Frequently Asked Questions

What will my mortgage payments include?

Your mortgage payment usually consists of two parts. The principal is the amount of money you are paying towards the amount borrowed. The interest is the amount of money you are paying to borrow the money. In the beginning of your mortgage you will pay more to interest and less to principal and as your mortgage progresses you will see a shift where more of the money is going to principal and less to interest.

What is a fixed rate mortgage?

With this type of mortgage your interest rate will remain fixed for the entire life of the loan. This type of loan will provide you with the same payment amount every month until the loan is paid off

What is an adjustable rate mortgage?

An adjustable rate mortgage is a loan in which the interest rate can move either up or down over the life of the loan. With this type of mortgage the interest rate will generally start low and increase the longer you have the loan.

What is a home equity loan?

A home equity loan is a loan that allows you to borrow a large amount of money, using your home as collateral. Your home equity loan will be a set amount of money at a fixed interest rate. It is a great option when you need a large amount of money for home improvement, debt consolidation or other major expenses.

When is refinancing a good option?

There are a number of reasons why someone would refinance. You can refinance if the interest rate has gone down, which will lower your monthly payment. Some people refinance when they have built equity in their home and would like to take some of that money out. Many people also refinance their loan when the initial period of their adjustable rate mortgage is coming to an end and they want to switch to a fixed rate mortgage.

Do I need to appraise my home if I am refinancing?

Yes, essentially refinancing is paying off your mortgage with a new mortgage. Especially if you are changing lenders, they want to make sure the property they are funding is worth the cost that is being mortgaged.

How much are closing costs?

Closing costs will vary based on several factors including the lender, the type of mortgage, the purchase contract, and the state you live in. Your lender will charge fees for appraisal and credit reports. If you are paying for points, those will also be charged at closing. There are also fees for title insurance and hazard insurance and deposits for an escrow account. A lender can give you the approximate closing costs of your mortgage with a quote so that you can compare lenders.

What is amortization?

Amortization is the period it would take you to pay off your mortgage in full. As long as you maintain the same terms and payment periods of your loan your amortization period will be whatever the term of your mortgage was when it was first taken out.

What is Private Mortgage Insurance and will I have to pay it?

Private Mortgage Insurance (PMI) provides your lender with a way to recoup its investment if you are unable to repay your loan. PMI is usually required when the mortgage amount is higher than 80% of the home’s value. That means that if you buy a home with a down payment of less than 20%, you will probably have to pay PMI. Many people get around this by using an 80/20 program, which combines a first mortgage with home equity financing.

What if I have bad credit?

Your credit history is only one factor that a lender will look at. While someone with good credit will have more options available to them it doesn't’t mean someone with bad credit cannot qualify for a loan. In fact, there are several mortgage programs specifically designed for people with bad credit.