FAQ’s

  • With so many interest rates on so many different kinds of loans out there, it is hard to know which is right for you. You shouldn’t take a rate just because it’s low. In fact, a lower rate on the wrong loan can cost you thousands of dollars. That’s why we discuss your financial goals with you and help you access the best rate on the right loan to help you achieve financial freedom.
  • Interstate has a tax service that will obtain your bill for us. If you have an escrow account for the payment of property taxes and you receive your bill, you may retain it for your records or write your loan number on the bill and mail it to:   Interstate Home Loan Center Attention: Tax Department 40 Marcus Drive, Suite 100 Melville, NY 11747
       
  • Interstate is required to mail the annual year-end statement by January 31st of each year.
  • With most ARMs, the interest rate and monthly payment change every month, quarter, year, 3 years, or 5 years. The period between rate changes is called the adjustment period.
  • PITI is the acronym (Principal, Interest, Taxes, and Insurance) used to cover what’s included in your monthly payment. Principal is the portion of your payment that goes toward the repayment of the money you borrowed. Interest is the portion of your payment that goes toward the interest you’re being charged on your loan amount. Taxes, Homeowners Insurance, Flood insurance and Mortgage Insurance are the portions of your payment held in an Escrow account to cover those payments when they come due.
  • An escrow cushion is allowed by federal and most state laws and acts as an additional safeguard to cover unanticipated disbursements or disbursements made before all of your payment have been made into your escrow account. The maximum allowable cushion is equal to two monthly escrow deposits unless otherwise required by state law.
  • If your escrow accounts balance is less than the required amount needed at the time of your analysis, your escrow account may have a projected shortage. Your escrow shortage is automatically spread over a 12 month period and included in your monthly payment. You do, however, have the option to pay the escrow shortage in part or in full. If you choose to pay the escrow shortage, your monthly mortgage payment will adjust. When remitting the shortage payment, be sure to indicate on the face of your check “Escrow Shortage Only.” If you believe the shortage is incorrect please compare the anticipated escrow disbursement amounts for those items escrowed according to your statement with your annual tax bill and/or insurance renewal to ensure the amounts are correct.
  • Interest rates fluctuate based on a variety of factors, including inflation, the pace of economic growth, and Federal Reserve policy. While interest rates are hard to predict, if you think rates are on an upward trend, you may want to consider locking in your interest rate. (Before you decide to lock in, make sure that your loan can close within the lock in period. If it can’t, it won’t do you any good to lock in your rate.) If you think interest rates might drop while your loan is being processed, you may want to “float” your interest rate instead of locking it in. You can lock in at least 5 days prior to your loan closing. First Mortgage Company offers a variety of lock in programs:
    • Hard Lock - This is a guarantee that your loan will close at a specified interest rate if you are able to close your loan within the lock in period. Hard locks are available for 15 to 120 days. The longer the lock in period, the more discount points you have to pay.
    • Lock In With a Float-Down Option - With this option, your interest rate will improve as market rates improve. If interest rates go up, your interest rate may go up. However, a “cap” limits the amount your rate can go up, and range from 1/2 to 1%. The lower your cap, the more discount points you will pay.
    • Lock In While You Shop For Your Home - This program lets our pre-approved customers lock in today’s interest rate while shopping for a home, giving them the peace of mind that their interest rate and monthly payments will remain affordable.
  • Part of the mortgage application process will be the determination of how much house you can afford based on your income. The two ratios that will be computed are the front ratio and the back ratio. Front Ratio: The total mortgage payment including principal, interest, taxes and insurance (PITI) as well as any condominium or homeowner association fees divided by your total GROSS income. According to underwriting industry standards, this ratio must be below 28%. Example: With a gross income of $3,700 per month and a PITI of $973, the front ratio would be 26%. Back Ratio: The total mortgage payment PLUS any car payments, credit card and other loan payments divided by your total GROSS income. According to underwriting industry standards, the total back ratio should be below 36%. Example: With a gross income of $3,700 per month, a total mortgage payment of &973, a car payment of $212, one credit card payment of $59 and one credit card payment of $43 for a total of $1,287, the back ratio would be 35%.
  • Interstate reports interest under the primary mortgagor’s Social Security number. We do not determine how the interest is claimed on your tax return. You should seek assistance from a tax professional to ensure you are claiming the correct amount.
  • Interstate reports interest under the primary mortgagor’s Social Security number. We do not determine how the interest is claimed on your tax return. Any legal documents you have should reflect who has the right to claim the interest paid. You should seek assistance from a tax professional to ensure you are claiming the correct amount. Interstate Home Loan Center does not give tax advice.
  • Supplemental bills are your responsibility. Supplemental bills should only occur one time after a change of ownership takes place or for new construction once the property has become occupied.
  • Contact Customer Service at (800) 313-8618 Monday thru Friday 8:00 am to 5:00 pm (EST).
  • If you lost your 1098 interest statement, or need an additional copy at a later date, you may access a copy on our web site on the "Year End Statement" tab or simply call Customer Service at (800) 313-8618 and a copy will be mailed to the mailing address on file for the primary borrower. We do not fax or email year end statements.
  • There are two situations where your interest rate may rise although the index has gone down. First, if your initial interest rate was a discounted rate, it will raise by at least the margin on your first adjustment date, regardless of how the index is moving. Second, if the prior interest rate adjustments were limited by a Periodic Change Cap, the next change may be to a higher rate even if the index goes down.
  • Escrow payment amounts may increase if there is a shortage of funds in your escrow account. Some of the most common reasons for escrow shortages are: 1.) an increase in annual property taxes; 2.) An increase in your annual insurance premium; and 3.) if the actual tax or insurance payment from escrow differs from the original estimate. If you have questions about an increase in your property taxes or homeowner’s insurance premiums, please contact your local taxing authority or insurance agent respectively. They are the best source of information to explain changes in your bill.
  • If you have a non-escrowed account, you are responsible for the payment of the taxes when due. When First Mortgage Company receives information from the taxing authority that your taxes are past due, we send you a letter requesting proof of payment. If you paid your taxes, please mail proof of payment to First Mortgage Company at: Interstate Home Loan Center Attention: Tax Department 40 Marcus Drive, Suite 100 Melville, NY 11747 Please write your loan number on the face of the receipt.
  • When you get pre-qualified, you provide information about your monthly income and  debts, and a general estimate is provided to you of the size loan you will qualify for at a given interest rate. Getting pre-approved is a more detailed process. You make a formal mortgage application. Your credit is checked; supporting documentation is acquired for your income and assets; and your loan is officially approved, subject to your finding a home within that loan amount and price range. Having either a pre-qualification or a pre-approval is useful when you’re buying a home, especially if you’re competing with others for the property. Pre-approvals are usually only good for 120 days, so be prepared to update your credit documents if you don’t close within a certain period of time.
  • The amount applied to your escrow account is determined by the amount needed to pay your taxes and/or insurance on a yearly basis. This amount will change only when the amount needed to pay these items either increases or decreases, or the scheduled payment for the last year has not been met. You can find the amount of your escrow payment listed on your monthly billing statement or by visiting the “Loan Details” section of our website.
  • Although most programs require assets for down payment and closing costs, there are a few that don’t or may have minimal down payment requirements. Eligible Veterans can do a VA loan with no down payment. FHA only requires 3.5%.  If you’re a first time home buyer, you may qualify for State sponsored down payment and/or closing cost assistance, which may require as little as $500 in borrower contribution, based on program qualification. Closing costs are typically 2 -5% of the selling price, which your seller could pay on your behalf as part of your contract negotiations.
  • It's an insurance policy that guarantees the accuracy of the title work done on your home at the time of purchase or refinance and is provided by the title company. As a buyer, you are required to purchase a lender title insurance policy, which only protects the mortgage company, as part of your standard closing costs. Most buyers choose to purchase an owner title insurance policy, which would protect you against any loss in the event of any legal issues relating to the title of your home.
  • Negative amortization occurs when the monthly payments do not cover all the interest owed. The interest that is not paid in the monthly payment is added to the loan balance. This means that even after making many payments, you could owe more than you did at the beginning of the loan. Negative amortization can occur when an ARM has a payment cap that results in monthly payments that are not high enough to cover the interest due or when the minimum payments are set at an amount lower than the amount you owe in interest.
  • An interest rate cap limits the amount your interest rate can change at each adjustment. There can be two types of caps: Periodic Change caps, which limit the amount the rate may increase or decrease at each change; or Life of Loan caps, which specify the highest or lowest that your interest rate can be over the life of the loan.
  • Lenders put a portion of your monthly mortgage payment into an escrow account – a holding bin of funds to cover your homeowners insurance, flood insurance if applicable, and your property taxes. When these payments are due, the lender pays them from the escrow account on your behalf. Escrow accounts are required on conventional loans when the loan to value is greater than 80% per investor guidelines.
  • A mortgage that does not have a fixed interest rate. The rate changes during the life of the loan based on movements in an index rate, such as the rate for Treasury securities or the Cost of Funds Index. ARMs usually offer a lower initial interest rate than fixed-rate loans. The interest rate fluctuates over the life of the loan based on market conditions, but the loan agreement generally sets maximum and minimum rates. When interest rates increase, generally your loan payments increase; and when interest rates decrease, your monthly payments may decrease. For more information on Adjustable Rate Mortgages, download the Consumer handbook on adjustable-rate mortgages from the Consumer Financial Protection Bureau.
  • A fixed rate mortgage carries the same rate for the term of the mortgage. The interest rate and term are fixed at the start of the mortgage. The monthly amount for the payment of principal and interest will not change during the term of the mortgage, regardless of market conditions.
  • f your account is non escrow you will need to pay the taxes immediately. If your account is escrowed for taxes, you will need to contact our Tax Department at (800) 313-8618
  • Mortgage Insurance is usually required on a conventional loan any time that the down payment is less than 20% of the sales price (or the appraised value if the appraisal is lower than the sales price) of the property. Premiums vary based on the amount of down payment and credit scores. Higher coverage is required with a lower down payment to address the greater risk. This insurance protects the lender should you default on the loan and it’s required by the investor. On an FHA loan, it’s automatically required upfront and monthly.
  • Points and discount points are the same thing. They are percentage points of a loan amount. They are an elective fee that you may choose to pay at the time of closing. They reduce the interest rate that you pay. Sometimes it’s worth paying points to get a lower interest rate and to make sure that you’re comfortable with your monthly payment. If you have the additional cash, are payment sensitive, and/or will be living in the home longer term, then paying points may make sense. Your Loan Officer will help you look at the options.
  • When the purchase or refinance of a property is finalized, various closing costs are collected, including but not limited to:
    • Discount Points, or fees paid to lower the interest rate
    • Processing Fees
    • Escrow Deposit
    • Title Insurance
    • Appraisal
    • Lender Fees
    • Credit Report
    • Courier Charges
  • There is no fee required to establish an escrow account with Interstate; however, a deposit for the purpose of creating an initial balance in your escrow account is needed. Over the first twelve months your escrow account is active, We will collect this deposit in 12 equal payments. This amount is in addition to that which is collected to pay all installments of taxes and/or insurance premiums that will be paid from your escrow account.
  • Question number one when buying a home is usually “How much down payment are we going to need?” The necessary down payment is dependent upon the type of loan you receive (which can vary from 0%, as with VA loans, to 25% or more as with non-conforming loans), and how much you are comfortable paying each month. As an average, most homebuyers make down payments in the 3.5%-15% range, although your own personal situation may dictate more or less down payment. When you are factoring money for a down payment, don’t forget about closing costs, which will total in the 2%-5% range, payable in cash at the time of closing.
  • The calculated interest rates for ARMs are based on an index rate plus a margin. ARM loans typically calculate the interest rate on adjustment by adding a margin to a specific published index, such as the weekly one-year Treasury bill or LIBOR. Changes in the index may cause changes in your interest rate. The margin that will be added to that index rate is stated in your ARM note.
  • Contact our Customer Service Department for requirements on how to set up an escrow account by calling (800) 313-8618.
  • This information is included in your billing statement and is available through our website. Log on to our website. Once you have logged in, select “History or Tax and Insurance.” Also you will receive a very detailed annual escrow analysis statement that will show, among other items, moneys collected, disbursements made, and anticipated disbursements for the coming year.
  • You will receive a notice regarding your initial arm change. You will receive notification by mail approximately 25 and 120 days prior to the effective date of the new interest rate and payment amount. If your first ARM change is effective more than 1 year after the origination of your ARM note, you will receive an initial rate change and payment change notice within 210 and 240 days before the change date. This notice will be based on an estimated new rate and payment.
  • For most first time buyers, you can use the funds in these retirement accounts without penalty. According to the IRS, if both husband and wife are first-time homebuyers, they each can withdraw up to $10,000 for qualified acquisition costs penalty-free for a first home. Retirement plans do vary and you should look into your specific plan in advance to confirm accessibility, if there are any limits on the amount and if there are any restrictions on withdraw.
  • If your loan documents state that you have a “Fixed Rate Conversion Option” at the top of your Adjustable Rate Note, you may be eligible to convert your rate and should request further information on the conversion procedure by contacting our Customer Service Department at (800) 313-8618, 8:00 am – 5:00 pm EST, Monday-Friday. Unless your loan documents specifically allow for this option, you would need to refinance to get a fixed-rate loan.