Frequently Asked Questions
Here are some frequently asked questions from our clients.
Q: What’s the difference between a fixed-rate mortgage and an ARM?
A: ARM stands for Adjustable Rate Mortgage. This means that the interest rate on the loan, like a South Carolina home mortgage, for instance, can be adjusted for a disclosed period of time. All ARMs should clearly denote the initial interest rate, the adjustment period, the index rate, and interest rate caps. An ARM may mean smaller payments at first, but borrowers run the risk of higher payments once the adjustments are complete.
A fixed-rate mortgage, on the other hand, means that the interest rate doesn’t change. Payments are the same over the entire repayment schedule. Your rate it, in essence, “locked in” so long as you do not refinance.
Q: How do I use a mortgage calculator?
A: While seeking expert advice is always preferable when you’re looking for the right South Carolina home loan, doing your own research can give you a great idea of what you can afford and what you can expect from your new mortgage. As you shop for interest rates and options, and consider how much money to put down on your new home or farm loan, mortgage calculators allow you to crunch numbers without leaving your computer. As a result of your research, you may discover you should (or shouldn’t) put more money down, or look into finding better interest rates.
Q: How do patronage refunds affect my loan?
A: Because we’re an agricultural credit cooperative, ArborOne--part of Farm Credit--is owned by the member-borrowers who purchase stock and participation certificates in the cooperative. At the end of every fiscal year, our Board of Directors may choice to retain the net income of the Association to strengthen the company’s capital, or distribute some or all of the net income to members by declaring a dividend on stock or a patronage refund.
That means at the end of the fiscal year, you may qualify for money back on the interest paid on your loan. This not only reduces the costs for the company itself, but lowers your overall costs as well. In 2006, ArborOne returned 25 cents on every dollar earned by members. This effectively lowers the overall impact of your South Carolina mortgage rate.
Q: What does subprime mean? Does ArborOne provide subprime loans?
A: Recent new coverage has talked a great deal about the subprime crisis. What subprime means, essentially, is that lenders are giving mortgages to borrowers who do not qualify for the best rates due to a bad credit history. This poses a problem for lenders and borrowers, as rates tend to be extremely high, and the proportion of defaults even higher. Subprime loans can lead to foreclosure, which has happened to hundreds of thousands of borrowers in the last few years. Though some view the practice as a second chance to help borrowers build their credit, recent trends have indicated that the risks far outweigh the benefits.
ArborOne does not offer subprime loans. Our rates are competitive for those who qualify.