Q&A With Pattie Romanzi of PAR East Mortgage Company

With the federal funds rate the highest its has been in more than two decades, Residence asked PAR East Mortgage Company President and CEO Pattie Romanzi to share facts and advice for homebuyers seeking mortgages.

How do mortgage rates now compare to last summer?

Interest rates are 1.5 percent higher than a year ago, give or take.

Is it wise to wait for rates to drop before purchasing a home?

When rates come down, you can reduce your monthly payment and/or shorten your term. Sadly, for some first-home buyers, the higher rates reduce the house price they can afford and may have taken them out of the housing purchase market for now.

What can homebuyers do to get the most favorable mortgage rate?

Maintaining a high credit score gets you the best available rates on the market. A higher down payment can often get better rates. We also have programs for first-home buyers where rates are a full 1 percent lower then market rates and give you funds toward closing fees.

How do the terms of a mortgage for a second home differ from purchasing a primary home?

Second homes with conventional loans have slightly higher rates and require 20 percent down in most cases. We do have programs that allow financing up to 90 percent of the purchase cost, but you pay mortgage insurance when you don’t put down 20 percent.

On primary homes you can get up to 96.5 percent financing.

With jumbo loans, you can finance up to 80 percent up to $2.5 million. On jumbo second homes, many banks reduce that percent by 5 or 10 percent. Every bank is different.

What kind of homebuyer should consider an adjustable-rate mortgage?

Taking an adjustable rate mortgage is good for the following reasons:

If you think you will not be in the house long and can take advantage of the lower payments on an ARM.

If your regular base earnings are low and you depend on a bonus, you may want to take the lower payment with an ARM.

You may want an interest-only ARM so you can pay down principal with a reduction in your monthly payment. Interest-only ARMs are a little harder to get and require larger down payments.