FAQ's
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Questions
What is a mortgage?
What is a mortgage calculator?
What is a mortgage refinance?
What is a mortgage home loan?
What is a home equity loan?
What is a home equity line of credit or HELOC?
What is a second mortgage?
What is a reverse mortgage?
Who is a mortgage lender?
Who is a mortgage broker and a mortgage banker?
What is a mortgage principle?
What does APR mean?
What does the word “Naviscreen” mean?
What is a fixed rate mortgage?
What is the adjustable mortgage rate?
What is an interest-only mortgage?
What is an amortized mortgage?
How do you calculate LTV or loan-to-value ratio?
What are lender fees?
What is the Truth in Lending Act?
What is a pre-qualification?
What is an appraisal?
What is mortgage protection insurance?
How important is credit of the borrower?
What are closing costs?
What are discount points and how are they calculated?
What is title insurance?
What is Private Mortgage Insurance (PMI)?
Who are other mortgage loan providers?
Answers
What is a mortgage?
A mortgage is the transfer of an interest in property to a lender as a security for a debt - usually a loan of money. While a mortgage loan in itself is not a debt, it is the lender's security for a debt. The lender can take possession of the property if the borrower fails to pay the prearranged home loan payments.
What is a mortgage calculator?
Mortgage calculators or home mortgage calculators are used to help a current or potential real estate owner determine how much they can afford to borrow to purchase a piece of real estate. These calculators could be adjusted according to the home mortgage interest rate to return monthly or weekly payment schedule. Mortgage calculators can also be used to compare the costs or real interest rates between several different loans, determine the impact on the length of the loan of making added principal payments or bi-weekly instead of monthly payments on mortgage and choosing the one which is of the lowest mortgage rates. A mortgage payment calculator is an automated tool that enables the user to quickly determine the financial implications of changes in one or more variables in a mortgage financing arrangement. The major variables include loan principal balance, periodic interest rate compound interest, number of payments per year, total number of payments and the regular payment amount.
What is a mortgage refinance?
Refinancing mortgage refers to the replacement of an existing debt obligation with a debt obligation bearing different terms. The most common mortgage refinancing is to refinance home mortgage. Refinancing mortgage may be undertaken to reduce interest rate/interest costs (by refinancing at a lower refinancing mortgage rate), to extend the repayment time, to pay off other debt(s), to reduce one's periodic payment obligations (sometimes by taking a longer-term loan), to reduce or alter risk (such as by refinancing from a variable-rate to a fixed-rate loan), and/or to raise cash for investment, consumption, or the payment of a dividend.
What is a mortgage home loan?
A mortgage home loan is to finance the purchase of real estate and property, especially for residential purposes, usually with specified payment periods and mortgage interest rates. The loan is secured by through the use of a document which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan. However, the word mortgage alone, in everyday usage, is most often used to mean mortgage home loans.
What is a home equity loan?
A home equity loan (sometimes abbreviated HEL) is a type of loan in which the borrower uses the equity in their home as collateral. These loans are sometimes useful to help finance major home repairs, medical bills or college education. A home equity loan creates a lien against the borrower's house, and reduces actual home equity.
What is a home equity line of credit or HELOC?
A home equity line of credit (often called HELOC) is a loan in which the lender agrees to lend a maximum amount within an agreed period (called a term), where the collateral is the borrower's equity in his/her house. Because a home often is a consumer's most valuable asset, many homeowners use home equity credit lines only for major items, such as education, home improvements, or medical bills, and choose not to use them for day-to-day expenses.
What is a second mortgage?
Mortgage loan taken out after the first mortgage and secured against the same asset as the first mortgage loan. Mortgage loan is based on the amount of equity or ownership interest you have in your home and the payment patterns are set according to current mortgage rates. They are usually provided by second mortgage lenders.
What is a reverse mortgage?
A reverse mortgage (or lifetime mortgage) is a loan available to seniors, and is used to release the home equity in the property as one complete amount or in a series of multiple payments. It enables the senior citizens, age 62 and older to convert part of their home equity into income—without having to sell their home, give up title to it, or make monthly mortgage payments. The loan only becomes due when the last borrower (s) permanently leaves the home.
Who is a mortgage lender?
A mortgage lender can be a person or a financial institution such as a bank providing prospective homeowners with mortgage assistance and funds to pay off their home mortgage over a long-term period. Monthly payments are made to the lender which compiles the principle amount, interest and additional fees.
What is the difference between a mortgage broker and a mortgage banker?
A mortgage broker is the middleman who helps match borrowers with lenders based on corresponding needs and standards. Mortgage brokers arrange more than 80% of all transactions between borrowers and lenders, yet mortgage bankers actually finance and distribute the largest portion of home loans compared to all other lenders.
What is a mortgage principle?
The mortgage principle amount is the basic loan amount that is borrowed by the borrower. This amount doesn’t include the interest.
What does APR mean?
The terms annual percentage of rate (APR), describe the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage, credit card, etc.
What does the word “Naviscreen” mean?
Naviscreening is the concept of directly connecting (mortgage) buyers with regionally specific, prescreened, and competent lenders through the simple completion of a universal and secure form.
What is a fixed rate mortgage?
A fixed rate mortgage (FRM) is a mortgage loan where the interest rate on the note remains the same throughout the life of the loan.
What is the adjustable mortgage rate?
An adjustable rate mortgage (ARM) is a mortgage loan where the interest rate on the note is periodically adjusted based on a variety of indices. The monthly payments made by the borrower may change during the term of your mortgage loan with the changing interest rate. The fluctuating rates pass on part of the interest rate risk from the mortgage lender to the borrower.
What is an interest-only mortgage?
An interest-only loan is a loan in which, for a set term, the borrower pays only the interest on the principal balance, with the principal balance unchanged. At the end of the interest-only term the borrower may enter an interest-only mortgage, pay the principal, or (with some lenders) convert the loan to a principal and interest payment (or amortized) loan at his/her option.
What is an amortized mortgage?
Loans paid in installments comprised of principle amount and interest is referred to as amortized Mortgage. These loans are to be paid off (or amortized) over a fixed period of time.
How do you calculate LTV or loan-to-value ratio?
The loan-to-value (LTV) ratio of the borrower’s home is calculated by dividing the fair market value of the home by the amount of home loan. For instance, if a borrower wants $130,000 to purchase a house worth $150,000, the LTV ratio is $130,000/$150,000 or 87%.
What are lender fees?
Fees paid to the lender along with the principle and interest amount is referred to as lender fees. These fees usually range anywhere from 2 to 5 percent and may include, but are not limited to, things such as appraisal costs, document preparation, and application costs.
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. This law requires lenders to reveal all information to the borrower and detail all costs associated with the transaction.
What is a pre-qualification?
A pre-qualification is a pre-check as to how much money a borrower is eligible to borrow before he/she could apply for a mortgage. It is calculated on the basis of principal information such as income, debts and assets.
What is an appraisal?
Before getting a loan, a borrower needs an appraisal made by a certified appraiser who provides a professional opinion or estimate of the property value.
What is mortgage protection insurance?
Mortgage protection is an insurance coverage a homeowner can purchase to ensure that—in the event that they lose their job or they are otherwise unable to continue mortgage payments—their mortgage will be paid by the insurer. This is also a kind of life insurance policy designed to pay off mortgage in the event of the death of borrower or disability.
How important is credit of the borrower?
Credit is an important consideration for determining the creditworthiness of the borrower. Information in credit report is prepared by a credit bureau or consumer reporting agency. Any late payments or other adverse information contained in credit report will receive additional review during the underwriting of loan application.
What are closing costs?
Closing costs cover all the fees and expenses associated with a loan transaction. Closing costs may include fees for an appraisal, credit report, title insurance, survey, and points.
What are discount points and how are they calculated?
Points, sometimes also called a "discount point", are a form of pre-paid interest. One point equals one percent of the loan amount. By charging a borrower points, a lender effectively increases the yield on the loan above the amount of the stated interest rate. Borrowers can offer to pay a lender points as a method to reduce the interest rate on the loan, thus obtaining a lower monthly payment in exchange for this up-front payment.
What is title insurance?
Title insurance protects the lender (lender's policy) and the homeowner (owner's policy) against loss resulting from disputes over ownership of the property.
What is Private Mortgage Insurance (PMI)?
Lenders Mortgage Insurance (LMI), also known as Private mortgage insurance (PMI) in the US, is insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan. It is insurance to offset losses in the case where a mortgagor is not able to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property.
Who are other mortgage loan providers?
some other mortgage loan providers are Wells Fargo home mortgage, Chase mortgage, Washington Mutual mortgage, Wells Fargo mortgage, gmac mortgage etc.