A. Mortgage rates can change from the day you apply for a loan to the day you close the transaction. If interest rates rise sharply during the application process it can increase the borrower's mortgage payment unexpectedly. Therefore, a lender can allow the borrower to "lock-in" the loan's interest rate guaranteeing that rate for a specified period, often 30,60 or more days, sometimes for a fee.
A. An account set up by the lender into which the borrower makes periodic payments, usually monthly, for taxes, hazard insurance, assessments, and mortgage insurance premiums. The funds are held in trust by the lender who pays the sums as they become due.
A. A periodic review of escrow accounts to make sure that there are sufficient funds to pay the taxes and insurance on a home when they are due.
A. A loan with an interest rate which remains the same for the entire loan. With a fixed rate loan, your monthly payment will only change if your taxes or insurance costs fluctuate.
A. The cost you pay to borrow money, shown as a percentage. The amount of interest you owe on the mortgage depends on the interest rate and loan amount.
A. A mortgage where the homeowner pays only the interest on the loan for a specified amount of time.
A. A property used for the purpose of generating income or gaining profit from the resale or tax write-offs.
A. Principal, Interest, Taxes, and Insurance are the components of a mortgage payment.
A. An estimate of how much you may be able to borrow based on unverified financial details you provide such as your debt, income, and liquid assets.
A. Pre-approval is essentially a preliminary evaluation to determine how much you can borrow for a home loan. It involves an anaysis of your financial situation (income, debts, assets, and credit score) to give you a realistic idea of what you can afford.
A. Is an official notification from the lender confirming the loan approval outlining the loan terms and estimated monthly payment.
A. Streamline loans are available for Federal Housing Authority (FHA) or VA loans. VA Streamline is another term for an Interest Rate Reduction Refinance Loan (IRRRL). Streamline refinances typically involve fewer requirements and are a faster option when your goal is to keep the same loan, but refinance to reduce your interest rates.
A. You can refinance as often as you like, as long as it makes financial sense, although lenders may enforce a waiting period, typically around six months, known as a 'seasoning' requirement.
A. The amount you want to borrow compared to the appraised value of the property.
A. There may be tax benefits associated with owning a home, such as deductions for mortgage interest payments, real estate taxes and mortgage points. Check with your tax advisor for a full list of deductions.
A. Are an option for buyers to pay an upfront fee at closing to buy down the interest rate on a loan. One point will generally cost 1% of the total amount that is loaned.
A single point will generally reduce the interest rate on your mortgage by .25% (¼).
A. The APR is an accurate measure of the cost of borrowing money. The APR or annual percentage rate reflects not only the interest rate but also any mortgage points, fees, and any other charges that you may pay to get the loan. The interest rate alone is the cost you will pay each year to borrow the money. Unlike the APR, interest rate does not reflect fees or any other charges you may have for the loan.
