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Mortgage FAQs

We at collected the Frequently Asked Questions for our esteemed visitors so that they can understand all related aspects of mortgage concept.  If you do not find what you are looking for or have additional questions, please contact us.

What is APR?

The Annual Percentage Rate is the cost of credit expressed as a yearly rate. The APR combines interest rate, points, and related fees.

What is a Credit Score?

Credit scores were created for general use in making lending decisions and are based on credit data only. FICO* scores are one type of generic credit score. FICO scores range from approximately 400 to 900. The lower the score the greater the risk of default on a loan. A credit score below 620 gives a lender a strong indication that a borrower's credit reputation is not acceptable.

What is Private Mortgage Insurance (PMI)?

Private Mortgage Insurance is a type of insurance provided by a private mortgage insurance company, to protect the lender in the event of loan default. This type of insurance is required when a borrower has less than 20% equity in a home. Private mortgage insurance is paid monthly.

What is ARM (Adjustable Rate Mortgage)?

A mortgage that permits the lender to adjust its interest rate periodically based on the movement of a specific index. Example: 1-3-5 year Treasury Bill. There are generally limitations, such as 2% on the amount the mortgage interest rate can go up or down.

What is PITI?

PITI is an acronym for the items included in a monthly payment: principal, interest, taxes, and insurance.

How do I determine how much I can afford?

Generally, you should qualify for monthly housing expense (PITI, or the monthly payment for mortgage principal, interest, property taxes and property insurance) equal to 33% of your gross monthly income. The best way to know with confidence is by getting pre-approved.

What is a Finance Charge?

The Finance Charge is the cost of credit expressed as a dollar amount. It includes any charge payable directly, or indirectly, by the applicant, and imposed directly, or indirectly, by the lender, as a condition of receiving credit.

What are Discount Points?

Discount Points are equal to a percent of the loan amount. 1.25 points are equal to 1.25% of the loan amount. For example: on a $100,000 loan amount that equals $1,250. Typically, if you pay points it will lower the Interest Rate.

What is a Loan Origination Fee?

Origination fees are expressed as points or as a percentage. A one point or one-percent origination fee is equal to 1% of the loan amount.

What are Escrows?

An Escrow Account is used to protect monthly payments for taxes and insurance obligations.

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