| Q: What is my credit score and how is it determined?
A: See (credit basics page)
Q: What is an Interest Only Loan?
A: This term is used to describe a loan in which you are only making a payment on the interest that accrues on the loan on a monthly basis vs. principle and interest.
Q: Is that type of loan risky?
A: Every loan has its strengths and drawbacks as it compares to other options. The benefit is that a borrower is allowed a lower payment for a period of time and always has the option of paying additionally on the principal.
Q: What is a Point?
A: A point is equal to 1% of the mortgage amount. Example: the points on a mortgage of $100,000 would equal $1,000 each ($100,000 x .01). Points are also referred to as a loan discount and are a one-time charge assessed at the closing. If you are able to pay points upfront, you can benefit from a lower rate.
Q: Can I finance Points?
A: You can finance points.
Q: What is an ARM?
A: An ARM is an Adjustable Rate Mortgage. This means the interest rate is periodically adjusted to more closely coincide with current rates . Rates can adjust as quickly as the second month of the loan up to ten years into the loan. These adjustment periods are clearly defined by your lender.
Q: How high can my ARM go?
A: This is determined by the caps specified in the mortgage note. See "What is a Cap?"
Q: What is a Cap?
A: A cap is a limit placed on how high or low an interest rate can fluctuate. Many loan programs will place a limit on how much your rate can increase each adjustment period and also a limit on rate increases for the life of the loan.
Q: What is a Closing?
A: A closing is when all the loan documents are signed and the mortgage becomes effective. Closings will generally be conducted at a title company or an attorney's office. Some lenders may also have the option of closing the loan at your home or place of business with the aid of a notary.
Q: What are the Closing Costs?
A: Expenses incidental to the purchase or refinance of real estate, such as loan fees, title fees, appraisal, points, etc.
Q: What do the closing costs consist of?
A: There are a number of fees that are assessed with closing costs: appraisal, attorney or legal work, credit bureau reports, escrows, PMI insurance, pre-paid interest, recording charges, title insurance, points, and these vary per mortgage.
Q: What is PMI?
A: PMI stands for Private Mortgage Insurance. This insurance is required if you make less than a 10% down payment or have less than 20% equity in your home.
Q: How long does the processing take?
A: Depending upon the complexity of your loan, processing can take as little as 2 or 3 days, up to 2 or 3 weeks. It's a good idea to convey exactly what your time constraints are so the lender of choice can advise you accordingly. |
