FAQ's About Mortgages
Here are the most commonly asked questions about a mortgage with Provident Bank. If you do not see an answer to your question below, please contact your loan agent or call us at (800) 250-1713, Monday through Friday, 8am - 5pm.
How do I start the application process for a mortgage with Provident Bank?There are a number of ways you can get started with your Provident Bank mortgage application:
What is the difference between a fixed rate and adjustable rate mortgage?A fixed rate mortgage has regular monthly payments that will not change over the life of the loan. With an Adjustable Rate Mortgage (ARM), the loan has an initial fixed rate period, typically 3 to 10 years. The interest rate may change every 6 months once the fixed portion of the loan expires. ARMs are 30 year loans and are a great option for home buyers who do not plan on staying in their current home for a long period of time.
What is an FHA mortgage?An FHA loan is a mortgage loan that is insured by the Federal Housing Authority (FHA). Borrowers can typically qualify for an FHA loan with a down payment as little as 3.5% and a credit score of 580 or higher. Another advantage of an FHA loan is it can be assumable, which means if you want to sell your home, the buyer can "assume" the loan you have. Because FHA loans have more flexible lending requirements, interest rates for FHA loans may be somewhat higher, and the buyer will pay monthly mortgage insurance along with their monthly loan payment.
What is a VA mortgage?A VA Mortgage is the Veteran's Administration (VA) loan program sponsored by the US Government's Department of Veteran's Affairs. VA loans are available to credit-worthy individuals who are or were:
- An honorably discharged Veteran
- An active duty service member
- An un-remarried surviving spouse of a military service member
- A Reservist
- A National Guardsperson
What is a jumbo mortgage?A jumbo mortgage is a home loan that exceeds conforming loan limits set by the two Federal agencies, Fannie Mae and Freddie Mac.
How do I know how much I can afford?Figuring out how much you can afford to borrow will be based on your income, credit history, the amount of your down payment, and your employment and residence history.
What information do I need to have when I apply for a mortgage at Provident Bank?When applying for a mortgage loan at Provident Bank, you will be asked for the following:
- W-2s (current 2 years) and 1 month current consecutive pay stubs
- Residence and employment history (2 years)
- Last 3 months' bank statements (all accounts, all pages)
- Loans, credit cards: list of addresses, account numbers, balance and monthly payment
- Real Estate owned: property address, lender, loan number, balance and monthly payment
- If self-employed/commissioned/bonus/overtime: last 2 years tax returns (all schedules) and YTD P&L and balance sheet
Is there a cost to apply for a mortgage?At Provident Bank, there are no upfront costs to apply for a mortgage.
What are mortgage points?Mortgage points are a form of prepaid interest you can choose to pay up front in exchange for a lower interest rate and can typically be paid along with your closing costs. In exchange for each point paid at closing, your mortgage APR will be reduced and monthly payments lowered. One mortgage point equals 1% of your total loan amount (or $1,000 for every $100,000).
What is a buy-down?Points, also known as "discount points", are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is referred to as "buying down the rate", and can help lower your monthly mortgage payments. A point is equal to 1% of your mortgage amount (or $1,000 for every $100,000).
What is an origination fee?An origination fee is an up-front fee charged by the lender for preparing a new loan application. Origination fees are quoted as a percentage of the total loan.
What are closing costs?Closing costs typically range from 2% to 5% of the total loan amount and can typically be rolled into your mortgage amount. Closing costs can be estimated by your lender up-front and may include the following costs:
- Mortgage points
- Attorney's fees
- Inspections and surveys
- Title insurance and title search
- Escrow deposit
- Recording fees
- An appraisal fee
- Credit Report
What is Private Mortgage Insurance (PMI)?Private Mortgage Insurance, also called PMI, is provided by a private mortgage insurance company and reimburses the lender if you default on your home loan. Lenders require PMI with a down payment of less than 20% on most products and may be required for a loan with an initial loan to value (LTV) in excess of 75-80%.
What is Pre-qualification?A mortgage pre-qualification is the initial step in the mortgage process. It provides an estimate of how much you may be able to borrow based on the information you provide to the lender. When you get pre-qualified, you can request a letter stating how much you may be able to borrow. This is a great way to show your real estate agent you are a serious buyer. Please note, since the lender is basing your borrow amount on the information you have provided, being pre-qualified doesn't carry the same weight as being pre-approved for a mortgage loan.
What is a Pre-approval?A mortgage pre-approval requires the applicant to submit a mortgage application and supply the lender with necessary information to perform an extensive financial background check and credit rating. If approved, you'll get a commitment by the lender for a specific loan amount. Having a mortgage pre-approval can help you negotiate on price and it can be a deciding factor for sellers who receive multiple bids on their home.
What is a rate lock?A rate lock is a contractual guarantee from a mortgage lender that they will give you a certain interest rate, at a certain price, for a specific time period.
What is an escrow account? How does it work?An escrow account is a separate account setup by your mortgage lender to pay your home owner's insurance and property taxes. Each month you pay a portion of the estimated annual costs along with your principal and interest payment. When your home owner's insurance and property taxes are due, both are paid from this separate account.
What is a Loan Estimate?A loan estimate is a form you receive after applying for a mortgage. It will provide you with important information including the estimated interest rate, monthly payment, and total closing costs of the loan. It is designed to help you understand the key features, costs, and risks of the loan.
How do I pay off my loan?To pay off your loan, simply call (800) 686-3756, Monday - Friday, 8am - 5pm and request a payoff demand.
Can I make additional payments to the principal balance of my loan?Yes, you can make additional principal payments to your loan. When you make your monthly mortgage payment, you can include an additional amount to be applied directly to the principal balance.
When does it make sense to refinance?People usually tend to refinance their mortgage when they are looking to save money, either by reducing the term of the loan or by obtaining a lower interest rate. Converting an adjustable rate loan to a fixed rate loan or consolidating debt are times it may make sense to refinance. If you are looking to save money by refinancing your home, here's a calculation that may help you decide if it makes sense:
- Calculate the total cost of the refinance
- Calculate the savings
- Divide the total cost of the refinance (#1) by the monthly savings (#2). This is the "break even" time. If you own the house longer than this, you will save money by refinancing.
When refinancing my mortgage, can I get extra money at closing so I can pay off other debt?Receiving extra money at the time of closing is called a cash-out refinance. When there is extra equity available in your home, you may take extra cash out in a lump sum payment at closing when refinancing.
How can I reach a live person?At Provident Bank, supporting our customers is our upmost importance. Questions about your loan can be answered directly by calling our Mortgage Direct Loan Center at (800) 250-1713, Monday through Friday, 8am - 5pm.