Yes. You can obtain pre-approval for a maximum purchase price, loan amount and loan program. Once the loan has been approved, any of these variables can be changed to match the specifics of the actual transaction. However, an interest rate can not be locked until a property address has been specified.
Title insurance protects the lender and the homeowner against loss resulting from any defects in the title or claims against a property that were not uncovered in the title search and that are not specifically listed as exemptions to the coverage on the title insurance policy.
APR is abbreviated for Annual Percentage Rate. The APR is the annual cost of the mortgage expressed in the form of a yearly rate. The APR is generally higher than the note rate because the APR includes the interest rate plus related costs such as points, fees for processing the loan and other pre-paid charges. The APR can be used to compare the actual cost of different types of mortgages.
Closing costs cover all the charges associated with the transaction, including points, origination fee, appraisal fee, title insurance, survey, charges for credit reports, etc. Closing costs vary depending upon the loan product and the fees that are customary in your region.
Points are prepaid interest which may be charged by the lender for the purpose of providing a lower interest rate. If points are paid, they are normally payable at the time of closing. Each point is equal to 1% of the principal loan amount. For example, $1,500 equals one point on a $150,000 mortgage. The more points you pay, the lower your interest rate will be, thus lowering your monthly payment.
It all depends on the loan product and the lender. The Mortgage Resource offers a wide range of lock-in periods depending on your needs.
Buying down the rate refers to the payment of discount points in exchange for a lower interest rate. A discount point is one percent of the loan amount. As an example, paying two discount points on a $100,000 loan requires $2,000.
Your ability to purchase a home will depend, in part, on your credit history as profiled in a credit report. The information on the credit report is used to determine how responsible you are in meeting your obligations. You do not have to have perfect credit to be approved for a mortgage, but if you have a number of late payments, you may need to provide a letter explaining why those payments were late.
Amortization is the repayment of a mortgage debt with periodic payments of both principal and interest, calculated to retire the obligation at the end of a fixed period of time.
An estimate of the value of the property you intend to buy or refinance.
The Mortgage Resource requires up-front expenses for the credit report and the appraisal (this amount varies depending upon the region).
The Mortgage Resource offers any term between 10 and 30 years. Mortgages are generally paid over a 10, 15, 20, or 30-year period. While monthly payments for a 30-year mortgage are lower than those for a 10, 15 or 20-year mortgage, a shorter term can save you a considerable amount of money because of the way the mortgage amortizes. In addition, many times a shorter term is available at a lower interest rate.
An escrow payment is the portion of your monthly payment held by your lender to pay the taxes and insurance associated with home ownership. Your lender or servicer is responsible for collecting and disbursing these funds as they come due. Escrows are also called impounds or reserves in some states.
Fixed-Rate Mortgages With this type of mortgage your monthly payments for interest and principal never change. Property taxes and homeowners insurance may increase, but generally your monthly payments will be very stable. Fixed-rate mortgages are available for 30 years, 20 years, 15 years and even 10 years. There are also "bi-weekly" mortgages, which shorten the loan by calling for half the monthly payment every two weeks. (Since there are 52 weeks in a year, you make 26 payments, or 13 "months" worth, every year.) Adjustable-Rate Mortgages (ARMS) These loans generally begin with an interest rate that is 2-3 percent below a comparable fixed rate mortgage, and could allow you to buy a more expensive home. However, the interest rate changes at specified intervals ( for example, every year) depending on changing market conditions; if interest rates go up, your monthly mortgage payment will go up, too. However, if rates go down, your mortgage payment will drop also.
This is a mortgage that allows a borrower to convert from an Adjustable Rate Mortgage to a Fixed Rate Mortgage during specified time periods. A conversion fee usually applies.
Administered by the Department of Veterans Affairs, these special loans make housing affordable for U.S. veterans. To qualify you must be a veteran, reservist, on active duty, or a surviving spouse of a veteran that died with a service-related injury and had 100% entitlement. A VA loan is simply a fixed rate mortgage with a very competitive interest rate. Qualified buyers can also use a VA loan to purchase a home with no money down and no cash reserves. Your VA regional office can tell you if you are eligible for this VA benefit.
FHA (Federal Housing Administration) loans are insured by the U.S. Department of Housing and Urban Development (HUD) which enables homebuyers to obtain mortgages with low down payments. Both fixed and adjustable rate FHA loans are available.
A “conforming” loan meets loan limits and underwriting guidelines established by Federal agencies such as Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC). These agencies purchase mortgages from lenders in the secondary market. “Non-conforming” loans, or “jumbo” mortgages, exceed these limits. Currently, the conforming loan limit for single family homes is set at $333,700.
Jumbo loans are mortgages that exceed the maximum loan amount established by the Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC). Currently, any loan over $333,700 for a single-family residence, is considered a jumbo.
Private Mortgage Insurance, or PMI is insurance which protects the lender in case the buyer defaults on the loan. It is typically paid for by the borrower and exists on conventional mortgages when the buyer’s down payment is less than 20%.
You may request that your lender cancel Private Mortgage Insurance when your mortgage balance reaches 80% of your home’s original value (i.e. the lesser of the sales price or the appraised price at origination). Your mortgage payments must be current, you must have no other loans on the house, and your lender must be satisfied that your property value has not declined.
When your mortgage balance reaches 78% of your home’s original value, your Mortgage Insurance will be canceled automatically by your lender. Again, you must be current on your payments. Some exceptions apply to certain “high risk” loans.
Principal-Interest-Taxes-Insurance. These elements together are called P.I.T.I. For most borrowers, monthly mortgage payments include three components: a payment toward the principal of the loan (that is the amount borrowed); a payment representing interest; and a payment into a special account (called an escrow account) that your lender maintains to pay your hazard insurance and property taxes. If you will be paying private mortgage insurance or condo association fees, these may also be included in the payment amount.
Continued delinquency (late payment) or defaulting on your mortgage (failing to make one or more payments) can lead to foreclosure, or judgement against you.
This depends on the lender you choose. With The Mortgage Resource, you may select monthly, or biweekly payments.
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