-
-
What
is an application fee?
The amount charged
for services performed for handling the initial application
and processing of the loan.
-
What
is a discount point?
A discount point
is paid to the lender to permanently buy down or lower an interest
rate. It is usually a percentage of the loan amount.
-
May
I pay additional discount points to reduce my interest rate?
Yes, most lenders
will allow you to pay additional discount points to lower your
interest rate.
-
What
are investor commitment fees or lender fees?
Lender's fees are
fees that offset the cost of producing the loan and at the same
time enabling them to offer the lowest rates. Different companies
may refer to them by different names, such as, processing fees
or underwriting fees.
-
What
is the difference between APR and interest rate?
See: APR
-
What
is prepaid interest?
This is the interim
interest that accrues on the mortgage loan from the date of
settlement to the beginning of the period covered by the first
monthly payment. For example, if your closing date is May 15,
the first mortgage payment is due July 1. The per-day interest
amount will be calculated from May 15 to June 1.
-
What
is the difference between 'locking' and 'floating'?
A lock guarantees
your rate for a specified period of time, usually 30 –
45 days. If you choose to "float" or defer "locking,"
your rate will fluctuate with the market and will be subject
to both upward and downward movements in the market. You can
lock a rate up to ten days prior to settlement.
-
How
much does it cost to lock a rate?
1% of the loan. This
is not a fee and will be refunded to you during settlement.
-
What
is PMI and why is it required?
Private mortgage insurance
(PMI) is protection for lenders against borrower default. Money
paid to insure the mortgage when the down payment is less than
20 percent of the appraised value. If you make a down payment
of less than 20%, even if you have a good credit profile, lenders
generally require private mortgage insurance. If you make a
down payment of 20% or more you can eliminate PM.
-
How
long will I be required to have PMI on my loan?
Each lender has
different guidelines, but in most cases you can request cancellation
of pmi at 80% loan to value. See: LTV
-
What
is an escrow account?
This account is held
by the lender for the future payments of recurring items relating
to the mortgaged property, such as real estate taxes and insurance
premiums, as they become due. Lenders usually require you to
pay an initial amount for each of those items to start the reserve
account at the time of closing. The escrow account is usually
set up at settlement.
-
How
much money will be required at closing?
We will provide you
with a good faith estimate outlining your total cost. A good
faith estimate is not an exact amount but an approximation of
what your cost will be at closing. See: Closing
Fees
-
Does
the lender require title insurance for purchase transactions?
Yes, a Mortgagee's
Title Insurance Policy will be required on purchase transactions.
-
What
homeowner's insurance requirements will I need to meet at closing?
Most lenders require
a one-year paid receipt for homeowner's insurance policy for
at least the amount of the mortgage at the loan closing.
