lowest monthly payment I can get?
The three year adjustable rate mortgage (ARM) provides the lowest monthly payment during the first three years of the mortgage. However, the monthly payment will change annually, rising or falling with interest rates. You are protected against major interest rate changes with caps which limit annual adjustments to 2% and life of loan adjustments to 6%.

Fixed rate loans offer a higher monthly payment that does not fluctuate annually with rate changes which means it could be the lowest long term payment.

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What is the lowest mortgage rate I can get?
Initially, the three year adjustable rate mortgage (ARM) will have the lowest interest rate available. This rate may increase or decrease during the term of the loan as interest rates rise and fall. With an ARM you do have protection against major interest rate changes with caps which limit annual adjustments to 2% and life of loan adjustments to 6%.

Interest rates for fixed rate mortgages tend to be higher because they do not fluctuate annually with rate changes. However, the rate for a 20 or 30 year fixed rate mortgage could ultimately end up being lower than the aggregate or overall adjustable rate on an ARM.

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What mortgage is best if I plan to be in the house less than five years?
An adjustable rate mortgage (ARM) is generally better if you don't plan to own the house for more than five years. The benefits of a three year or five year ARM include a lower initial interest rate, lower monthly payments and the possibility of qualifying for a higher mortgage amount

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What mortgage is best if I plan to be in the house more than five years?
A fixed rate mortgage may be your best option. It offers a consistent monthly payment and is not subject to rate fluctuations. You may also want to consider a five year adjustable rate mortgage for a lower initial rate and payment. The first five years provide you with a fixed rate which is then adjusted on a yearly basis thereafter.

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How can I build equity quickly?
The shorter your mortgage term the faster your equity will build as you pay back more of the principal. Consider a ten, fifteen, twenty or twenty-five year term, they will build equity and save on interest expense when compared with a 30 year term.

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Should I choose a lower interest rate with more points or a higher rate with less points?
When looking to lower your interest rate by purchasing points, you should consider the following...

  1. Will either the seller or your employer be paying the points? If the answer to this question is yes, you will enjoy the benefit of a lower rate without incurring the expense of paying points. If the answer is no, you should also consider the following...
  2. Do you have sufficient income to qualify for the mortgage and cash available to pay the points? If you are able to answer yes to this question, an additional consideration is the length of time that you will own the house or if you plan to pay the loan off early. If you continue ownership of the house beyond the break even point you can recoup your upfront payment for points and begin enjoying lower payments for the remainder of the mortgage. If you sell the house before your break even point, you may lose money.

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What is private mortgage insurance?
Private mortgage insurance (PMI) is the insurance you are required to pay if you have a downpayment of less than 20% (or less than 20% equity in your home when refinancing). This insurance protects the lender if the borrower defaults on their loan and the lender must foreclose. The lender then uses the money collected from PMI to offset any losses. Once you accumulate enough equity in your home, your lender may eliminate your PMI.

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When will I be required to have private mortgage insurance?
Private mortgage insurance (PMI) is almost always required for a mortgage when the down payment or equity in the property is less than 20%. It is designed to protect the lender from losses in the event that the borrower defaults on the mortgage. The borrower is generally responsible for paying the PMI premium, which can be included in the monthly mortgage payments. Dollar Bank has some special mortgages available to assist you with down payments of less than 20% without PMI. Call 1-877-261-2820 to talk to us about your situation.

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How much will private mortgage insurance cost me?
The cost of private mortgage insurance (PMI) varies according to loan type, loan amount and the amount of equity in the house. PMI costs can be included in your monthly mortgage payment. These costs typically change from .25 to .35 of your mortgage amount per year.

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Is there a way to avoid paying private mortgage insurance?
A down payment of 20% or more on any mortgage does not require private mortgage insurance (PMI). Dollar Bank currently offers a five year adjustable rate mortgage (ARM) with a maximum loan to value of 85% which also does not require private mortgage insurance. Another alternative is obtaining a second mortgage which will eliminate the need for PMI.

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Whether you want to maximize your interest savings or find a way to buy a bigger house, this section offers the quick education you may need to evaluate the different financing options available. Click on the question to be answered below or select a new topic.

  1. What are points?
  2. How is an annual percentage rate different from an interest rate?
  3. If I pay more on my payment, will the money go towards interest or principal?

What are points?
A point is an up front fee, where each point is equal to one percent of the mortgage amount. Paying points is a way to reduce or "buy down" a mortgage interest rate. For example, a $100,000 mortgage with zero points has a rate of 8%, the same mortgage with the borrower buying one point ($1,000 paid up front) may have a rate of 7.75%

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How is an annual percentage rate different from an interest rate?
An annual percentage rate (APR) is a calculated rate that is different from the mortgage interest rate. The APR is intended to be used to compare loans from different lenders. The APR represents fees and certain loan costs, including points and interest, as a cumulative rate that is disclosed to borrowers. The federal Truth in Lending Act requires mortgage companies to disclose the APR when they advertise an interest rate to help borrowers compare the true cost of the loan.

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If I pay more on my payment, will the money go towards interest or principal?
The additional funds will be applied to the balance of your principal. This increase in payment will cause a shorter mortgage term.

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Whether you want to maximize your interest savings or find a way to buy a bigger house, this section offers the quick education you may need to evaluate the different financing options available. Click on the question to be answered below or select a new topic.

  1. What are prepaids?
  2. What are closing costs?
  3. What is an escrow account?
  4. What is title insurance and why do I need it?
  5. Do I have to pay for a new title policy if I refinance?
  6. Do I need homeowner's insurance?

What are prepaids?
Prepaids are costs and fees paid by the borrower up front at closing. They include the amount of interest that has accrued daily from the date of the mortgage settlement (closing) to the beginning of the period covered by the first payment. Prepaids are paid prior to closing and at the closing table. Also, if an escrow account is established, funds sufficient to pay tax bills and home owner's insurance will be required

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What are closing costs?
Closing costs are fees to be paid at settlement. These costs include the purchase of points, flood certification, document preparation and tax service, as well as fees paid to third parties, including title insurance, recording fees and transfer recording stamps

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What is an escrow account?
Lenders often set up an account called an escrow or impound account to provide the tax and insurance portion of your monthly mortgage payment. At the closing of your mortgage, the lender will collect sufficient money to establish the necessary reserves for an escrow account. This money plus the monthly deposit are then held until they can be used by the lender to pay the tax and insurance bills

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What is title insurance and why do I need it?
Title insurance is required to close your mortgage. It protects against title disputes that may arise regarding a particular property. Before your closing, a title company researches your property's title to insure that it has been legally passed from buyer to seller every time it was bought or sold. Title insurance further protects the lender against illegal or fraudulent title transfers. You may choose to purchase an owner's policy that insures that you have good and marketable title. It insures you against past events up to the date of the policy and is effective for as long as you own the property. The cost is based upon the mortgage amount and/or fair market value and varies in each state.

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Do I have to pay for a new title policy if I refinance?
Yes, a loan policy insures the validity of the mortgage currently being insured. Each time a new mortgage is recorded and insured, a new title policy must be issued. There is usually a reduced rate available depending upon the amount of time that has lapsed since the property was last insured

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Do I need homeowner's insurance?
Yes, you must present a receipt of your homeowner's insurance policy showing first year's payment at closing. The total amount of the policy must be for at least 80% of the replacement costs of the dwelling (binders are not acceptable). Your homeowner's policy must be issued by a company with a rating no less than B, Class III. In the event that you get your mortgage through Dollar Bank, you should also instruct your insurance agent to have the mortgage clause on your policy read as follows: Dollar Bank, Federal Savings Bank, its successor and/or assigns, c/o The Mortgage Service Center, P.O. Box 8469, Canton, OH, 44711

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