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How much money can I qualify for?
You can usually obtain a mortgage valued at between two and
three times your annual household income, assuming you have
an average debt load.
What if I have had credit problems?
You will need to explain the circumstances. If you have
overcome the problem and kept up with your obligations on a
timely basis for a year or more, most lenders will accept
your mortgage application. Call us for information about
your particular situation.
What is the difference between a Conventional loan,
an FHA loan or a VA loan?
A conventional loan requires you to place a down payment of
between 5% and 20% of the selling price of the home you want
to buy. However, with loans insured by the Federal Housing
Administration (FHA) you can qualify for a mortgage with as
little as 2.5% down. Loans guaranteed by the Department of
Veterans Affairs (VA) require no money down.
What is "private mortgage insurance?"
Private mortgage insurance may allow you, even if you do not
qualify for an FHA-insured or VA-guaranteed loan, to purchase
a home for as little as 5% down. Such coverage requires a
monthly insurance fee to be paid.
Who are "Fannie Mae", "Freddie Mac" and "Ginnie Mae"?
Instead of asking "who are" you might ask "what are".
"Fannie Mae" is the colloquial term for the Federal National
Mortgage Association, an institute incorporated by Congress
which buys and sells conventional residential mortgages, as well
as FHA-insured and VA-guaranteed mortgages.
"Freddie Mac" is the Federal Home Loan Mortgage Corporation, an
agency that purchases mortgages from insured savings institutions
and HUD-approved mortgage bankers.
The government National Mortgage Association -- "Ginnie Mae" --
funds residential mortgages insured through the FHA or guaranteed
by the VA.
What is the difference between fixed rate mortgages and adjustable
rate mortgages?
The differences are that fixed rate mortgages are offered with an
interest rate that remains unchanged for the term of the loan.
Adjustable rate mortgages, sometimes referred to as ARMs and also
called variable rate mortgages, have rates that change at predetermined
intervals during the term to reflect general interest rates.
What is a "convertible mortgage"?
This is a mortgage that allows a borrower to convert from an adjustable
rate to a fixed rate during specified time periods. An additional
fee usually applies.
What is an "adjustable interval"?
This is the time between changes in the interest rate and/or the
monthly payment on an adjustable rate mortgage.
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 are "points"?
Points (sometimes called "loan discount points") are pre-paid interest
on your mortgage, charged at closing. Each point is equal to 1% of
the mortgage amount.
What does "APR" stand for?
This stands for Annual Percentage Rate and reflects the annual cost
of the mortgage, taking into account points and other credit costs.
The APR can be used to compare the annual cost of different types of
mortgages.
What is an index?
An "index" is a financial reference rate on which a lender bases
mortgage and other loan rates. Typical indices include the rate of
return on 1-, 3- or 5-year U.S. Treasury bills or the monthly average
interest rate on loans closed by savings and loan associations. As
this rate goes up or down, so too, will your mortgage rate.
What is a "buy-down"?
A "buy-down" occurs when a lender lowers the interest rate on a
mortgage -- for a fee -- for the first few years of the loan.
What are "caps"?
"Caps" are limits that are placed on the changes allowed in the
interest rate and/or monthly payment on an adjustable rate mortgage.
What is "locking-in"?
"Locking-in" means that -- sometimes for a fee -- your lender will guarantee
the interest rate on your mortgage for a limited period, regardless
of fluctuations in market rates. If you are concerned that rates will
go up between the time you apply and the time the loan closes, you
should lock-in.
What is "PITI"?
It is simply "Principal, Interest, Taxes and Insurance" -- the
components of your monthly mortgage payment.
What is an appraisal?
An estimate of the value of the property you intend to buy or
reference.
What is closing?
"Closing" is the date set when the buyer, seller and lender, or
their agents, agree to legally transfer the property and all
associated funds, or reference the property.
What is "escrow"?
"Escrow" is the process wherein a neutral, third-party is responsible
for carrying out the buyer's and seller's instructions and paperwork
relating to closing. Escrow can also refer to an account set up
by the mortgage lender into which a portion of each mortgage payment
is deposited to cover insurance and taxes, or an account set up to
hold funds for needed repair.
What are "closing costs"?
"Closing costs" are those costs that include the mortgage broker's
fee, discount points, appraisal and title search fees, insurance
charges, survey fees and other charges associated with the legal
transfer of the property. These costs typically amount to between
2% and 3% of the mortgage amount.
What happens at closing?
This is also called the "settlement". The buyer, seller and lender,
or its agents, meet and legally transfer the property and all
associated funds.
How often do I have to make mortgage payments?
This depends on the lender you choose as you may select from monthly,
bi-weekly or weekly payments.
What happens if I'm late with a payment or miss a payment?
Continued delinquency (late payment) or defaulting on mortgage
(failing to make one or more payments) can lead to foreclosure, or
judgment against you on the note for the amount owed.
What if I want out of my mortgage?
You may pay off the loan prior to the end of the term. Some
mortgages do have a prepayment penalty, but many do not. Ask your
lender or broker about the program you are applying for.
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