FREQUENTLY ASKED QUESTIONS

  • A mortgage is a loan obtained from a financial institution to purchase real estate, with the property itself serving as collateral for the loan.

  • A borrower receives a loan to purchase a home and agrees to repay it over a specified period, typically with interest. If the borrower fails to repay, the lender can take possession of the property through a process called foreclosure.

  • A fixed-rate mortgage has a constant interest rate throughout the loan term, while an adjustable-rate mortgage (ARM) has an interest rate that may change periodically, affecting the monthly mortgage payment.

  • A down payment is an initial payment made when purchasing a home. The percentage required varies but is often around 3-5% of the home's purchase price.

  • Mortgage pre-approval is a process where a lender evaluates a borrower's financial information and creditworthiness to determine the maximum loan amount they can qualify for.

  • Private Mortgage Insurance (PMI) is required when a borrower makes a down payment of less than 20%. It protects the lender in case the borrower defaults on the loan.

  • Interest is typically calculated using the principal amount owed and the annual interest rate. The interest paid decreases over time as the principal is paid down.

  • An escrow account is set up by the lender to hold funds for property taxes and homeowners insurance. The borrower makes monthly contributions to cover these expenses

  • Yes, many mortgages allow for early repayment without penalties. However, it's essential to check the terms of your specific mortgage agreement.

  • A home appraisal is an assessment of a property's value by a qualified appraiser. Lenders require appraisals to ensure the property's value is sufficient to cover the loan amount.

  • A mortgage broker acts as an intermediary between borrowers and multiple lenders, helping find the best loan terms. A mortgage lender directly provides the loan to the borrower.

  • Factors include the borrower's credit score, loan-to-value ratio, economic conditions, and the overall interest rate environment.

  • Closing costs are fees associated with finalizing a mortgage. They may include loan origination fees, title insurance, appraisal fees, and other costs related to the home purchase.