We know the mortgage process can sometimes seem overwhelming. Listed are some of the most commonly asked questions with our answers below. Please feel free to contact us with any additional questions or comments.
An adjustable rate mortgage, called an ARM for short, is a mortgage with an interest rate that is linked to an economic index. The interest rate, and your payments, are periodically adjusted up or down as the index changes.
What are closing costs?
All costs incurred during the purchasing of the property, not including the sale price itself. This may include (but is not limited to) points, origination fees, attorney's fees and title insurance. Closing costs vary from state to state, but your loan officer will be able to give you an estimate when you apply for your loan. Fees paid at closing, including attorneys fees, fees for preparing and filing a mortgage, fees for title search, taxes, and insurance.
What is an APR?
A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing.
What are points?
Points are a percentage of the loan amount paid at closing that affect your interest rate. For instance, on a $90,000 loan, 1 point = 1% or $900. How it works is that if you pay points, you buy down the rate. Alternatively, in exchange for a higher rate, the lender pays points to offset your closing costs. These are considered negative points. Negative points may be a wise option if you have limited funds to use at closing. Points are also disclosed as discount points. Whatever the name, they are itemized on your Good Faith Estimate and are typically paid at closing.
