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FAQs |
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1.What is a 30-year fixed rate conventional loan? A 30-year fixed rate mortgage loan provides you with the security of a monthly principal and interest payment that never changes because the interest rate never changes during the term of the loan. 2. What makes the $ amount of the loan change when you have a fixed interest rate? The only change could be an increase or decrease in the amounts the lender collects for mortgage insurance, real estate taxes, or property insurance (escrow payments). 3. What is a 15-year fixed rate conventional loan? A 15-year fixed rate mortgage reduces the amount of interest paid over the life of the loan by accelerating the principal reduction. 4. What are Prepaid Finance Charges? These are certain charges made in connection with the loan and which must be paid upon the close of the loan. These charges are defined by the Federal Reserve Board in Regulation Z and the charges must be paid by the borrower. Non-Inclusive examples of such charges are: Loan origination fee, "Points" or Discount, Private Mortgage Insurance or FHA Mortgage Insurance, Tax Service Fee. Some loan charges are specifically excluded from the Prepaid Finance Charge such as appraisal fees and credit report fees. 5. What are points? In essence, "points" is interest paid in advance. By paying interest in advance, the payments over the term of a loan are reduced. The frequently heard term "point(s)" actually refers to that percentage of the total cash being borrowed. For example: 1 point on a $100,000 loan would equal $1,000 ($100,000 X .01). 3 points on a $250,000 loan would equal $7,500 ($250,000 X .03). 6. What should I do first: Find a home or get qualified? There is no wrong answer to this question, however; getting pre-qualified does allow you to go house shopping with a solid idea of what you can and can not afford. It will also put you in a stronger negotiating position with the seller by informing them that you will not be denied when the time comes to get final approval for a loan. 7. What is the difference between FHA, VA, and Conventional loans? The FHA and VA loans are loans that are insured or guaranteed by the federal government against default. These loans generally will have guidelines less restrictive than other types of loan, but they also have limits. A conventional loan is a loan that is not insured by the federal government and usually meets a generally accepted set of standards. |
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