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MBA Urges Regulators To Avoid Invoking Suitability Standards
The Mortgage Bankers Association (MBA) recently made a preemptive strike against what it obviously perceives as the next threat against the mortgage industry - "suitability standards." Read more...

 

Mortgage Loans FAQ's

Will an appraisal be required for the property?

The simple answer to this question is yes. Whether you are buying a new home, selling your home, or refinancing your current mortgage lenders will almost always require an appraisal.

What is mortgage insurance and am I required to have it?

Mortgage insurance is paid for by the borrower and is designed to protect the lender against payment default. In most cases if the loan is being taken out for more than eighty percent of a property the lender will require mortgage insurance.

Can funds be borrowed to pay for a down payment?

Yes it is possible to borrow the money for your down payment. You could borrow money from your 401 K, or even another home that you may own. If you are borrowing the money for your down payment even if it is from your friends or family you should disclose this information to your lender. There are some cases were keeping this information private has been considered a breach of the loan agreement.

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 prepayment penalty and should I have one?

A prepayment penalty allows the lender to charge the borrower a fee if they close their low within a certain period, usually the first five years of the loan. This fee is usually equal to about six months worth of interest payments on a loan. In some cases you may be able to get a lower rate if the lender includes a prepayment penalty, but it is usually better to try and avoid it.

What is the difference between pre qualification and pre approval?

Pre qualification is when a prospective buyer discloses, either verbally or by providing documentation of, their income, assets and credit so that a lender can determine how much a borrower will be likely to afford in loan payments. A pre approval involves an underwriter and is a more formal review of your credit and income. A pre qualification will commonly only provide you with an idea of what you can afford while a pre approval will actually guarantee you a loan of a certain amount.

Should I lock my rate?

When you lock your interest rate your lender will guarantee that rate for a determine amount of time, no matter what the market does. Usually lenders will lock a rate for 30 to 60 days. If interest rates rise within that period of your lower interest rate is safe, and that is what you will pay on your loan. Talking with your mortgage lender will give you a better idea of whether you should lock your rate. They will usually keep up with current events and know whether the interest rate is planning to rise or fall.

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 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.