Q1: What is the definition of a mortgage?
A mortgage is a home loan in which a legal contract is made between a lender and a borrower that uses the home or property as collateral to secure the loan. Which means that the lender can take possession of the property if the borrower does not meet the terms of the contract. |
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Q2: What is a home equity loan?
A home equity loan is a loan in which a homeowner obtains cash loans based on the present value of their property minus the balance of the mortgage. |
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Q3: What is a home equity line of credit or HELOC?
HELOCs give homeowners access to an open line of credit, where only the outstanding balance accrues interest. HELOCs allow borrowers access to their funds on an as needed basis. |
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Q4: What is a mortgage lender?
A mortgage lender is an institution that finances prospective homeowners with the funds to buy a house and pay off the mortgage according to terms agreed upon in a contract between the mortgage lender and the borrower. Let Continental Mortgage be your mortgage lender! |
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Q5: What is the difference between a mortgage broker and a mortgage banker?
A mortgage broker matches borrowers with lenders based on certain criteria. Mortgage bankers finance the home loans. |
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Q6: What is mortgage principle?
Mortgage principle is the amount of money that is borrowed not including interest. |
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Q7: What does APR stand for, and what is it?
APR stands for Annual Percentage Rate and it is the effective rate for a loan per year. This rate is typically higher than the note rate because it takes into account closing costs. This is one way to compare loan programs offered by different lenders. |
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Q8: What is a fixed rate mortgage?
Fixed rate mortgages are interest rates that are consistent throughout the life of the loan. The interest does not change. |
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Q9: What is an adjustable rate mortgage(ARM)?
Adjustable rate mortgages are interest rates that fluctuate with the market. They are not consistent throughout the life of the loan. |
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Q10: Is a fixed rate mortgage or an adjustable rate mortgage better?
There are advantages and disadvantages to both of these loan products. Which mortgage rate is best for you depends on many different factors, with the two biggest being your financial situation and your housing goals. The knowledgeable staff at Continental Mortgage can help you determine which one is right for you. |
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Q11: What is an amortized mortgage?
Amortized mortgages are loans in which borrowers pay back interest plus principle for a fixed period of time. |
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Q12: How are loan-to-value(LTV) ratios calculated?
The loan-to-value (LTV) ratio expresses the fair market value of your home loan divided by the actual amount of your home loan. |
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Q13: What is the Truth in Lending Act?
The Truth in Lending Act is a federal law that was enacted as part of the Consumer Protection Act that requires lenders to reveal all information to the borrower and detail all costs associated with the mortgage transaction. |
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Q14: How long does the mortgage process take?
The length of the mortgage process depends on many different things. Usually the time frame is determined by the escrow closing date agreed upon by the buyer and seller. This time frame is usually somewhere between 30 and 90 days. However, refinancing a home loan usually only takes between 5 and 30 days. |
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Q15: What is PMI(Private Mortgage Insurance)?
PMI is insurance purchased by the buyer when they have less than the standard 20% down payment that covers the lender against the borrower defaulting. This insurance is paid until the loan-to-value ratio drops below 80%. |
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Q16: What are Fannie Mae and Freddie Mac?
Fannie Mae and Freddie Mac are organizations that purchase mortgages from lenders on the secondary market. By purchasing the mortgages from the lenders, there are more funds available for new home purchases. Fannie Mae and Freddie Mac have requirements and limits on the loans that these organizations will purchase from the lenders. These loans are known as "conforming" or "conventional" loans. |
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Q17: For how much of a loan will I qualify?
Lenders will get you qualified based on your income, debts, and credit score. Every person qualifies for a different amount and the terms of the loans are different for every individual. There are ways to get estimates, but the only way to know for sure is to talk to the experienced mortgage specialists at Continental Mortgage. |
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Q18: How much of a down payment do I need?
The standard to put down is 20%. By putting down 20%, you are not required to pay for PMI. However, you may also get 100% financing with the purchase of PMI. |
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Q19: Should I obtain a credit check before buying a home?
It is better if you obtain a credit check so that you can take care of any errors from the beginning. By taking care of things early, you can avoid any delays. |
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Q20: What is an escrow account?
A trust account held in a borrower's name to pay certain things such as insurance and property tax. |
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Q21: What is included in my mortgage payment?
Mortgage payments include principle, interest, taxes, and insurance. Principle is the remaining balance left on the house. Interest is what it cost to borrow the money. Taxes are costs associated with the property that are added by the local government. Insurance is expenses to cover the house in case of damage caused by natural disasters. |
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Q22: What does homeowner's insurance cover?
Homeowner's insurance typically covers the dwelling, any structures on your property not connected to the main dwelling, loss of use, personal liability, and medical payments. |
