What is a
closing?
Closing" is the date when the buyer,
seller, and
lender, or their agents, agree
to meet and legally transfer the property and
disperse all the funds, or reference
the property.
What are
closing costs?
"Closing costs" are the costs associated with the
transfer of property. They may be costs such as
discount points, appraisal fees, title search fees,
insurance charges, survey charges, mortgage
brokers fees, and state filing fees. Typical costs
amount to
approximately 2% and 3% of the mortgage amount.
What happens
at closing?
The seller, buyer, and lender, or their agents, meet and
legally transfer the property, and
associated
funds, between parties.
How often do
I have to make mortgage payments?
Depending on the lender you choose, payments will be
monthly, bi-weekly, or weekly.
What is
foreclosure?
"Foreclosure" is a legal action undertaken by a lender
to sell a mortgaged property, in order to pay a
defaulted borrower's debt.
See our guide here.
Can I get
out of my mortgage if I choose?
Most mortgages allow you to pay off the mortgage early.
Some mortgages do have a prepayment penalty, but
most do not. Ask your mortgage broker about the program
you've applied for.
What is
"Fannie Mae", "Freddie Mac", and "Ginnie Mae"?
Fannie Mae
is the term for the Federal National Mortgage
Association. This is an institution incorporated
by congress to buy and sell conventional, FHA insured
and VA guaranteed mortgages.
Freddie Mac is the term for the Federal Home Loan
Mortgage Corporation, an agency that purchases
mortgages from insured savings institutions and HUD
approved mortgage bankers.
Ginnie Mae is the term for
the Government National Mortgage Association. They
supply
residential mortgages that are insured through the FHA
or are guaranteed by the VA.
What is the
difference between fixed mortgages and an adjustable
rate mortgage?
Fixed rate mortgages offer an interest rate that remains
fixed for the entire term of the loan. An
adjustable rate mortgage (ARM) is a loan in which the
interest rate changes to reflect the current
interest rates. Adjustable rate mortgages may change
rates according
to the rate set at your closing. Ask your mortgage
broker for the options right for you.
What does
A.P.R. stand for?
This stands for Annual Percentage Rate. This amount also
reflects the annual cost of the mortgage, taking
into account the points paid and other costs incurred
for the credit
extended to
the borrower. The A.P.R. is helpful in comparing the
costs of different loan packages.
What happens
if I am late or miss a mortgage payment?
Typically, a late payment fee will be assessed, and must
be paid. Of course, interest will continue to
accumulate. If the borrower stops making payments, this
will result in a defaulted mortgage, and
foreclosure of the property.
Why use a
mortgage broker?
When utilizing the services of a professional mortgage
broker, you have a representative who has your
best interests in mind. Brokers are not tied to selling
you a specific lender's loan program. A mortgage
broker acts as your representative in opening the doors
to a
multitude of lenders. By assessing various lender's
programs, interest rates, loan fees, underwriting
guidelines and credit requirements, the mortgage broker
will recommend which lender and specific loan
program best suits your needs.
How much
money can I qualify for?
Typical mortgage requirements say that if you have an
average debt load, you can obtain
a mortgage
between two and three times your annual income.
What if I
have credit problems?
You will need to explain the circumstances of the credit
problem. If you no longer have the problem and
have kept current with your obligations for a period of
one year or more, most lenders will accept your
mortgage application.
What is
private mortgage insurance?
Private mortgage insurance may allow you to purchase a
home for as little as 5% down
payment,
even if you do not qualify for a FHA-insured or
VA-guaranteed loan. Such coverage requires a
monthly insurance fee to be paid.
What is the
difference between a conventional loan and a FHA loan?
A conventional loan requires you to place a down payment
of between 5% and 20% of the selling price of the
home. FHA (Federal Housing Administration) loans are
guaranteed by the Housing and Urban Development
(HUD) and you can buy a home with as little as
2.5% down payment.
What is a
convertible mortgage?
When you have a convertible mortgage, it allows you to
change from the initial ARM mortgage to a fixed
rate mortgage. This option usually requires an extra
fee.
What is
amortization?
Amortization is the division of principal and total
interest charges into equal payments that will
result in the complete payment of the debt by the end of
a fixed period of time.
What is a
cap?
A cap is a limit that is placed on an ARM mortgage. It
may limit the maximum loan rate amount, or the
maximum amount the loan rate may increase per term, for
example, a one year ARM changes once a year.
What does it
mean to lock-in?
When you "lock-in", your lender will guarantee the
interest rate on your mortgage for a limited
period, regardless of the current market rates. This
option usually is done for a fee. If you are
concerned that rates may rise before your closing date
you may want to
"lock-in".
What is P.I.T.I.?
This stands for the components of your regular home
payment, "Principal, Interest, Taxes, and
Insurance".
What is an
appraisal?
This is an estimate of the value of the property you
intend to buy or refinance.
