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1.	How do I know how much house I can afford? Answer
2.	What is the difference between a fixed-rate loan and an adjustable-rate loan? Answer
3.	How is an index and margin used in an ARM? Answer
4.	How do I know which type of mortgage is best for me? Answer
5.	What does my mortgage payment include? Answer
6.	How much cash will I need to purchase a home? Answer

Q :	How do I know how much house I can afford?
A :	Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Contact us to help you determine exactly how much you can afford.

Q :	What is the difference between a fixed-rate loan and an adjustable-rate loan?
A :	A fixed-rate mortgage, the interest rate and payment remain the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest rate and payment recalculate periodically, in relation to a particular index. For example: A 30-year, fixed rate mortgage with an original loan amount of $100,000 and an interest rate of 5% has a principal and interest payment of $536.82 per month for all 30 years. Our 5/5 Adjustable Rate mortgage product with a similar loan amount and beginning interest rate, but will recalculate on five year intervals. Interest rate "caps" are placed on each recalculation in order to responsibly limit negative effects to the borrower. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by contacting us.

Q :	How is an index and margin used in an ARM?
A :	An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).

Q :	How do I know which type of mortgage is best for me?
A :	There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. Alternatives Federal Credit Union can help you evaluate your choices and help you make the most appropriate decision.

Q :	What does my mortgage payment include?
A :	For most homeowners, the monthly mortgage payments include three separate parts: Principal: Repayment on the amount borrowed Interest: Payment to the lender for the amount borrowed Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.

Q :	How much cash will I need to purchase a home?
A :	The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply: Earnest Money: The deposit that is supplied when you make an offer on the house Down Payment: A percentage of the cost of the home that is due at settlement Closing Costs: Costs associated with processing paperwork to purchase or refinance a house If you need assistance with down payment and closing costs, please contact Ithaca Neighborhood Housing Services for their programs: Ithaca Neighborhood Housing Services (INHS) 607-277-4500 https://ithacanhs.org/ https://www.ithacanhs.org/homeownership