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FAQs

Here are some frequently asked questions (FAQs) about mortgages:

  1. What is a mortgage?

    • A mortgage is a loan specifically used to purchase real estate. The property itself serves as collateral for the loan.

  2. How do I qualify for a mortgage?

    • Qualification depends on several factors including your credit score, income, debt-to-income ratio, and employment history.

  3. What is the difference between a fixed-rate and an adjustable-rate mortgage?

    • A fixed-rate mortgage has a constant interest rate and monthly payments that never change, while an adjustable-rate mortgage has a rate that can fluctuate over time.

  4. What is a down payment?

    • A down payment is an upfront portion of the total property price you pay. It’s typically a percentage of the purchase price.

  5. What are closing costs?

    • Closing costs are fees associated with finalizing a mortgage, including lender fees, title insurance, and appraisal fees.

  1. Can I refinance my mortgage?

    • Yes, refinancing a mortgage involves taking out a new loan to pay off the existing one, usually to secure a better interest rate or different loan term.

  2. What is a pre-approval?

    • A pre-approval is a lender’s offer to loan you a certain amount under specific terms. It’s based on a preliminary review of your finances.

  3. What is an escrow account?

    • An escrow account is used by your lender to pay property taxes and homeowners insurance on your behalf. Funds for these expenses are included in your monthly mortgage payment.

  4. What happens if I miss a mortgage payment?

    • Missing a mortgage payment can lead to late fees and negatively impact your credit score. Continued missed payments may lead to foreclosure.

  5. What is private mortgage insurance (PMI)?

    • PMI is insurance that a borrower must purchase when they put down less than 20% of the home’s purchase price. It protects the lender in case the borrower defaults on the loan.