Mortgage FAQs continued
Can
I pay my loan off early? Can I pay extra each month?
Yes, you can make principal payments at anytime during
your loan term or pay the loan in full. You can also pay a set amount each
month above the normal payment due or make lump sum payments periodically.
What is an escrow account?
An account maintained by the lender to collect funds
from the borrower in order to pay the taxes and property insurance due on
the loan.
What is PITI?
This represents the accounts your money is applied
to when you make your monthly mortgage payment:
P - Principal
I - Interest
T - Taxes
I - Insurance
How
do I know what loan is best for me?
Review your current situation and future goals. Then
answer the following questions to help determine the direction you may wish
to take. Also, discuss these questions with your loan officer to help determine
the type of loan you need.
> How long do you expect to stay in the house?
> Which is more important, low monthly payments, or low closing costs?
> Will your income increase or decrease in the next three years?
> How comfortable are you with your monthly payment potentially increasing?
What is the difference between a fixed rate
and adjustable rate mortgage?
With a fixed rate mortgage, the interest rate and
payment remains constant over the life of the loan. Whereas, with an adjustable
rate mortgage, the interest rate can either increase or decrease, based
upon the terms of the loan. This could cause the monthly payments to increase
in order to have the loan paid in full by maturity.
What is a convertible mortgage?
A convertible mortgage allows you to convert your
adjustable rate mortgage to a fixed rate mortgage for a flat fee during
a specific time frame. This fee can range from $250 - $500 per lender.
What is a balloon mortgage?
A loan with a fixed rate payment for the first five
to seven years of the loan, after which a lump sum payment is due on the
balance of the loan at a specified date when the balloon loan matures.
What is a conventional loan?
A mortgage not guaranteed by VA or insured by FHA,
FMHA or State Bond Agencies.
What is a jumbo loan?
A conventional loan that exceeds the maximum agency
(Fannie Mae, Freddie Mac) mortgage amount guidelines for a conventional
loan.
What is PMI?
This stands for Private Mortgage Insurance. On a conventional
loan PMI is required if you borrow over 79.99% of your appraised value.
This protects the lender against financial loss if the loan is defaulted.
What is mortgage life insurance?
This insurance would pay the balance owed on your
mortgage home loan in the event of your death during the term of the mortgage.
What is hazard insurance?
This represents the insurance that protects your investment
in your home. It provides compensation to the insured in case of property
loss or damage.
What are points?
Points represent an origination fee charged by the
lender and loan discount points sometimes charged on the note rate to lower
the interest rate.
What is a buy-down?
A fee paid to lower the interest rate on a mortgage.
The buyer, seller, or any other interested party may pay it. A permanent
buydown would lower the rate for the entire term of the mortgage.
What is an origination fee?
The origination fee is charged by the lender, and is typically 1% of the
loan amount you borrow. This fee is used to cover expenses during the process
of the loan.
What are closing costs?
Fees and costs that both buyer and seller must pay at closing. They generally
include: origination fee, discount point, appraisal fee, credit report,
title search, recording fees, and other costs described in the HUD I at
settlement.
First
Time Home Buyers:
•
Paint the walls neutral colors; a green or red master bedroom is not in!!
• Accentuate the main features of your home. In other words, remove
clutter or nick-nacks in the house, especially the kitchen.
• Clean carpets and hardwoods, or expect to replace them if they are
in poor condition.
• Burn scented candles or use air freshners to make the house smell
more pleasant.
• Play soft relaxing music to set the mood.
• Consider providing a Home Warranty, especially if the home is older
than 10 years.
• Last but not least, always try and keep the home clean and tidy;
weekends are going to be your main showing days, so prepare in advance.
Tips for selling your home:
• Paint the walls neutral colors; a green or
red master bedroom is not in!!
• Accentuate the main features of your home. In other words, remove
clutter or nick-nacks in the house, especially the kitchen.
• Clean carpets and hardwoods, or expect to replace them if they are
in poor condition.
• Burn scented candles or use air freshners to make the house smell
more pleasant.
• Play soft relaxing music to set the mood.
• Consider providing a Home Warranty, especially if the home is older
than 10 years.
• Last but not least, always try and keep the home clean and tidy;
weekends are going to be your main showing days, so prepare in advance.
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